nep-hea New Economics Papers
on Health Economics
Issue of 2020‒05‒04
thirty-two papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. The Evolving Consequences of OxyContin Reformulation on Drug Overdoses By David Powell; Rosalie Liccardo Pacula
  2. Do People Have a Bias for Low-Deductible Insurance? By Howard Kunreuther; Mark Pauly
  3. Do Swedish Schools Discriminate against Children with Disabilities? By Ahmed, Ali; Hammarstedt, Mats; Karlsson, Karl
  4. Countervailing Market Power and Hospital Competition By Eric Barrette; Gautam Gowrisankaran; Robert Town
  5. Effects of front-of-pack labels on the nutritional quality of supermarket food purchases: evidence from a large-scale randomized controlled trial By Dubois, Pierre; Albuquerque, Paulo; Allais, Oliver; Bonnet, Céline; Bertail, Patrice; Compris, P.; Lahlou, Saadi; Rigal, Nathalie; Ruffieux, Bernard; Chandon, Pierre
  6. Every Day is Earth Day: Evidence on the Long-term Impact of Environmental Voluntarism By Daniel M. Hungerman; Vivek S. Moorthy
  7. Human-Environment-Health and reinforcement of individual resilience By Didier Sornette; Peter Cauwels; Euan Mearns; Ke Wu
  8. Aging and Health Care Expenditures: A Non-Parametric Approach By Normann Lorenz; Peter Ihle; Friedrich Breyer
  9. Unintended Health Costs of Gender Equalization By Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall Castello
  10. "Induced Physician-Induced Demand" By Kei Ikegami; Ken Onishi; Naoki Wakamori
  11. Effects of the COVID-19 Pandemic on Population Mobility under Mild Policies: Causal Evidence from Sweden By Matz Dahlberg; Per-Anders Edin; Erik Gr\"onqvist; Johan Lyhagen; John \"Osth; Alexey Siretskiy; Marina Toger
  12. Did California’s Shelter-in-Place Order Work? Early Coronavirus-Related Public Health Effects By Andrew I. Friedson; Drew McNichols; Joseph J. Sabia; Dhaval Dave
  13. Impacts of COVID-19: Mitigation Efforts versus Herd Immunity By Karen A. Kopecky; Tao Zha
  14. Covid-19 Infection Externalities: Trading Off Lives vs. Livelihoods By Zachary A. Bethune; Anton Korinek
  15. Demographic Determinants of Testing Incidence and COVID-19 Infections in New York City Neighborhoods By George J. Borjas
  16. The Subways Seeded the Massive Coronavirus Epidemic in New York City By Jeffrey E. Harris
  17. Covid-19: Testing Inequality in New York City By Stephanie Schmitt-Grohé; Ken Teoh; Martín Uribe
  18. Defining misinformation, disinformation and malinformation: An urgent need for clarity during the COVID-19 infodemic By Darrin Baines; Robert J R Elliott
  19. On the Optimal "Lockdown" During an Epidemic By Martín Gonzalez-Eiras; Dirk Niepelt
  20. Viral Social Media Videos Can Raise Pro-Social Behaviours When an Epidemic Arises By Youting Guo; Jason Shachat; Matthew J. Walker; Lijia Wei
  21. Firm-Level Exposure to Epidemic Diseases: Covid-19, SARS, and H1N1 By Tarek A. Hassan; Laurence van Lent; Stephan Hollander; Ahmed Tahoun
  22. Evaluating and mitigating the effects of the Covid 19 pandemic By Marianne, Ojo
  23. Economic Policy Incentives to Preserve Lives and Livelihoods By Roberto Chang; Andrés Velasco
  24. Covid and Social Distancing By Miltiadis Makris
  25. Blacking out By Lengwiler, Yvan
  26. Estimate of underreporting of COVID-19 in Brazil by Acute Respiratory Syndrome hospitalization reports By Leonardo Costa Ribeiro; Américo Tristão Bernardes
  27. Precaution, Social Distancing and Tests in a Model of Epidemic Disease By Francesc Obiols-Homs
  28. Risk Attitudes and Human Mobility During the COVID-19 Pandemic By Ho Fai Chan; Ahmed Skali; David Savage; David Stadelmann; Benno Torgler
  29. Incidence of COVID-19 and Connections with Air Pollution Exposure : Evidence from the Netherlands By Andree,Bo Pieter Johannes
  30. Managing COVID-19 Pandemic without Destructing the Economy By David Gershon; Alexander Lipton; Hagai Levine
  31. Integrated assessment of epidemic and economic dynamics By Holtemöller, Oliver
  32. How do governments perform in facing COVID-19? By Ghasemi, Abdolrasoul; Boroumand, Yasaman; Shirazi, Masoud

  1. By: David Powell; Rosalie Liccardo Pacula
