Published: Robert E. Hall & Charles I. Jones & Peter J. Kleneow, 2020. "Trading Off Consumption and COVID-19 Deaths," Quarterly Review, vol 42(1).
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%.