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Economic Activity and the Value of Medical Innovation during a Pandemic

Published online by Cambridge University Press:  09 June 2021

Casey B. Mulligan*
Department of Economics, University of Chicago, Chicago, IL, USA.


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.

© The Author(s), 2021. Published by Cambridge University Press on behalf of the Society for Benefit-Cost Analysis

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