Integrating macroeconomic and public health impacts in social planning policies for pandemic response

Ofer Cornfeld, Kaicheng Niu, Oded Neeman, Michael Roswell, Gabi Steinbach, Stephen J. Beckett, Yorai Wardi, Joshua S. Weitz and Eran Yashiv

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Infectious disease outbreaks with pandemic potential present challenges for mitigation and control. Policymakers must reduce disease-associated morbidity and mortality while also minimizing socioeconomic costs of interventions. At present, robust decision frameworks that integrate epidemic and macroeconomic dynamics to inform policy choices, given uncertainty in the current and future state of the outbreak and economic activity, are not widely available. In this study, we propose and analyze an economic-epidemic model to identify robust planning policies that limit epidemic impacts while maintaining economic activity. We compare alternative fixed, dynamic open-loop optimal control, and feedback control policies via a welfare loss framework. We find that open-loop policies that adjust employment dynamically while maintaining a flat epidemic curve outperform fixed employment reduction policies. However, open-loop policies are highly sensitive to misestimation of parameters associated with intrinsic disease strength and feedback between economic activity and transmission, leading to potentially significant increases in welfare loss. In contrast, feedback control policies guided by open-loop dynamical targets of the time-varying reproduction number perform near-optimally when parameters are well-estimated, while significantly outperforming open-loop policies whenever disease transmission and population-scale behavioral response parameters are misestimated – as they inevitably are. Our study provides a template for integrating principled economic models with epidemic scenarios to identify policy vulnerabilities and expand policy options in preparation for future pandemics. Across disease scenarios, we show that policies that temporarily limit economic activity and disease transmission reduce both disease-driven mortality and cumulative loss of economic activity. Our study suggests that future preparedness depends on feasible, robust, and adaptive policies and can help avoid false dichotomies in choosing between public health and economic outcomes.

Keywords: macroeconomics of epidemics; GDP loss; health outcomes; optimal and feedback control; pandemic response (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2025-12-31
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Published in Epidemics, 31, December, 2025, 53. ISSN: 1755-4365

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