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A cost–benefit analysis of the COVID-19 disease

Author

Listed:
  • Robert Rowthorn
  • Jan Maciejowski

Abstract

The British government has been debating how to escape from the lockdown without provoking a resurgence of the COVID-19 disease. There is a growing recognition of the damage the lockdown has caused to economic and social life. This paper presents a simple cost–benefit analysis inspired by optimal control theory and incorporating the SIR model of disease propagation. It also reports simulations informed by the theoretical discussion. The optimal path for government intervention is computed under a variety of conditions. These include a cap on the permitted level of infection to avoid overload of the health system, and the introduction of a test and trace system. We quantify the benefits of early intervention to control the disease. We also examine how the government’s valuation of life influences the optimal path. A 10-week lockdown is only optimal if the value of life for COVID-19 victims exceeds £10m. The study is based on a standard but simple epidemiological model, and should therefore be regarded as presenting a methodological framework rather than giving policy prescriptions.

Suggested Citation

  • Robert Rowthorn & Jan Maciejowski, 2020. "A cost–benefit analysis of the COVID-19 disease," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(Supplemen), pages 38-55.
    • Handle: RePEc:oup:oxford:v:36:y:2020:i:supplement_1:p:s38-s55.
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    File URL: http://hdl.handle.net/10.1093/oxrep/graa030
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    Citations

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    Cited by:

    1. Arielle Kaim & Tuvia Gering & Amiram Moshaiov & Bruria Adini, 2021. "Deciphering the COVID-19 Health Economic Dilemma (HED): A Scoping Review," IJERPH, MDPI, vol. 18(18), pages 1-13, September.
    2. Pablo D. Fajgelbaum & Amit Khandelwal & Wookun Kim & Cristiano Mantovani & Edouard Schaal, 2021. "Optimal Lockdown in a Commuting Network," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 503-522, December.
    3. Taejong Kim & Hyosun Kim, 2022. "A “Ballpark” Assessment of Social Distancing Efficiency in the Early Stages of the COVID-19 Pandemic," IJERPH, MDPI, vol. 19(3), pages 1-10, February.
    4. Kai Fischer & J. James Reade & W. Benedikt Schmal, 2021. "The Long Shadow of an Infection: COVID-19 and Performance at Work," Economics Discussion Papers em-dp2021-17, Department of Economics, University of Reading.
    5. Callaway, Brantly & Li, Tong, 2023. "Policy evaluation during a pandemic," Journal of Econometrics, Elsevier, vol. 236(1).
    6. Krzysztof Drachal & Daniel González Cortés, 2022. "Estimation of Lockdowns’ Impact on Well-Being in Selected Countries: An Application of Novel Bayesian Methods and Google Search Queries Data," IJERPH, MDPI, vol. 20(1), pages 1-24, December.
    7. Tsai, I-Chun & Chiang, Ying-Hui & Lin, Shih-Yuan, 2022. "Effect of COVID-19 lockdowns on city-center and suburban housing markets: Evidence from Hangzhou, China," Journal of Asian Economics, Elsevier, vol. 83(C).

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