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Caveats for Economists: Epidemiology-Based Modelling of COVID19 and Model Misspecifications

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  • Yashiv, Eran
  • Bar-On, Yinon
  • Baron, Tatiana
  • Milo, Ron

Abstract

Rapidly expanding research on COVID19 in Economics typically posits an economy subject to a model of epidemiological dynamics, which is at the core of the analysis. We place this model on the foundations of an epidemiological analysis of the SARS-CoV-2 virus transmission timescales. The contribution is twofold. First, we formulate a full model with epidemiologically-based and clinically-based parameterization. The model features two blocks: an infection transmission block, described by the SEIR-Erlang model, and a clinical block, characterizing the development of symptoms, hospitalization, ICU admission, and recovery or death. The latter is important for the analysis of dynamics of the public health system. Second, we show that there is often serious mis-specification of the model, erroneously characterizing a relatively slow-moving disease, thereby distorting the policymaker decisions towards less severe, delayed intervention. Moreover, the scale of the disease is under-estimated. We also discuss misguided modelling of lockdown policies.

Suggested Citation

  • Yashiv, Eran & Bar-On, Yinon & Baron, Tatiana & Milo, Ron, 2020. "Caveats for Economists: Epidemiology-Based Modelling of COVID19 and Model Misspecifications," CEPR Discussion Papers 15107, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15107
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    References listed on IDEAS

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    More about this item

    Keywords

    The economy and epidemiological dynamics; Covid19; Transmission timescales; Optimal policy;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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