Working Paper: CEPR ID: DP14664
Authors: Andrea Ichino; Carlo A. Favero; Aldo Rustichini
Abstract: We provide, calibrate and test a realistic model of the spread of SARS-Cov-2 in an economy with different risks related to age and sectors. The model considers hospital congestion and response of individuals adjusting their behavior to the virus’ spread. We measure precisely the size of these effects using real data for Italy on intensive care capacity and mobility decisions; thus our claim is that the tradeoffs we estimate are quantitatively, rather than qualitatively, approximately correct.We characterize the policies of containment of the epidemic that are efficient with respect to number of fatalities and GDP loss. Prudent policies of gradual return to work may save many lives with limited economic costs, as long as they differentiate by age group and risk sector. More careful behavior of individuals induced by the perceived cost of infection may contribute to further reduce fatalities.
Keywords: COVID-19; SEIR model; post-lockdown policies
JEL Codes: I12; I18; D6; H84
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Containment policies (E65) | fatalities (J17) |
| Containment policies (E65) | GDP loss (F69) |
| Prudent policies of gradual return to work (J08) | fatalities (J17) |
| Differentiating policies by age group and risk sector (G52) | fatalities (J17) |
| Differentiating policies by age group and risk sector (G52) | GDP loss (F69) |
| Return of younger and low-risk sector workers (J26) | fatalities (J17) |
| Individual behavioral adjustments (D91) | tradeoff between saved lives and economic costs (J17) |
| Stable behavioral responses (D91) | causal claims certainty (D81) |