An Analytical Model of Covid-19 Lockdowns

This paper develops an analytical framework for studying risk mitigation behaviors and policies during an epidemic. The analytics uncover two novel insights. First, individual precautionary behavior dramatically flattens the epidemic curve, so much so that the infection externality leads to too much, not too little, social distancing in equilibrium. Second, the optimal policy does not flatten the curve per se; instead it avoids the second wave of infections and prevents the epidemic overshoot, minimizing cumulative deaths. The optimal policy is almost entirely independent of the economic parameters such as the value of statistical life.