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Economic Activity and the Value of Medical Innovation during a Pandemic

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  • Mulligan, Casey B.

Abstract

The “shutdown” economy of April 2020 is compared to a normally functioning economy both in terms of market and nonmarket activities. Three novel methods and data indicate that a full shutdown of “nonessential” activities puts market production about 25 % below normal in the short run. At an annual rate, a full shutdown costs $9 trillion, or about $18,000 per household per quarter. Employment already fell 24 million by early April 2020. These costs indicate, among other things, the value of innovation in both health and general business sectors that can accelerate the time when, and the degree to which, normal activity resumes.

Suggested Citation

  • Mulligan, Casey B., 2021. "Economic Activity and the Value of Medical Innovation during a Pandemic," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 12(3), pages 420-440, October.
    • Handle: RePEc:cup:jbcoan:v:12:y:2021:i:3:p:420-440_2
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    Cited by:

    1. Chen, Zhuo & Li, Pengfei & Liao, Li & Liu, Lu & Wang, Zhengwei, 2024. "Assessing and addressing the coronavirus-induced economic crisis: Evidence from 1.5 billion sales invoices," China Economic Review, Elsevier, vol. 85(C).
    2. Daniel Hernán Sánchez Pazmiño, 2022. "Immunizing the Economy: A Causality Discussion on Vaccines and Economic Recovery," X-pedientes_Economicos, X-pedientes Económicos, vol. 6(14), pages 65-82.
    3. John R. Birge & Ozan Candogan & Yiding Feng, 2022. "Controlling Epidemic Spread: Reducing Economic Losses with Targeted Closures," Management Science, INFORMS, vol. 68(5), pages 3175-3195, May.
    4. Casey B. Mulligan, 2021. "Peltzman Revisited: Quantifying 21st Century Opportunity Costs of FDA Regulation," NBER Working Papers 29574, National Bureau of Economic Research, Inc.

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