Working Paper: NBER ID: w28932
Authors: Alberto Bisin; Andrea Moro
Abstract: We introduce a model of the diffusion of an epidemic with demographically heterogeneous agents interacting socially on a spatially structured network. Contagion-risk averse agents respond behaviorally to the diffusion of the infections by limiting their social interactions. Firms also respond by allowing employees to work remotely, depending on their productivity. The spatial structure induces local herd immunities along sociodemographic dimensions, which significantly affect the dynamics of infections. We study several non-pharmaceutical interventions; e.g., i) lockdown rules, which set thresholds on the spread of the infection for the closing and reopening of economic activities; and ii) selective lockdowns, which restrict social interactions by location (in the network) and by the demographic characteristics of the agents. Substantiating a “Lucas critique” argument, we assess the cost of naive discretionary policies ignoring agents and firms’ behavioral responses.
Keywords: Epidemic Modeling; Public Health Policy; Behavioral Responses
JEL Codes: I18; R10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lockdown timing (C41) | peak of infections (F44) |
| demographic characteristics (J21) | health outcomes (I14) |
| selective lockdowns (C24) | fatalities (J17) |
| selective lockdowns (C24) | economic costs (D61) |
| lockdown policies + behavioral responses (E71) | epidemic outcomes (I12) |