Efraim Berkovich from the Penn Wharton Budget Model talks with Wharton Business Daily on SiriusXM about the economic tradeoffs for reopening schools during the pandemic.

Few doubt that reopening schools would cause a rise in COVID-19 infections, but policymakers have had little more than trial-and-error for a strategy here. A new Penn Wharton Budget Model analysis has taken the guesswork out of estimating the cost-benefit threshold for keeping schools closed.

The findings of the PWBM study in a nutshell: If reopening schools in October leads to an increased COVID incidence of greater than 0.355 new community cases per month for each student (or 355 new cases for every thousand students), then schools should remain closed.

“We try to calculate the cost of a COVID infection in terms of life lost, medical costs and productivity loss, put a dollar value on those, and then compare that with the loss to students from their education in terms of wage earnings,” PWBM’s director of computational dynamics Efraim Berkovich said on the Wharton Business Daily radio show on SiriusXM. (Listen to the podcast above.) “We’re literally looking to see if there is a dollar value you can assign to not learning your three R’s.” Berkovich conducted the study with PWBM research associates Maddison Erbabian and Youran Wu.

The PWBM study employed two measures to weigh the costs on either side of the equation. First, it estimated that for each month of school closures, each student faces a loss in future earnings of between $12,000 and $15,000 “due to lower educational quality.” Next, it pegged the total value-of-life, medical, and productivity costs per infection at $38,315 for September 2020.

In projecting the loss of lifetime wage earnings on account of school closures, the study assumed that distance learning under school closures is lost class time – that was because of the dearth of evidence on distance learning outcomes. However, if the loss in wage earnings from distance learning is only 10% of its estimates, for example, then the threshold to justify school reopenings would be proportionately higher.

“We’re literally looking to see if there is a dollar value you can assign to not learning your three R’s.”

The authors clarified that they did not attempt to quantify potential increases in COVID incidence from reopening schools. Instead, they estimated the number of new infections in the community for the benefit of a school closure to exceed its costs.

As of October 1, 2020, students in grades 1-12 have lost between $43,000 and $57,000, or 4% to 5% of their lifetime wage earnings, with younger children losing more than older children, the study stated. On the high end, U.S. K-12 students have already lost $2.8 trillion in future wage earnings from school closures in Spring 2020 and September 2020, the study estimated. If schools do not reopen until January, American students may lose another $2 trillion, it added.

A Way Out of Uncertainty

PWBM decided to conduct the study because its charter is to “to provide economic tools for people to understand the implications of their economic decisions,” and because no analysis seemed to be available on the trade-offs involved in reopening schools, Berkovich said. “[For parents of school-age children,] the most topical political issue of the day right now is not the [November presidential] election, but why the kids are not in school and what they’re learning,” he added.

“The idea here is to start a conversation so that policymakers — and specifically school boards, who are the ones who are making these decisions — have some numbers,” said Berkovich.  Armed with data, they could “start to think of this in terms of a trade-off, as opposed to listening to thresholds that are provided with no explanation as to why a particular number of COVID incidents shouldn’t relate to students being kept out of school or students being brought into school, for that matter.”

The need for clarity on the trade-offs between the benefits and costs of reopening schools is becoming increasingly urgent.  Berkovich pointed to research elsewhere that younger children effectively treated the school closures like a summer vacation, and that it was “almost equivalent to losing an entire grade of learning, which is terrible.”

The PWBM analysis comes at a time when there’s “a lot of heterogeneity” in school openings and reopenings, Berkovich continued. While private schools tend to be open now, virtual learning for students in disadvantaged communities is dependent on them having internet connections where they might “watch YouTube videos from Khan Academy,” he said.

“The idea here is to start a conversation so that policymakers — and specifically school boards, who are the ones who are making these decisions — have some numbers.”

Trying to get a definitive picture of how school closures affect learning outcomes is not easy. Wading through the complex mix of data and assumptions means experimenting with theories. “We [in the U.S.] are running a huge experiment right now on our children, so economists will have lots of data in the future. But certainly as a parent, I don’t want my children subject to that experiment.”

Under the circumstances, the best option is to look at data from things like Hurricane Katrina and school closures owing to teacher strikes in other parts of the world, said Berkovich. Students who take a little time off from school might be able to catch up later, and it’s “not as horrible as losing an entire year,” he noted. “So, the long term effects are likely more severe than for a shutdown for a short period of time. I’m not arguing for school closure or school reopening one way or the other. I’m simply saying, let’s try to take a look at these numbers and think about what the trade-off might be.”

Meanwhile, the costs of each COVID-19 infection have dropped significantly from around $330,000 in March, when the pandemic was in its early stages. Back then, the public health benefits of closing schools in a district would have outweighed the costs to students if closing reduced new infections by more than 40.9 per week, the study noted.

The cost of a COVID infection will continue to decline with the availability of improved treatments and vaccines, said Berkovich. Therefore, it is important to weigh the trade-offs on a monthly, or even weekly, basis to decide on reopening schools, he added.