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Optimal Age-based Policies for Pandemics: An Economic Analysis of Covid-19 and Beyond

Author

Listed:
  • Luiz Brotherhood
  • Philipp Kircher
  • Cezar Santos
  • Michèle Tertilt

Abstract

This paper investigates the importance of the age composition for pandemic policy design. To do so, it introduces an economic framework with age heterogeneity, individual choice, and incomplete information, emphasizing the value of testing. Calibrating the model to the US Covid-19 pandemic reveals an 80% reduction in death toll due to voluntary actions and the lockdown implemented in the US. The optimal lockdown, however, is more stringent than what was implemented in the US. Moreover, the social planner follows an asymmetric approach by locking down the young relatively more than the old. We underscore the importance of testing, showing its impact on reduced deaths, lower economic costs and laxer lockdown. We use the framework to provide systematic insights into pandemics caused by different viruses (among others the Spanish flu), and underline the influence of economic conditions on optimal policies.

Suggested Citation

  • Luiz Brotherhood & Philipp Kircher & Cezar Santos & Michèle Tertilt, 2024. "Optimal Age-based Policies for Pandemics: An Economic Analysis of Covid-19 and Beyond," NBER Working Papers 32558, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32558
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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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