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Trump’s Implicit Valuation of Life: Back of Envelope Calculations from the Pandemic Response

Summary:
According to researchers at Columbia University, implementation of shelter-in-place/social distance measures one week earlier would’ve saved 36,000 lives. Given the GDP that was generated in that one week, this implies Trump’s implicit valuation of one life is .16 million (compared to typical Value of Statistical Life of about million). Here are the calculations: 2019Q4 GDP was 417.9 billion/week (= 729 billion SAAR/52 weeks) If GDP in shutdown is 10% reduced (which is implied by estimates of 2020Q2 reduction of about 40% relative to 2019Q4), that means a .8 billion loss. Pei, Shandula and Kaman (2020)  estimate 36,000 lives could’ve been saved by implementing lockdown measures one week earlier. Dividing .8 billion by 36,000 lives yields an implicit valuation of .16

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According to researchers at Columbia University, implementation of shelter-in-place/social distance measures one week earlier would’ve saved 36,000 lives. Given the GDP that was generated in that one week, this implies Trump’s implicit valuation of one life is $1.16 million (compared to typical Value of Statistical Life of about $11 million).

Here are the calculations:

2019Q4 GDP was 417.9 billion/week (= $21729 billion SAAR/52 weeks)

If GDP in shutdown is 10% reduced (which is implied by estimates of 2020Q2 reduction of about 40% relative to 2019Q4), that means a $41.8 billion loss.

Pei, Shandula and Kaman (2020)  estimate 36,000 lives could’ve been saved by implementing lockdown measures one week earlier.

Dividing $41.8 billion by 36,000 lives yields an implicit valuation of $1.16 milion/life.

This compares against 10.1 million 2015$ in median Value of Statistical Life (VSL) reported by Kniesner and Viscusi (2019) in their Oxford Research Encyclopedia of Economics and Finance entry. Adjusting to current dollars yields a VSL of about $11 million.

In other words, Trump’s implied valuation of a typical life sacrificed by not implementing non-pharmaceutical interventions is approximately one-tenth of the value used in some standard benefit-cost calculations.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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