C19 Health Economics Literature

The Scandinavian countries of Denmark, Iceland, Norway and Sweden have approached the first months of the 2020 novel coronavirus pandemic with a range of economic and health policies that have resulted in disparate outcomes. Though similar in behavioral norms and institutions, Denmark, Iceland and Norway chose a precautionary approach that formally shut down schools and businesses to protect human health, while Sweden took a Business-As-Usual (BAU) approach aimed at maintaining normal economic and social activities. Iceland and Denmark have further invested in testing, tracking and containing the disease. Economic costs of the pandemic and government fiscal and monetary interventions to reduce their impacts have been dramatic and similar across countries, while Sweden has had the most severe loss of life. Using a panel from the four countries since the beginning of the pandemic, we...

Managing the COVID-19 effectively requires a series of mitigating steps that change over time as function of external conditions and previous mitigating steps. Modeling this effectively requires a multi-disciplinary integrative approach that combines epidemiological, economic and social considerations within a unified modeling environment. Our research focuses on incorporating elements from classical utility theory in combination with control theory and machine learning to better model the dynamics of the non-linear trade-offs inherent in managing the pandemic. We postulate a theoretical formulation on how these tradeoffs can be modeled, and demonstrate empirical results to elucidate the limiting factors in finding efficient solutions.

This study analyzes the benefits of statewide policy intervention in reducing COVID-19 deaths and the costs of that intervention in lost jobs and lower real gross state product (RGSP). Policy interventions are measured by the Oxford stringency index which places a daily numerical value on the level of a state’s policy intervention. Empirical evidence is provided that shows policy interventions have reduced COVID-19 deaths in the U.S. by 358,000 lives in 2020. On the cost side, it was found that policy intervention resulted in a loss of 7.3 million jobs and a decline of $410 billion in RGSP. The study concludes by integrating the findings related to the benefits and costs of policy interventions to the economic cost per life saved for every state, as well as an estimate of the national average cost per life of $1.1 million. That figure is compared to an age-adjusted value of...

The COVID-19 crisis has the potential to turn into the biggest emerging market (EM) crisis since 1980s. We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model to Turkey. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and sectoral demand shocks with credit card purchases. Both shocks are also affected from changing infection rates under different lockdown scenarios. Our results show that the optimal policy, which yields the lowest economic cost and saves the maximum number of lives, can be achieved under a full lockdown. Being an open economy amplifies the economic costs through two main channels. First, the demand shock has domestic and external components. Second, the initial shock is magnified due to domestic and international input-output linkages. The policy options are limited...

We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently experienced by the US optimally triggers a reduction in economic activity by two thirds, for about 50 days, or approximately 9.5 percent of annual GDP.

The outbreak of the Coronavirus Disease 2019 (COVID-19) is inevitably affecting remittance-dependent countries through economic downturns in the destination countries, and restrictions on travel and sending remittances to their home country. This paper explores the potential impacts of the COVID-19 pandemic on the welfare of remittance-dependent households using a dataset collected in heavily remittance-dependent regions in the Philippines prior to the outbreak. First, the empirical model pins down the relationship between the macroeconomic performance of the destination countries, the amount of remittances, and the welfare of households. Second, we use the difference in the IMF’s forecasts for the 2020 GDP before and after the COVID-19 crisis to project potential impacts on households caused by the COVID-19 pandemic. Our projection shows that remittance inflow will decrease by...

Effects of the COVID-19 shocks in the Japanese labor market vary across people of different age groups, genders, employment types, education levels, occupations, and industries. We document heterogeneous changes in employment and earnings in response to the COVID-19 shocks, observed in various data sources during the initial months after onset of the pandemic in Japan. We then feed these shocks into a life-cycle model of heterogeneous agents to quantify welfare consequences of the COVID-19 shocks. In each dimension of the heterogeneity, the shocks are amplified for those who earned less prior to the crisis. Contingent workers are hit harder than regular workers, younger workers than older workers, females than males, and workers engaged in social and non-flexible jobs than those in ordinary and flexible jobs. The most severely hurt by the COVID-19 shocks has been a group of female,...

On March 24, 2020, India’s Prime Minister announced the world’s largest COVID-19 lockdown, bringing to a near-halt the economic and social lives of more than one billion Indian residents. This paper quantifies the economic impacts and behavioral changes induced by this unprecedented policy using two unique data sources: Facebook mobility data and a representative sample of previously surveyed low income Delhi households. Compliance with the lockdown was widespread: intra-city movement declined by 80% following the announcement. The economic consequences have been accordingly severe, with income and days worked falling by 86 and 72% respectively. Nevertheless, observance of public health directives was high: mask usage rose by 73 percentage points and handwashing became nearly universal, while time spent outdoors and smoking both declined. We also show how government-provided social...

This paper estimates the benefits and costs of state suppression policies to “bend the curve” during the initial outbreak of COVID-19 in the United States. We employ a value-of-production approach that values benefits and costs in terms of additions or subtractions to total production. Relative to a baseline in which only the infected and at-risk populations mitigate the spread of coronavirus, we estimate that total benefits of suppression policies are between $605.9 billion and $841.1 billion from early March 2020 to August 1, 2020. Relative to private mitigation, the costs of suppression policies are estimated to be between $214.2 billion and $331.5 billion. The cost estimate is based on the duration of nonessential business closures and stay-at-home orders, which were enforced between 42 and 65 days. Our results indicate that the net benefits of suppression policies to slow...

We analyze the externalities that arise when social and economic interactions transmit infectious diseases such as COVID-19. Individually rational agents do not internalize that they impose infection externalities upon others when the disease is transmitted. In an SIR model calibrated to capture the main features of COVID-19 in the US economy, we show that private agents perceive the cost an additional infection to be around $80k whereas the social cost including infection externalities is more than three times higher, around $286k. This misvaluation has stark implications for how society ultimately overcomes the disease: for a population of individually rational agents, the precautionary behavior by the susceptible flattens the curve of infections, but the disease is not overcome until herd immunity is acquired. The resulting economic cost is high; an initial sharp decline in...