Wharton Finance Faculty Research
The Effectiveness of Life-Preserving Investments in Times of COVID-19
Jules H. van Binsbergen, Christian C. Opp
Wharton working paper
- This paper examines investments in mitigation efforts for two diseases, COVID-19 and influenza.
- There are always trade-offs involved when investing limited resources to combat life hazards. Generally speaking, doing everything possible to mitigate one life hazard (such as COVID-19) is sub-optimal, as it can leave mitigation efforts for other hazards (such as influenza) under-resourced.
- Using population data from the Census, and life expectancy and mortality data from the CDC, the authors examine the 2017-2018 flu season, and calculate the influenza death rate by age group and the number of life-years lost to that disease for each age cohort. The authors find that in 2017, there were 643,000 life-years lost to influenza.
- The authors then look at the flu vaccine. They calculate an average flu vaccine effectiveness rate of 40%, and then determine the reduction in life-years lost, if the U.S. had universal vaccination, as opposed to its actual vaccination rate of around 50%. In 2017, approximately 156,300 life-years could have been saved by vaccinating the entire U.S. population. On average, the study finds that annually in the U.S., 433,000 life years have been lost to influenza, and on average, 106,000 of those life-years could have been saved by mandatory vaccination.
- Based on the price of the flu vaccine, the research suggests that implementing a policy of mandatory influenza vaccination would cost $36,607 for each life-year thus gained by mitigating the spread of the disease.
- The authors conduct a similar analysis for COVID-19, comparing the current mitigation scenario with a scenario where there are no mitigation efforts. They calculate that current mitigation investments will save 31 billion life-years this year, at an estimated cost (in terms of lost GDP growth) of $1.3 trillion. The average cost for each year of life gained from COVID-19 mitigation therefore comes to $42,730.
- Given the projections for current COVID-19 mitigation costs, the analysis suggests that universal flu vaccination would be a worthwhile and effective life-preserving investment.
- The issue of equalizing investments in COVID-19 and influenza mitigation will become especially relevant if, as some experts predict, there is a “second wave” of COVID-19 outbreaks later in the year, as the flu season is beginning.