Epidemic policy under uncertainty and information

Martin Forster and Emanuela Randon

Discussion Papers from Department of Economics, University of York

Abstract: We present a model of infectious disease control which incorporates uncertainty and information. A policy-maker possesses beliefs about the value of a key parameter - we choose the level of herd immunity in the population - and seeks the welfare-maximising level of intervention, accounting for both the public health benefit and economic cost. An approximation to the optimal rule shows that it accounts for interactions between beliefs, the policy-maker's attitude to risk, the production technology and costs, and the weights in the welfare function. We consider the role of information, in the form of expert opinion and scientific advice, in influencing the policy-maker's beliefs and the optimal policy. We assess the framework's potential for advancing the economic modelling of epidemic control.

Keywords: Economics; Epidemics; COVID-19 (search for similar items in EconPapers)
JEL-codes: H12 H51 I18 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-hea
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