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The Full Recession: Private Versus Social Costs Of Covid‐19

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  • Juan‐Carlos Cordoba
  • Marla Ripoll
  • Siqiang Yang

Abstract

2020 official recession figures ignore the costs associated with the loss of human life due to COVID‐19. This article constructs full recession measures that consider the death toll. Our model features nonexpected utility, leisure, age‐specific survival rates, and tractable heterogeneity. We find an average full recession of 10.7%, which reflects the net value of an aggregate drop in consumption of 2.7%, an average increase of 197 leisure hours and about 540,000 lives lost in the first pandemic year. The full recession for a utilitarian planner is 14.5%, which aligns with that of individuals in their late 50s.

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  • Juan‐Carlos Cordoba & Marla Ripoll & Siqiang Yang, 2024. "The Full Recession: Private Versus Social Costs Of Covid‐19," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 547-582, February.
    • Handle: RePEc:wly:iecrev:v:65:y:2024:i:1:p:547-582
    DOI: 10.1111/iere.12667
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    6. Andrew Glover & Jonathan Heathcote & Dirk Krueger & José-Víctor Ríos-Rull, 2020. "Intergenerational Redistribution in the Great Recession," Journal of Political Economy, University of Chicago Press, vol. 128(10), pages 3730-3778.
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