Or you could say “all-star economists write Covid-19 paper.” Daron Acemoglu, Victor Chernozhukov, Iván Werning, and Michael D. Whinston have a new NBER working paper. Here is part of the abstract:
For baseline parameter values for the COVID-19 pandemic applied to the US, we find that optimal policies differentially
targeting risk/age groups significantly outperform optimal uniform policies and most of the gains can be realized by having stricter lockdown policies on the oldest group. For example, for the same economic cost (24.3% decline in GDP), optimal semi–targeted or fully-targeted policies reduce mortality from 1.83% to 0.71% (thus, saving 2.7 million lives) relative to optimal uniform policies. Intuitively, a strict and long lockdown for the most vulnerable group both reduces infections and enables less strict lockdowns for the lower-risk groups.
Note the paper is much broader-ranging than that, though I won’t cover all of its points. Note this sentence:
Such network versions of the SIR model may behave very differently from a basic homogeneous-agent version of the framework.
…we find that semi-targeted policies that simply apply a strict lockdown on the oldest group can achieve the majority of the gains from fully-targeted policies.
Here is a related Twitter thread. I also take the authors’ model to imply that isolating infected individuals will yield high social returns, though that is presented in a more oblique manner.
Again, I would say we are finally making progress. One question I have is whether the age-specific lockdown in fact collapses into some other policy, once you remove paternalism as an underlying assumption. The paper focuses on deaths and gdp, not welfare per se. But what if older people wish to go gallivanting out and about? Most of the lockdown in this paper is for reasons of “protective custody,” and not because the older people are super-spreaders. Must we lock them up (down?), so that we do not feel too bad about our own private consumption and its second-order consequences? What if they ask to be released, in full knowledge of the relevant risks?