I have a Viewpoint out in JAMA with my colleague @Cutler_econ – The COVID-19 Pandemic and the $16 Trillion Virus. It is particularly relevant today ja.ma/3diC0U9
We estimate the cost of the COVID virus for the US. Bottom line cost: $16 trillion. This is $200,000 per family or 90% of a year’s GDP.
Some other metrics: this is 4x the output loss of the Great Recession, 2x the cost of all wars since 9/11, and roughly the cost of climate change in the next 50 years. Let me explain the estimates.
There are two major parts. First part is lost GDP. This is estimated by CBO at $7.6 trillion over the next decade.
Second part is lost health. We do this in stages. 1st, we take estimates of loss of life assuming number of deaths stays constant at today’s level for next year – a conservative assumption. This amounts to @ 625,000 deaths total, incl COVID and non-COVID excess deaths.
Conventional economic work values a statistical life at about $7 million per life. Thus, economic loss from premature mortality = $4.4 trillion.
There will also be long-term health impairments. The extent of this is not known entirely. We use estimates from COVASIM by Kerr et al. to get ratio of people with severe disease to deaths. Then use experience from SARS to get share of those who will suffer impairment.
Assuming surviving COVID with complications is like having COPD, this is a loss of about one-third of QALY, or $2.6 trillion total
Finally, population mental health has been severely adversely affected. Symptoms of anxiety & depression went from 11% of the population pre-COVID to 41% now. This is 80 million people.
Using a low-end estimate of the QALY loss from this and the low end of values per QALY, this amounts to $1.6 trillion total loss just for one year.
Add it up and the total is $16 trillion – assuming the virus only affects health for the next year. Half of this is lost output; the other half is health impairment.
The fact that this number is so high implies that investments in reducing COVID are hugely valuable. We estimate the value of testing to be AT LEAST 30 times the cost.
Congress is currently debating a second economic support measure. Our suggestion: at least 5% of any such bill should be devoted to testing and contact tracing. 13/13

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More from @LHSummers

12 Oct
Watch here my debate ⁦@fordschool⁩ with @MayaMacGuineas on whether the federal deficit is unsustainable. fordschool.umich.edu/events/2020/fe…
We need a different paradigm while thinking about the deficit. Of course we need more stimulus. The difficult question is: What do we need in the future?
A move to austerity as soon as possible is dangerous & misguided. Fails to appreciate the big structural changes in our economy, which is the emergence of a massive excess of private savings over private investments at a reasonable interest rate. What I call secular stagnation.
Read 6 tweets
11 Oct
1/ Very important column by @NickKristof in @nytopinion this weekend on the gravity of the tax compliance crisis facing this country today.

2/ Whatever you think about tax collection and the merits of investment in IRS that @NatashaRSarin and I have discussed:


It is indefensible that you are more likely to get audited if you live in the Mississippi Delta than on Park Avenue
3/ And it’s outrageous the IRS is so underfunded it has been unable to pick up the phone when taxpayers call for help

And unacceptable that it does not have agents to work the cases of a few hundred high-income individuals whose failure to even file taxes cost the IRS billions
Read 4 tweets
25 Jun
Glenn Hubbard asked me today at a talk with the @EconClubNY, "How do you expect higher-ed to be evolving both in terms of delivery and addressing opportunity?" I told him I think the two things go together.
I am very proud of the fact that I put in place a set of policies during my time as President of @Harvard that was widely emulated, that basically said if your family had an income below $60,000, you didn’t have to pay a cent to come to @Harvard.
This changed the composition of student body, the applicant pool and influenced what other universities did. It was a really great thing.
Read 14 tweets
27 Apr
My conversation with @HarvardHBS Prof. Robin Greenwood on public health, economic policy, politics, financial markets and what the crisis means to higher education. Watch here: hbs.edu/mba/blog/post/…
These events are not a huge surprise. As President of @Harvard, I said global health should be a priority b/ two of most important things to happen in 21st century were the rise of developing world & the century of biology. Those two things come together @ global health issues.
It’s mostly not our policy that is reducing the performance of the economy, it’s the disease itself. You can open the economy all you want but not many people are going go shopping when they think 10 percent of their neighbors have a potentially fatal, contagious disease.
Read 12 tweets
15 Apr
National governments have gone big. The IMF and World Bank need to do the same. My column with Gordon Brown in today's @washingtonpost
As @federalreserve & other central banks have expanded their balance sheets in previously unimaginable ways, the international community needs to do Mario Draghi’s famous phrase "whatever it takes" to maintain functioning global financial system. Here are 3 ways to do it.
First, the IMF, World Bank and regional development banks need to be as aggressive as the world’s central banks in expanding their lending. This means recognizing both that the current near-zero interest rate environment makes it possible to use more leverage.
Read 6 tweets
11 Apr
.@USTreasury Secretary @stevenmnuchin1 insistence that America’s major airlines partially repay taxpayer funds aimed at shoring up the industry has set up a clash between the Trump administration and the carriers bloomberg.com/news/articles/… via @bpolitics
If airline industry wants no payback to government, let them try their luck with other funders. If airline execs were not complaining, we could be sure the terms were too generous.
Airlines running of their business on a high leverage, low cash reserve basis was a strategic choice which for years worked great for their shareholders. Now it hasn’t. Too bad. Not a rationale for a bailout.
Read 8 tweets

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