An Economic Model of Health-vs-Wealth Prioritization During COVID-19: Optimal Lockdown, Network Centrality, and Segregation
Roland Pongou (),
Guy Tchuente () and
Jean-Baptiste Tondji ()
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Roland Pongou: Department of Economics, University of Ottawa, Ottawa, ON
Jean-Baptiste Tondji: Dept. of Economics and Finance, The University of Texas Rio Grande Valley
Working Papers from University of Ottawa, Department of Economics
We address the problem of finding the optimal lockdown and reopening policy during a pandemic like COVID-19 for a social planner who prioritizes health over short-term wealth accumulation. Agents are connected through a fuzzy network of contacts. The planner's objective is to determine the policy that contains the spread of infection below a tolerable incidence level, which maximizes the present discounted value of real income, in that order of priority. We show theoretically that the planner's problem has a unique solution. The optimal policy depends both on the configuration of the contact network and the tolerated infection incidence. Using simulations, we apply these theoretical findings to: (i) quantify the tradeoff between the economical cost of the pandemic and the infection incidence allowed by the social planner and show how this tradeoff depends on network configuration; (ii) evaluate the correlation between different measures of network centrality and individual lockdown probability, and derive implications for the optimal design of surveys on social distancing behavior and network structure; and (iii) analyze how segregation induces differential health and economic dynamics in minority and majority populations, also illustrating the crucial role of patient zero in these dynamics.
Keywords: COVID-19; health-vs-wealth prioritization; economic cost; fuzzy networks; network centrality; segregation; patient zero; optimally targeted lockdown policy. (search for similar items in EconPapers)
Pages: 98 pages
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Working Paper: An Economic Model of Health-vs-Wealth Prioritization During COVID-19: Optimal Lockdown, Network Centrality, and Segregation (2020)
Working Paper: An Economic Model of Health-vs-Wealth Prioritization during Covid-19: Optimal Lockdown, Network Centrality, and Segregation (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ott:wpaper:2009e
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