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Uncertainty in Healthcare Policy Decisions: An Epidemiological Real Options Approach to COVID-19 Lockdown Exits

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  • de Mello-Sampayo, F.;

Abstract

Uncertainty significantly influences healthcare policy decisions, especially regarding lockdown exits amid pandemics. This paper examines different uncertainties affecting stayat-home and essential workers concerning COVID-19 exposure. Using an epidemiological real options model, we assess how uncertainty impacts the decision to end lockdown without causing disease resurgence. Results indicate higher policy-change value lengthens the lockdown delay. Greater shock correlation between stay-at-home and mask-only populations reduces this value, leading to earlier lockdown exits. The findings bridge discrepancies between public health recommendations and policymakers' actions. Integrating options theory enables more informed decision-making by considering uncertain risks and outcomes.

Suggested Citation

  • de Mello-Sampayo, F.;, 2024. "Uncertainty in Healthcare Policy Decisions: An Epidemiological Real Options Approach to COVID-19 Lockdown Exits," Health, Econometrics and Data Group (HEDG) Working Papers 24/01, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:24/01
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    More about this item

    Keywords

    public health strategy; uncertainty; real options; mitigation measures; lockdown;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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