The economic burden of COVID-19 in the United States: Estimates and projections under an infection-based herd immunity approach

Chen, S., Prettner, K., Kuhn, M., & Bloom, D.E. (2021). The economic burden of COVID-19 in the United States: Estimates and projections under an infection-based herd immunity approach. The Journal of the Economics of Ageing 20 e100328. 10.1016/j.jeoa.2021.100328.

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Abstract

Objectives
To assess the economic burden of COVID-19 that would arise absent behavioral or policy responses under the herd immunity approach in the United States and compare it to total burden that also accounts for estimates of the value of lives lost.

Methods
We use the trajectories of age-specific human and physical capital in the production process to calculate output changes based on a human capital–augmented production function. We also calculate the total burden that results when including the value of lives lost as calculated from mortality rates of COVID-19 and estimates for the value of a statistical life in the United States based on studies assessing individual’s willingness to avoid risks.

Results
Our results indicate that the GDP loss associated with unmitigated COVID-19 would amount to a cumulative US$1.4 trillion by 2030 assuming that 60 percent of the population is infected over three years. This is equivalent to around 7.7 percent of GDP in 2019 (in constant 2010 US$) or an average tax on yearly output of 0.6 percent. After applying the value of a statistical life to account for the value of lives lost, our analyses show that the total burden can mount to between US$17 to 94 trillion over the next decade, which is equivalent to an annual tax burden between 8 and 43 percent.

Conclusion
Our results show that the Unite States would incur a sizeable burden if it adopted a non-interventionist herd immunity approach.

Item Type:	Article
Uncontrolled Keywords:	COVID-19; Economic burden; HMM; VSL; USH; uman capital
Research Programs:	Economic Frontiers (EF)
Depositing User:	Luke Kirwan
Date Deposited:	31 May 2021 07:23
Last Modified:	29 May 2023 03:00
URI:	https://pure.iiasa.ac.at/17230

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