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An Economic Model of the COVID-19 Pandemic With Young and Old Agents: Behavior, Testing and Policies

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  • Luiz Brotherhood
  • Philipp Kircher
  • Cezar Santos
  • Michéle Tertilt

Abstract

This paper investigates the importance of the age composition in the Covid-19 pandemic. We augment a standard SIR epidemiological model with individual choices on work and non-work social distancing. Infected individuals are initially uncertain unless they are tested. We find that older individuals socially distance themselves substantially in equilibrium. Confining the old even more reduces their welfare. Confining the young extends the duration of the epidemic, with negative consequences on the old if the epidemic cannot be controlled after confinement. Testing and quarantines save lives, even if conducted just on the young, as does separation of activities by age. Combining policies can increase the welfare of both the young and the old.

Suggested Citation

  • Luiz Brotherhood & Philipp Kircher & Cezar Santos & Michéle Tertilt, 2020. "An Economic Model of the COVID-19 Pandemic With Young and Old Agents: Behavior, Testing and Policies," CRC TR 224 Discussion Paper Series crctr224_2020_175v2, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2020_175v2
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    Cited by:

    1. Birinci, Serdar & Karahan, Fatih & Mercan, Yusuf & See, Kurt, 2021. "Labor market policies during an epidemic," Journal of Public Economics, Elsevier, vol. 194(C).
    2. Glover, Andrew & Heathcote, Jonathan & Krueger, Dirk, 2022. "Optimal age-Based vaccination and economic mitigation policies for the second phase of the covid-19 pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    3. Brotherhood, Luiz & Jerbashian, Vahagn, 2023. "Firm behavior during an epidemic," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    4. Jeremy Greenwood & Nezih Guner & Karen A. Kopecky, 2022. "The Downward Spiral," NBER Working Papers 29764, National Bureau of Economic Research, Inc.
    5. Pensieroso, Luca & Sommacal, Alessandro & Spolverini, Gaia, 2023. "Intergenerational coresidence and the Covid-19 pandemic in the United States," Economics & Human Biology, Elsevier, vol. 49(C).
    6. Thomas Hellmann & Veikko Thiele, 2022. "A theory of voluntary testing and self‐isolation in an ongoing pandemic," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(5), pages 873-911, October.
    7. Josselin Thuilliez & Nouhoum Touré, 2024. "Opinions and vaccination during an epidemic," Post-Print hal-04490900, HAL.
    8. Nicola Fuchs-Schündeln & Dirk Krueger & André Kurmann & Etienne Lalé & Alexander Ludwig & Irina Popova, 2023. "The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(1), pages 35-98, March.
    9. Checo Ariadne & Grigoli Francesco & Mota Jose M., 2022. "Assessing Targeted Containment Policies to Fight COVID-19," The B.E. Journal of Macroeconomics, De Gruyter, vol. 22(1), pages 159-196, January.
    10. Lester C Hunt & Anqi Zhang & Shuonan Zhang, 2022. "Recession and Recovery of the Pandemic," Working Papers in Economics & Finance 2022-05, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    11. Stefan Pollinger, 2023. "Optimal Contact Tracing and Social Distancing Policies to Suppress A New Infectious Disease," The Economic Journal, Royal Economic Society, vol. 133(654), pages 2483-2503.
    12. Masciandaro, Donato & Goodhart, Charles & Ugolini, Stefano, 2021. "Pandemic recession and helicopter money: Venice, 1629–1631," Financial History Review, Cambridge University Press, vol. 28(3), pages 300-318, December.
    13. Glover, Andrew & Heathcote, Jonathan & Krueger, Dirk & Ríos-Rull, José-Víctor, 2023. "Health versus wealth: On the distributional effects of controlling a pandemic," Journal of Monetary Economics, Elsevier, vol. 140(C), pages 34-59.
    14. Nikhil Vellodi & Joshua Weiss, 2021. "Optimal Vaccine Policies: Spillovers and Incentives," Working Paper 21-06, Federal Reserve Bank of Richmond.
    15. Josselin Thuilliez & Nouhoum Touré, 2024. "Opinions and vaccination during an epidemic," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-04490900, HAL.
    16. Yinon Bar-On & Tatiana Baron & Ofer Cornfeld & Eran Yashiv, 2023. "When to Lock, Not Whom: Managing Epidemics Using Time-Based Restrictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 292-321, December.
    17. Matteo Bizzarri & Fabrizio Panebianco & Paolo Pin, 2023. "Homophily and infections: static and dynamic effects," Papers 2304.11934, arXiv.org.
    18. Carnehl, Christoph & Fukuda, Satoshi & Kos, Nenad, 2023. "Epidemics with behavior," Journal of Economic Theory, Elsevier, vol. 207(C).
    19. Nicholas W. Papageorge, 2021. "Modeling Behavior during a Pandemic: Using HIV as an Historical Analogy," NBER Working Papers 28898, National Bureau of Economic Research, Inc.
    20. Yinon Bar-On & Tatiana Baron & Ofer Cornfeld & Eran Yashiv, 2023. "When to Lock, Not Whom: Managing Epidemics Using Time-Based Restrictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 292-321, December.
    21. Christian Alemán-Pericón & Daniela Iorio & Raül Santaeulàlia-Llopis, 2024. "A Quantitative Theory of the HIV Epidemic: Education, Risky Sex and Asymmetric Learning," Working Papers 1418, Barcelona School of Economics.
    22. Yinon Bar-On & Tatiana Baron & Ofer Cornfeld & Eran Yashiv, 2023. "When to Lock, Not Whom: Managing Epidemics Using Time-Based Restrictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 292-321, December.

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    More about this item

    Keywords

    Covid-19; testing; social distancing; age-specific policies;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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