Shaun P. Hargreaves Heap, Christel Koop, Konstantinos Matakos, Asli Unan, Nina Weber, 06 June 2020

The behavioural interventions to control the spread of COVID-19 present trade-offs between health and wealth. To be successful, an understanding of how the public currently values lives over economic loss is needed. A survey experiment in the US and UK finds that people highly prioritise saving lives, but this valuation will change as economic losses mount. Individual differences in valuation also predict individual compliance with COVID-19 policies, and information on COVID-19 deaths and income losses can affect valuations. Caution in relaxing the lockdown will help build public support and mitigate polarising effects and, through increasing compliance, improve its economic efficacy.

Luís Santos-Pinto, José Mata, 22 May 2020

Increasing and recurring pleas to return to normality in order to avoid the economic costs of a lockdown rely on the idea that ‘natural’ herd immunity may be achieved by letting Covid-19 spread without measures to contain it. This column discusses key uncertainties associated with Covid-19 and argues that there are substantial benefits in keeping the lockdown in place in order to first learn more about Covid-19 and then decide on the best strategy. This logic is based on option theory which shows that when a strategy has irreversible consequences and there are important uncertainties, there is substantial value in waiting.

Guillaume Chapelle, 20 May 2020

Non-pharmaceutical interventions such as school closures and social distancing were implemented in the US against the spread of the 1918 influenza pandemic. This column explores the effect of these interventions on economic activity and death rates in US cities during and after 1918. The policies lowered the fatality rate during the peak of the pandemic but are associated with a significant rise in the death rate in subsequent years, possibly through reducing herd immunity. Their impact, positive or negative, on the growth of the manufacturing sector in US cities remains an open question.

Zachary Bethune, Anton Korinek, 03 May 2020

At the centre of the debate on how to deal with the novel coronavirus is whether to aim for containment or herd immunity. A crucial factor in this decision is whether we are guided by individually optimising behaviour or by overall societal welfare, since COVID-19 gives rise to substantial externalities. This column calculates that while individuals perceive the cost of becoming infected to be $80,000 the true social cost is more than three times higher, and argues that public health authorities should use mandatory measures to account for these externalities. To ameliorate the costs of the trade-off, it is crucial to develop sufficient testing and tracing capacity so that untargeted lockdowns and the economic cost involved can be ended. 

Alexis Akira Toda, 21 April 2020

The COVID-19 epidemic will not end until populations acquire herd immunity either because a vaccine is developed or a sufficiently large share of the population has been infected and recovered. This column argues that the draconian mitigation measures currently taken by many governments may be suboptimal because they prevent the building of herd immunity while incurring significant economic costs. A more targeted approach, such as that of Sweden or ‘optimally delayed mitigation’, may be preferable.


CEPR Policy Research