A stylist in a protective mask cuts a client’s hair at a barber shop in Atlanta, Georgia, Monday, April 27, 2020.
Dustin Chambers | Bloomberg via Getty Images
A federal face mask mandate would not only reduce the daily growth rate of new confirmed cases of Covid-19, but could also save the US economy from taking a hit of 5% of GDP instead of additional blockades , according to Goldman Sachs.
Jan Hatzius, chief economist at Goldman, said his team investigated the link between facial masks and Covid-19’s economic and health outcomes and found that facial coatings are associated with considerable and statistically significant results.
“We found that face masks are associated with significantly better coronavirus results,” Hatzius wrote in a note to clients. “Our benchmark estimate is that a national mandate could increase the percentage of people who wear masks by 15 (percentage points) and reduce the daily growth rate of confirmed cases by 1.0 (percentage point) to 0.6%.”
“These calculations imply that a face mask mandate could replace blockages that would otherwise subtract nearly 5% of GDP,” added the economist.
He first focused on the extent to which, if at all, the actual use of face masks reduces the Covid-19 infection rate by looking at differences in population behavior by state. For example, Hatizus found that only about 40% of respondents in Arizona say they “always” wear face masks in public, compared to almost 80% in Massachusetts.
Goldman then analyzed the impact of mandates issued by 20 US states plus the District of Columbia between April 8 and June 24 and compared it to actual use of face masks in public using data from respondents from YouGov Covid-19.
The results are “large and highly significant” and show that state mask mandates increase the percentage of people who say they “always” or “frequently” wear masks by approximately 25 percentage points in the 30 days after the order of the government.
Meanwhile, the group of people who say they “always” wear masks jumps by 40 percentage points more than 30 days after the mandate. That result suggests that the order makes people who previously said they “often” wear masks “always” wear them.
Critically, Hatizus says that wearing face masks appears to have a causal impact on the rate of new Covid-19 infections. These findings are not weakened when fewer public trips are controlled or large gatherings are avoided.
Overall, Goldman’s base case is that a national mandate to wear face masks could increase the percentage of Americans who wear masks by 15 percentage points and reduce the daily growth rate of confirmed cases by 1 percentage point to 0.6%.
The investment bank then translated those results into GDP terms by asking how severe the government-imposed blockages would be to reduce infections by 1 percentage point. To do this, Hatzius compared the severity of previous blockades in the United States to how the United States economy has already reacted to state-imposed business closings.
According to Goldman’s estimates, closure efforts, both official government restrictions and real social distancing, earlier this year subtracted 17% of US GDP between January and April. Other countries with even more aggressive restrictions saw even greater economic effects.
Using those results and a target to reduce the daily growth rate by 1 percentage point, Goldman Sachs discovered that a face mask mandate could replace blockages that would otherwise subtract nearly 5% of GDP.
“If a face mask mandate significantly reduces coronavirus infections, it could be valuable not only from a public health perspective but also from an economic perspective because it could replace renewed blockages that would otherwise affect GDP,” wrote Hatzius.
– CNBC’s Michael Bloom contributed reports.
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