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Social Distancing, Vaccination and the Paradoxical Optimality of an Endemic Equilibrium

Author

Listed:
  • Andrew B. Abel
  • Stavros Panageas

Abstract

We analyze the impact of public health policy on the spread of a disease using a version of the SIR model that includes vital statistics, waning immunity, and vaccination. This model is rich enough to accommodate endemic steady states and disease-free steady states. We choose social distancing and vaccines to maximize an objective function that penalizes lost output resulting from social distancing, deaths resulting from the disease, and the cost of vaccination. Surprisingly, even though a disease-free equilibrium is attainable, optimal policy leads to an endemic steady state, though with a small number of deaths and negligible loss of output.

Suggested Citation

  • Andrew B. Abel & Stavros Panageas, 2020. "Social Distancing, Vaccination and the Paradoxical Optimality of an Endemic Equilibrium," NBER Working Papers 27742, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27742
    Note: AP EFG EH ME
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    References listed on IDEAS

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    1. Facundo Piguillem & Liyan Shi, 2022. "Optimal Covid-19 Quarantine and Testing Policies," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2534-2562.
    2. Fernando Alvarez & David Argente, 2020. "A Simple Planning Problem for COVID-19 Lockdown," Working Papers 2020-34, Becker Friedman Institute for Research In Economics.
    3. Martin S Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2021. "The Macroeconomics of Epidemics [Economic activity and the spread of viral diseases: Evidence from high frequency data]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5149-5187.
    4. Daron Acemoglu & Victor Chernozhukov & Iván Werning & Michael D. Whinston, 2021. "Optimal Targeted Lockdowns in a Multigroup SIR Model," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 487-502, December.
    5. David Berger & Kyle Herkenhoff & Chengdai Huang & Simon Mongey, 2022. "Testing and Reopening in an SEIR Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 1-21, January.
    6. Fernández-Villaverde, Jesús & Jones, Charles I., 2022. "Estimating and simulating a SIRD Model of COVID-19 for many countries, states, and cities," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    7. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(2), pages 137-150.
    8. Andrew Atkeson, 2020. "What Will be the Economic Impact of COVID-19 in the US? Rough Estimates of Disease Scenarios," Staff Report 595, Federal Reserve Bank of Minneapolis.
    9. Toxvaerd, F.M.O, 2020. "Equilibrium Social Distancing," Cambridge Working Papers in Economics 2021, Faculty of Economics, University of Cambridge.
    10. David Berger & Kyle Herkenhoff & Chengdai Huang & Simon Mongey, 2022. "Testing and Reopening in an SEIR Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 1-21, January.
    11. Robert E. Hall & Charles I. Jones & Peter J. Klenow, 2020. "Trading Off Consumption and COVID-19 Deaths," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 42(1), pages 1-14, June.
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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Health > Herd immunity

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    Cited by:

    1. Dirk Niepelt & Mart n Gonzalez-Eiras, 2020. "Optimally Controlling an Epidemic," Diskussionsschriften dp2019, Universitaet Bern, Departement Volkswirtschaft.
    2. Glover, Andrew & Heathcote, Jonathan & Krueger, Dirk, 2022. "Optimal age-Based vaccination and economic mitigation policies for the second phase of the covid-19 pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    3. Martin Eichenbaum & Miguel Godinho de Matos & Francisco Lima & Sergio Rebelo & Mathias Trabandt, 2024. "Expectations, Infections, and Economic Activity," Journal of Political Economy, University of Chicago Press, vol. 132(8), pages 2571-2611.
    4. Doerr, Sebastian & Hofmann, Boris, 2022. "Recessions and mortality: A global perspective," Economics Letters, Elsevier, vol. 220(C).
    5. Yinon Bar-On & Tatiana Baron & Ofer Cornfeld & Ron Milo & Eran Yashiv, 2020. "COVID19: Erroneous Modelling and Its Policy Implications," Discussion Papers 2030, Centre for Macroeconomics (CFM).
    6. Phelan, Thomas & Toda, Alexis Akira, 2022. "Optimal epidemic control in equilibrium with imperfect testing and enforcement," Journal of Economic Theory, Elsevier, vol. 206(C).
    7. Christopher Avery, 2024. "The economics of social distancing and vaccination," Review of Economic Design, Springer;Society for Economic Design, vol. 28(4), pages 781-812, December.

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    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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