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

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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