The economic burden of COVID-19 in the United States: Estimates and projections under an infection-based herd immunity approach

Objectives: To assess the economic burden of COVID-19 that would arise absent behavioral or policy responses under the herd immunity approach in the United States and compare it to the total burden that also accounts for estimates of the value of lives lost. Methods: We use the trajectories of age-specific human and physical capital in the production process to calculate output changes based on a human capital-augmented production function. We also calculate the total burden that results when including the value of lives lost as calculated from mortality rates of COVID-19 and estimates for the value of a statistical life in the United States based on studies assessing individual's willingness to pay to avoid risks. Results: Our results indicate that the GDP loss associated with unmitigated COVID-19 would amount to a cu-mulative US$1.4 trillion by 2030 assuming that 60 percent of the population is infected over three years. This is equivalent to around 7.7 percent of GDP in 2019 (in constant 2010 US$) or an average tax on yearly output of 0.6 percent. After applying the value of a statistical life to account for the value of lives lost, our analyses show that the total burden can mount to between US$17 and 94 trillion over the next decade, which is equivalent to an annual tax burden between 8 and 43 percent. Conclusion: Our results show that the United States would incur a sizeable burden if it adopted a non-interventionist herd immunity approach.