A team of mathematicians and economists from NYU Abu Dhabi examined how to balance the need to reduce the spread of COVID-19 while trying to prevent economies from experiencing a prolonged downturn. The team developed a mathematical model that could offer a template for policy-makers looking for the best approach to evaluate the human and economic costs of measures to contain the pandemic.
The team formalize the trade-off involved in the decision making between preserving economic activities and reducing the diffusion and the potential deaths resulting from COVID-19. They used the number of COVID-19 fatalities and the total GDP as indicators for the two effects, and provided a framework to think about economic costs and public health benefits in their work, Mortality containment vs. economics opening: Optimal policies in a SEIARD model published in Covid Economics, Vetted and Real-Time Papers from CEPR .
The researchers analyzed various scenarios including a complete lockdown until the first quarter of 2021, which few countries appear to be pursuing; a drastic, initial lockdown, followed by a reopening, which is what most countries are currently putting in place; and an alternation of containment and reopening, which is a potential scenario if reopening leads to recurrence of the virus.
For the team of researchers — comprised of including Elena Beretta, visiting professor of mathematics, Alberto Gandolfi, professor of practice of mathematics, and Etienne Wasmer, professor of economics as well as other collaborators — the central findings suggest that gradual policies of longer duration but more moderate containment have large welfare benefits. On the other hand, after a sharp lockdown has been put in place, the researchers report that an alternation of containment and reopening is worth consideration.
Beretta commented: “The central idea of our research is that it is possible to find the various opening levels that avert a sizable number of deaths without causing excessive damage to the economy. By developing this model, our hope is that policymakers will be better able to make informed decisions that balance the need to minimize the human cost of the pandemic and the desire to ensure the viability of the economies that are essential to their nations’ well-being.”
They also found that early economic loss is more damaging, and that early deaths harm the health system and miss the opportunity of some form of adaptation to the virus or more effective treatments. The researchers found that timing is key to successful implementation of a containment policy, and that this is closely tied to the pace and of the perspectives of potential technological advancement.
The research aims to inform policymakers make informed decisions while balancing public health and economic viability. The model could help decision-makers time their policies to help reduce disruption to both the health and welfare of its citizens.