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October 12, 2020

The COVID-19 Pandemic and the $16 Trillion Virus

Author Affiliations
  • 1Department of Economics, Harvard University, Cambridge, Massachusetts
  • 2Harvard Kennedy School, Cambridge, Massachusetts
JAMA. 2020;324(15):1495-1496. doi:10.1001/jama.2020.19759
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The SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) pandemic is the greatest threat to prosperity and well-being the US has encountered since the Great Depression. This Viewpoint aggregates mortality, morbidity, mental health conditions, and direct economic losses to estimate the total cost of the pandemic in the US on the optimistic assumption that it will be substantially contained by the fall of 2021. These costs far exceed those associated with conventional recessions and the Iraq War, and are similar to those associated with global climate change. However, increased investment in testing and contact tracing could have economic benefits that are at least 30 times greater than the estimated costs of the investment in these approaches.

Since the onset of coronavirus disease 2019 (COVID-19) in March, 60 million claims have been filed for unemployment insurance. Before COVID-19, the greatest number of weekly new unemployment insurance claims (based on data from 1967 on) was 695 000 in the week of October 2, 1982. For 20 weeks beginning in late March 2020, new unemployment claims exceeded 1 million per week; as of September 20, new claims have been just below that amount.

Recessions feed on themselves. Workers not at work have less to spend, and thus subsequent business revenue declines. The federal government offset much of the initial loss owing to the shutdown, which has averted what would likely have been a new Great Depression. But the virus is ongoing, and thus full recovery is not expected until well into the future. The Congressional Budget Office projects a total of $7.6 trillion in lost output during the next decade.1

Lower output is not the only economic cost of COVID-19; death and reduced quality of life also can be measured in economic terms. To date, approximately 200 000 deaths have been directly attributable to COVID-19; many more will doubtless occur. In the US, approximately 5000 COVID-19 deaths are occurring per week and the estimated effective reproduction number (Rt [ie, the average number of people who become infected by a person with SARS-CoV-2 infection]) is approximately 1. If these rates continue, another 250 000 deaths can be expected in the next year. Seasonal factors could increase mortality, although whether COVID-19 will display a large seasonal pattern is unknown. In addition to COVID-19 deaths, studies suggest increased deaths from other causes, amounting to almost 40% of COVID-19–related deaths. Thus, if the current trajectories continue, an estimated 625 000 cumulative deaths associated with the pandemic will occur through next year in the US.

Although putting a value on a given human life is impossible, economists have developed the technique of valuing “statistical lives”; that is, measuring how much it is worth to people to reduce their risk of mortality or morbidity. This approach has been used as a standard in US regulatory policy and in discussions of global health policy.2

There is a lengthy economic literature assessing the value of a statistical life; for example, in environmental and health regulation. Although no single number is universally accepted, ranges are often used. In environmental and health policy,3 for example, a statistical life is assumed to be worth $10 million. With a more conservative value of $7 million per life, the economic cost of premature deaths expected through the next year is estimated at $4.4 trillion.

Some individuals who survive COVID-19 are likely to have significant long-term complications, including respiratory, cardiac, and mental health disorders, and may have an increased risk of premature death. Data from survivors of COVID-19 suggest that long-term impairment occurs for approximately one-third of survivors with severe or critical disease.4 Because there are approximately 7 times as many survivors from severe or critical COVID-19 disease as there are COVID-19 deaths, long-term impairment might affect more than twice as many people as the number of people who die.

Given the predominance of respiratory complications among COVID-19 survivors, affected individuals may be like those with moderate chronic obstructive pulmonary disease, which has been estimated to have a quality-of-life disutility of approximately −0.25 to −0.35. Assuming a total reduction in quality-adjusted life expectancy, including length as well as quality of life, of 35% and taking into consideration the assumed value of a year of life yields an estimated loss from long-term complications of $2.6 trillion for cases forecast through the next year.