    Abstract: Recent evidence suggests that the short-term transition of the opioid crisis from prescription opioids to heroin can be attributed to the reformulation of OxyContin, which substantially reduced access to abusable prescription opioids. In this paper, we find that over a longer time horizon, reformulation stimulated illicit drug markets to grow and evolve. We compare overdose trajectories in areas more exposed to reformulation, defined as states with high rates of non-medical OxyContin use before reformulation, to less exposed areas. More exposed areas experienced disproportionate increases in fatal overdoses involving synthetic opioids (fentanyl) and non-opioid substances like cocaine, suggesting that these new epidemics are related to the same factors driving the rise in heroin deaths. Instead of just short-term substitution from prescription opioid to heroin overdoses, the transition to illicit markets spurred by reformulation led to growth in the overall overdose rate to unprecedented levels.
    JEL: I12 I18
    Date: 2020–04
  2. By: Howard Kunreuther; Mark Pauly
    Abstract: Do consumers show a strong bias toward low deductible insurance plans, as many field studies imply? This paper reports on a controlled experiment intended to see whether subjects have a predisposition toward such plans and whether that preference is consistent when their default plan and premiums are changed. Subjects were presented with a scenario where they had to make a decision on whether to purchase a plan with a low deductible (LD) or high deductible (HD) when faced with an illness having a specified probability and cost. Participants had to choose between these plans in two rounds with the identical risk of an illness and specified premiums. If their default option was an LD plan in Round 1, then it was an HD plan in Round 2. The experiment did not show a strong bias toward low deductible health plans. Only slightly more than half of the respondents chose an LD plan even when it was optimal for them to do so. When faced with a default option that was switched in Round 2, 58% of the respondents chose the same plan as they did in Round 1, implying that some but not all subjects resisted the default option in their decision process. Subject choices were correlated with their responses to questions about risk aversion and a desire for peace of mind.
    JEL: C90 C91 D03 D12 D3 D81 G22 I11 I18
    Date: 2020–04
  3. By: Ahmed, Ali (Department of Management and Engineering); Hammarstedt, Mats (Linnæus University and); Karlsson, Karl (Department of Economics and Statistics)
    Abstract: We present results from a field experiment in which fictitious parents to children with certain types of disabilities, attention deficit hyperactivity disorder (ADHD) and type 1 diabetes mellitus (T1DM), make inquires to Swedish schools about admission for their children to the compulsory preschool class. Our results reveal that Swedish schools discriminated against children with these disabilities and that discrimination is most prevalent in private schools. Private schools discriminated against boys with ADHD and T1DM and against girls with ADHD. Furthermore, public schools discriminated against girls with ADHD. One potential effect of our results is that children with disabilities are referred to less attractive schools than children with no such medical conditions. These results may have implications for the possibilities for individuals with ADHD and T1DM to succeed in the labor market in the long run.
    Keywords: Schools; Disabilities; Discrimination
    JEL: I24 J14 J71
    Date: 2020–04–15
  4. By: Eric Barrette; Gautam Gowrisankaran; Robert Town
    Abstract: While economic theories indicate that monopsony power by downstream firms can potentially counteract market power upstream, antitrust policy is opaque about whether to incorporate countervailing market power in merger analyses. We use detailed national claims data from the healthcare sector to evaluate whether insurer monopsony power does indeed limit hospitals' exercise of market power. We estimate willingness-to-pay models to evaluate hospital market power across analysis areas. We find that countervailing market power is important: a typical hospital merger would raise hospital prices 4.3% at the 25th percentile of insurer concentration but only 0.97% at the 75th percentile of insurer concentration.
