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Epidemic responses under uncertainty

Author

Listed:
  • Michael Barnett

    (a W. P. Carey School of Business, Arizona State University , Tempe , AZ 85287)

  • Greg Buchak

    (b Stanford University Graduate School of Business , Stanford , CA 94305)

  • Constantine Yannelis

    (c University of Chicago Booth School of Business , Chicago , IL 60637)

Abstract

We examine how policymakers react to a pandemic with uncertainty around key epidemiological and economic policy parameters by embedding a macroeconomic SIR model in a robust control framework. Uncertainty about disease virulence and severity leads to stricter and more persistent quarantines, while uncertainty about the economic costs of mitigation leads to less stringent quarantines. On net, an uncertainty-averse planner adopts stronger mitigation measures. Intuitively, the cost of underestimating the pandemic is out-of-control growth and permanent loss of life, while the cost of underestimating the economic consequences of quarantine is more transitory.

Suggested Citation

  • Michael Barnett & Greg Buchak & Constantine Yannelis, 2023. "Epidemic responses under uncertainty," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 120(2), pages 2208111120-, January.
    • Handle: RePEc:nas:journl:v:120:y:2023:p:e2208111120
    DOI: 10.1073/pnas.2208111120
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    Cited by:

    1. Yao, Yanming & Luo, Pengfei, 2023. "Optimal capital structure and credit spreads under pandemic shocks," Economics Letters, Elsevier, vol. 224(C).
    2. Shin-ichi Fukuda, 2022. "Self-fulfilling Lockdowns in a Simple SIR-Macro Model," CIRJE F-Series CIRJE-F-1183, CIRJE, Faculty of Economics, University of Tokyo.
    3. Ministry of Finance, 2021. "Saving Lives and Livelihoods 01 Amidst a Once-in-a-Century Crisis: Chapter I, Economic Survey 2020-21," Working Papers id:13133, eSocialSciences.
    4. Quentin Batista & Masakazu Emoto & Naoki Maezono & Taisuke Nakata, 2026. "Optimal Lockdown Policy with Virus Mutation," CARF F-Series CARF-F-618, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    5. Barrios, John M. & Hochberg, Yael V., 2021. "Risk perceptions and politics: Evidence from the COVID-19 pandemic," Journal of Financial Economics, Elsevier, vol. 142(2), pages 862-879.
    6. Boucekkine, Raouf & Chakraborty, Shankha & Goenka, Aditya & Liu, Lin, 2024. "Economic epidemiological modelling: A progress report," Journal of Mathematical Economics, Elsevier, vol. 113(C).
    7. Etienne Farvaque & Hira Iqbal & Nicolas Ooghe, 2020. "Health politics? Determinants of US states’ reactions to COVID-19," Post-Print hal-03128875, HAL.
    8. Quentin Batista & Masakazu Emoto & Naoki Maezono & Taisuke Nakata, 2026. "Optimal Lockdown Policy with Virus Mutation," Working Papers e221, Tokyo Center for Economic Research.

    More about this item

    Keywords

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    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • H0 - Public Economics - - General
    • I1 - Health, Education, and Welfare - - Health

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