Cost-benefit analysis of age-specific deconfinement strategies

Abstract

I calibrate a Multi-Risk SIR model on the covid pandemic to analyze the impact of the age-specific confinement and PCR testing policies on incomes and mortality. Two polar strategies emerge as potentially optimal. The suppression policy would crush the curve by confining 90% of the population for 4 months to eradicate the virus. The flattenthe-curve policy would reduce the confinement to 30% of the population for 5 months, followed by almost one year of free circulation of the virus to attain herd immunity without overwhelming hospitals. Both strategies yield a total cost of around 15% of annual GDP when combining the economic cost of confinement with the value of lives lost. I show that hesitating between the two strategies can have a huge societal cost, in particular if the suppression policy is stopped too early. Because seniors are much more vulnerable, a simple recommendation emerges to shelter them as one deconfines young and middleaged people in order to build our collective herd immunity. By doing so, one reduces the death toll of the pandemic together with the economic cost of the confinement, and the total cost is divided by a factor 2. I also show that expanding the mass testing capacity to screen people sent back to work has a large benefit under various scenarios. This analysis is highly dependent upon deeply uncertain epidemiologic, sociological, economic and ethical parameters.

Keywords

Replaced by

Christian Gollier, “Cost–benefit analysis of age‐specific deconfinement strategies”, Journal of Public Economic Theory, vol. 22, n. 6, December 2020, pp. 1746–1771.

Reference

Christian Gollier, “Cost-benefit analysis of age-specific deconfinement strategies”, Covid Economics, n. 24, June 2020, pp. 1–31.