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How Much Has the Pandemic Cost?

Economists measure policy options and their consequences in terms of monetary costs or GDP. But the dilemma policymakers have faced since the outset of the pandemic is fundamentally a moral one, rooted not least in the question of when individual preferences should prevail over collective interests.

HONG KONG – As the COVID-19 pandemic entered its third year, the United States was enjoying a protracted stock-market boom, and China’s global trade surplus had reached record highs. There is reason to believe these trends will not last: notably, with the US Federal Reserve set to tighten monetary policy in the face of rising inflation, the US stock market has tumbled.

But even if market ebullience or strong exports in the world’s biggest economies were to persist, most people are experiencing hardship and angst. We must not lose sight of that, let alone of the imperative of systemic change.

In responding to the pandemic, policymakers have faced an awful dilemma: keep the economy open and risk more COVID-19 deaths, or impose lockdowns and destroy livelihoods. As the Vanderbilt University economist W. Kip Viscusi points out, one way to simplify the trade-off between the benefits of reducing health risks and the costs of economic dislocations is to “monetize” COVID-19 deaths.