Even individuals who do not develop COVID-19 are affected by the virus. Loss of life among friends and loved ones, fear of contracting the virus, concern about economic security, and the effects of isolation and loneliness have all taken a toll on the mental health of the population. The proportion of US adults who report symptoms of depression or anxiety has averaged approximately 40% since April 2020; the comparable figure in early 2019 was 11.0%.5 These data translate to an estimated 80 million additional individuals with these mental health conditions related to COVID-19. If, in line with prevailing estimates, the cost of these conditions is valued at about $20 000 per person per year and the mental health symptoms last for only 1 year, the valuation of these losses could reach approximately $1.6 trillion.

The estimated cumulative financial costs of the COVID-19 pandemic related to the lost output and health reduction are shown in the Table. The total cost is estimated at more than $16 trillion, or approximately 90% of the annual gross domestic product of the US. For a family of 4, the estimated loss would be nearly $200 000. Approximately half of this amount is the lost income from the COVID-19–induced recession; the remainder is the economic effects of shorter and less healthy life.

Table.  Estimated Economic Cost of the COVID-19 Crisis
Estimated Economic Cost of the COVID-19 Crisis

Output losses of this magnitude are immense. The lost output in the Great Recession was only one-quarter as large. The economic loss is more than twice the total monetary outlay for all the wars the US has fought since September 11, 2001, including those in Afghanistan, Iraq, and Syria.6 By another metric, this cost is approximately the estimate of damages (such as from decreased agricultural productivity and more frequent severe weather events) from 50 years of climate change.7

For this reason, policies that can materially reduce the spread of SARS-CoV-2 have enormous social value. Consider a policy of wide-scale population testing, contact tracing, and isolation. For example, assuming 100 000 individuals are tested, the cost of testing would be approximately $6 million. According to current values for SARS-CoV-2 prevalence in some areas, approximately 5000 people will test positive.

Many infections could be prevented by this approach. Not every person who tests positive for SARS-CoV-2 is infectious; perhaps 20% of people who test positive are sufficiently late in the course of infection that transmission probabilities are low.8 In addition, approximately 25% of people who test positive would likely not quarantine.9 However, given an Rt of about 1, reducing transmission by 45% could lead to approximately 2750 fewer positive cases. This could prevent about 14 deaths (estimated value ≈ $96 million) and about 33 critical and severe cases (estimated value ≈ $80 million). These subsequent cases not occurring could ultimately lead to even fewer cases, but even ignoring that, the projected economic return from the test and trace strategy is approximately 30 times the cost (ie, investment of approximately $6 million leads to averted costs of an estimated $176 million).

The Rockefeller Foundation estimates that a policy of 30 million tests weekly would require an additional $75 billion in spending during the next year10; adding the cost of contact tracing might bring the total to approximately $100 billion.

Congress is currently discussing whether to provide economic support to mitigate the economic damage caused by COVID with legislation following up on the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The highest-return investments that should be included in such legislation are increased testing and contact tracing. A minimum of 5% of any COVID economic relief intervention should be devoted to such health measures.

More generally, the immense financial loss from COVID-19 suggests a fundamental rethinking of government’s role in pandemic preparation. Currently, the US prioritizes spending on acute treatment, with far less spending on public health services and infrastructure. As the nation struggles to recover from COVID-19, investments that are made in testing, contact tracing, and isolation should be established permanently and not dismantled when the concerns about COVID-19 begin to recede.

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Article Information

Corresponding Author: David M. Cutler, PhD, Department of Economics, Harvard University, 1805 Cambridge St, Cambridge, MA 02138 (dcutler@fas.harvard.edu).

Published Online: October 12, 2020. doi:10.1001/jama.2020.19759

Conflict of Interest Disclosures: Dr Cutler reports receiving fees from serving as an expert witness for opioid and vaping litigation, personal fees for article preparation from the Brookings Institution, and research support from the Pharmaceutical Research and Manufacturers of America outside the submitted work. He is also a commissioner of the Health Policy Commission in Massachusetts. Dr Summers reports receiving personal fees from various financial institutions outside the submitted work and personal fees for article preparation from the Brookings Institution.

