Trading Off Consumption and COVID-19 Deaths
This note develops a framework for thinking about the following question: What is the maximum amount of consumption that a utilitarian welfare function would be willing to trade off to avoid the deaths associated with the pandemic? The answer depends crucially on the mortality rate associated with the coronavirus. If the mortality rate averages 0.81%, taken from the Imperial College London study, our answer is 41% of one year's consumption. If the mortality rate instead averages 0.44% across age groups, our answer is 28%.
We are grateful to Romans Pancs and Katelyn Ann Tynan for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Robert E. Hall
Hall attends conferences and meetings at the Federal Reserve Board and regional Federal Reserve Banks, at the European Central Bank, and at the central banks of other countries, including the United Kingdom, Portugal, Chile, and Canada. In some cases, he receives honorariums for his participation. His wife, Susan Woodward, has similar relations with the Federal Reserve System. His daughter is an economist at the US Treasury. His son is chief economist of Uber Technologies, Inc. Hall's research is supported by Stanford's Hoover Institution.