Estimated Loss to the US Economy due to COVID-19, If the Disease were to Take its Course
Here I attempt a back of the envelope estimation of the total GDP loss to the USA alone if COVID-19 is allowed to run its course without any containment measures in place.
This assumes a conservative figure (30%) of the oft-repeated range(25 – 75%) of the total incidence rate of COVID-19 if no quarantine or stay-at-home types of segregation measures are taken.
I have used the 2010 demography numbers of the US population by age and sex and used the life-expectancy table of 2010 for the US population from the US census.
Here are some broad stroke assumptions I made for this rough estimation:
1. 2010 US census age and sex distributions
2. 2010 US life expectancy distributions
3. Infection rates follow a normal distribution (this is the epidemiological standard)
4. Males and females are equally infected (though not equally affected)
5. 30% of the population are ultimately infected within 1 year (the range provided by epidemiologists are from a low of 25% to a high of 70%)
6. All age groups are equally infected (though not equally affected)
7. I have used a sliding scale of treatment weight for various age groups, assuming 100% treatment rates for all age groups, except the above 65 years, in which I assumed 80% treatment rates (an ad hoc assumption but something that is seen in Italy where the resources are saturated).
8. Used a sliding scale of death rate (0.01 – 0.035) per age group. The upper range is a low estimate. Current mean rate according to WHO is 0.045 (which is widely considered to be an over-estimate, but current >75 years age group mortality rate is ~14.8%, so I have erred in favor of an under-estimation)
Using these parameters, I have calculated the DALY lost due to COVID-19 in one year. DALY, Disability-Adjusted Life Years is an economic measure used to estimate the loss to the economy due to a particular health issue.
DALY = Number of cases x disease duration x Disability weight + YLL
Here, the number of cases was estimated according to the assumptions stated above; disease duration was assumed to be 2 weeks for below 65 years and 3 months for >65 years; disability weight was 0 for all age groups except for 65+ yeas which on average was assumed to be 20%.
YLL is more complex, and is automatically calculated by the R-package “DALY” within R, and is defined below (ref: https://www.ncbi.nlm.nih.gov/pubmed/23927817)
Below is a snapshot of the input data:
And below is the resulting distribution of DALY estimated with the above parameters:
The mean value of DALY loss turns out to be: 41,056,030 years. This is the estimated mean loss of DALY to the economy due to COVID-19.
To translate that to the loss to the economy, we will need to multiply the per capita annual GDP of the US by this number:
The total estimated loss to GDP in one year due to COVID-19 if no specific additional measures to minimize the natural course of COVID-19 were in place
= 41,056,030 years x (per capita GDP of 2019) per year
= 41,056,030 x $65,116
= $2.67 x 1012
=$2.67 Trillion
Assuming again the US GDP of 2019, this means ~13% expected drop in GDP in 2020 relative to the previous year's GDP.