Funding/Support: This work was funded by the National Institute on Aging under award P01AG005842.

Role of the Funder/Sponsor: The National Institute on Aging had no role in the preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Additional Information: More information on the calculations is available at http://scholar.harvard.edu/cutler.

Congressional Budget Office. An Update to the Economic Outlook: 2020 to 2030. Congressional Budget Office; 2020.
Jameson  D, Summers  L, Alleyne  G,  et al  Global health 2035: a world converging in a generation.   Lancet. 2013;382:1898-1955.Google ScholarCrossref
Robinson  L. COVID-19 and uncertainties in the value per statistical life. Regulatory Review. August 5, 2020.
Ahmed  H, Patel  K, Greenwood  D,  et al Long-term clinical outcomes in survivors of coronavirus outbreaks after hospitalization or ICU admission: a systematic review and meta-analysis of follow-up studies. medRxiv. Preprint posted April 22, 2020. doi:10.1101/2020.04.16.20067975
Centers for Disease Control and Prevention. Mental health: Household Pulse Survey. Accessed September 5, 2020. https://www.cdc.gov/nchs/covid19/pulse/mental-health.htm
Crawford  NC. United States budgetary costs and obligations of post-9/11 wars through FY2020: $6.4 trillion. November 13, 2019. https://watson.brown.edu/costsofwar/files/cow/imce/papers/2019/US%20Budgetary%20Costs%20of%20Wars%20November%202019.pdf
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Bilinski  A, Mostashari  F, Salomon  JA.  Modeling contact tracing strategies for COVID-19 in the context of relaxed physical distancing measures.   JAMA Netw Open. 2020;3(8):e2019217. doi:10.1001/jamanetworkopen.2020.19217PubMedGoogle Scholar
Rockefeller Foundation. National Covid-19 testing and tracing action plan. July 16, 2020. Accessed September 5, 2020. https://www.rockefellerfoundation.org/wp-content/uploads/2020/07/TheRockefellerFoundation_ExecutiveSummary_7_20.pdf
1 Comment for this article
World Economic Growth Dependent on Vaccine Development for COVID-19
Takuma Hayashi, MBBS, D.M.Sci, GMRC, PhD | National Hospital Organization Kyoto Medical Center
On October 13, 2020, the International Monetary Fund (IMF) revised its World Economic Outlook (WEO). The IMF forecasts the world economy to grow 4.4% negatively in 2020 and has revised it up 0.8 points from the world economy as of June 2020. Huge fiscal mobilization from each country has reduced the extent of the deterioration of the world economy. However, the deterioration of the world economy in 2020 is large compared to the 0.1% decrease in the world economy during the financial crisis in 2009. In the IMF report, the economic loss caused by the slowdown in world economic growth has been estimated at 28 trillion dollars over the next six years.

The world economy has returned to a recovery trajectory from the July-September period of 2020, as major countries in the world have made huge fiscal mobilizations totaling $12 trillion. Vaccines against COVID-19 are expected to become widespread in 2021, so the world economy is projected to grow by 5.2%.

In Japan, the increase in the number of people infected with SARS-CoV-2 is relatively restrained. As a result, Japan's economic growth rate in 2020 is projected to be minus 5.3%, which has been revised upward by 0.5 points from the forecast of Japan's economic growth rate as of June 2020. However, the revised economic growth rate is the same negative growth as Japan's economic growth rate of 5.4% decline immediately after the financial crisis in 2009. In 2021, Japan's economic growth rate is expected to return to a gradual recovery trajectory with a positive growth of 2.3%.

The IMF has estimated down and up scenarios for world economic growth, depending on the prevalence of vaccines against COVID-19. If the development of a vaccine against COVID-19 is delayed and it is difficult to end COVID-19, the world economic growth rate in 2021 will decrease by 3 points from the basic scenario of 5% level. If the vaccine against COVID-19 spreads faster than expected, the world economic growth rate in 2021 will increase by 0.5 points.