The Economic Cost of COVID-19

The COVID-19 pandemic has caused more than 240,000 deaths in the United States, a sharp decline in economic activity, anxiety and depression for many individuals, and difficult-to-predict long-term health costs for those who survive serious infections.  NBER Research Associates David Cutler and Lawrence Summers of Harvard University translate all of these consequences into economic terms. Their calculations use estimates of the value of a statistical life that federal agencies apply in cost-benefit analysis, as well as estimates of the economic costs of anxiety.   Their findings suggest a total cost of roughly $16 trillion, more than three quarters of annual gross domestic product.  Cutler describes these results in the video below.

Seven NBER working papers distributed this week investigate the economic and health impacts of the COVID-19 pandemic and the policy responses to it. Two studies examine the effects of the pandemic on labor markets, one focusing on the US (28083) and the other on China (28072). Two more analyze trade-offs in pandemic-response policy design, one with respect to vaccines (28085) and the other with respect to masks, testing, and other transmission-reduction strategies (28093). Another pair of studies investigate aspects of corporate borrowing and financial policy, one assessing the effects of the Federal Reserve’s corporate bond buying (28097) and the other analyzing the increase to date in, and the prospects for, corporate bankruptcies (28104). The final study explores the integration of recent research on the determinants of well-being into a framework for responding to the virus (28095).

More than 300 NBER working papers have presented pandemic-related research. These papers are open access and have been collected for easy reference. Like all NBER papers, they are circulated for discussion and comment, and have not been peer-reviewed. They may be viewed in reverse chronological order or by topic area.