A pair of Harvard economists estimates that the coronavirus pandemic will cost the nation at least $16 trillion if it ends by next fall — timing they describe as “optimistic” — and say that a number that large justifies interventions such as a coordinated nationwide program of testing and contact tracing that would save 30 times its cost.
“It’s almost hard to understand what a number of that size means,” said David Cutler, the Otto Eckstein Professor of Applied Economics. “This is like a hurricane hitting the whole country.”
The calculations were done by Cutler and Lawrence Summers, the Charles W. Eliot University Professor and former U.S. Treasury secretary, and published in a recent issue of the Journal of the American Medical Association. Cutler said they embarked on the project in order to quantify just what is at stake economically as the pandemic grinds on and to evaluate the relative cost of interventions such as congressional bailout programs and public health steps like nationwide testing and contact tracing, which so far have not been implemented.
Cutler said the work lends numbers to what has been widely believed: that the coronavirus pandemic is among the greatest economic calamities in the nation’s modern history. The tally, Cutler said, is four times the damage done by 2008’s Great Recession, outstrips the amount spent on all the fighting — in Iraq, Afghanistan, and Syria — over the 19 years since 9/11, and, according to their analysis, “is the greatest threat to prosperity and well-being the U.S. has encountered since the Great Depression.”
While the economy has often been cited in an either/or argument about whether to take restrictive steps to fight the virus’ spread, such as lockdowns and targeted closures of bars and restaurants, Cutler said the argument that economics actually supports taking even costly steps to shorten the pandemic’s course has been drowned out. That’s because people fearful of infection won’t show up to work or spend money in shops if the virus is spreading widely in their communities.
