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Optimal Age-based Policies for Pandemics: An Economic Analysis of Covid-19 and Beyond

Author

Listed:
  • Brotherhood, Luiz
  • Kircher, Philipp
  • Santos, Cezar
  • Tertilt, Michèle

Abstract

This paper investigates the importance of the age composition for pandemic policy design. To do so, it introduces an economic framework with age heterogeneity, individual choice, and incomplete information, emphasizing the value of testing. Calibrating the model to the US Covid-19 pandemic reveals an 80% reduction in death toll due to voluntary actions and the lockdown implemented in the US. The optimal lockdown, however, is more stringent than what was implemented in the US. Moreover, the social planner follows an asymmetric approach by locking down the young relatively more than the old. We underscore the importance of testing, showing its impact on reduced deaths, lower economic costs and laxer lockdown. We use the framework to provide systematic insights into pandemics caused by different viruses (among others the Spanish flu), and underline the influence of economic conditions on optimal policies.

Suggested Citation

  • Brotherhood, Luiz & Kircher, Philipp & Santos, Cezar & Tertilt, Michèle, 2024. "Optimal Age-based Policies for Pandemics: An Economic Analysis of Covid-19 and Beyond," CEPR Discussion Papers 18759, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:18759
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    Cited by:

    1. is not listed on IDEAS
    2. Strulik, Holger & Grossmann, Volker, 2025. "The unequal effect of pandemics on aging and longevity: A health economic analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 239(C).
    3. Bizzarri, Matteo & Panebianco, Fabrizio & Pin, Paolo, 2025. "Homophily and infections: Static and dynamic effects," Games and Economic Behavior, Elsevier, vol. 150(C), pages 235-259.

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    Keywords

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    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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