    JEL: I11 I18 L11 L13
    Date: 2020–04
  5. By: Dubois, Pierre; Albuquerque, Paulo; Allais, Oliver; Bonnet, Céline; Bertail, Patrice; Compris, P.; Lahlou, Saadi; Rigal, Nathalie; Ruffieux, Bernard; Chandon, Pierre
    Abstract: To examine whether four pre-selected front-of-pack nutrition labels improve food purchases in real-life grocery shopping settings, we put 1.9 million labels on 1,266 food products in four categories in 60 supermarkets and analyzed the nutritional quality of 1,668,301 purchases using the FSA nutrient profiling score. Effect sizes were 17 times smaller on average than those found in comparable laboratory studies. The most effective nutrition label, Nutri-Score, increased the purchases of foods in the top third of their category nutrition-wise by 14%, but had no impact on the purchases of foods with medium, low, or unlabeled nutrition quality. Therefore, Nutri-Score only improved the nutritional quality of the basket of labeled foods purchased by 2.5% (-0.142 FSA points). Nutri-Score’s performance improved with the variance (but not the mean) of the nutritional quality of the category. In-store surveys suggest that Nutri-Score’s ability to attract attention and help shoppers rank products by nutritional quality may explain its performance.
    Keywords: Nutrition; labelling; supermarket; RCT; food; Field experiment; policy
    Date: 2020–04
  6. By: Daniel M. Hungerman; Vivek S. Moorthy
    Abstract: We use variation in weather to study the long-term effects of the original Earth Day on attitudes, environmental outcomes, and children's health. Unusually bad weather in a community on April 22, 1970, is associated 10 to 20 years later with weaker support for the environment, particularly among those who were school-aged in 1970. Bad weather on Earth Day is also associated with higher levels of carbon monoxide in the air and greater risk of congenital abnormalities in infants born in the following decades. These results indicate a long-lasting and localized effect of Earth Day, and more generally demonstrate the enduring value of voluntary environmental action
    JEL: H4 I1 Q10 Z10
    Date: 2020–04
  7. By: Didier Sornette (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute); Peter Cauwels (ETH Zürich; Director Quaerens CommV); Euan Mearns (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)); Ke Wu (ETH Zurich - Department of Management, Technology, and Economics (D-MTEC))
    Abstract: The ongoing SARS-CoV-2 pandemic is stressing the world population, health care system and economies at a level not experienced since WWII or the last “Spanish flu” pandemic of 1918. This shock provides a real-life test of the resilience of human societies, challenging our understanding and level of preparation. We suggest that a decay of global individual health resilience, due to cumulative multi-factor pollutions and modern ways of life, has made the whole population strongly susceptible to the Covid 19 pandemic. To ensure future resilient societies, we propose to prioritize economic development fostering depollution of the ecosystem and of individuals, and training individual responsibility.
    Keywords: Covid-19, resilience, system, pollution, individual responsibility, social digital technologies
    JEL: I12 I18 I30 M14 Q50
    Date: 2020–04
  8. By: Normann Lorenz; Peter Ihle; Friedrich Breyer
    Abstract: One of the most important controversies in health economics concerns the question whether the imminent aging of the population in most OECD countries will place an additional burden on the tax payers who finance public health care systems. Proponents of the “red-herring hypothesis” argue that this is not the case because most of the correlation of age and health care expenditures (HCE) is due to the fact that the mortality rate rises with age and HCE rise steeply in the last years before death. The evidence regarding this hypothesis is, however, mixed. Our contribution to this debate is mainly methodological: We argue that the relationship of age, time to death (TTD) and HCE should be estimated non-parametrically. Using a large panel data set from the German Statutory Health Insurance, we first show that the parametric approach overestimates the expenditures of the high age classes and thus overstates the increase of future HCE due to aging. Secondly, we show that the non-parametric approach is particularly useful to answer the question whether age still has an impact on HCE once TTD is taken into account and find that it is clearly the case. This relationship is even more pronounced for long-term care expenditures (LTCE). We then show that the age-expenditure relationship is not stable over time: for many age classes, HCE in the last year of life grow considerably faster than HCE of survivors. We explore the impact of these findings on the simulation of future HCE and find that population aging will in fact contribute to rising HCE in the coming decades. We also find that the impact of different population projections provided by the statistical offices has a greater impact on these simulations than previously acknowledged. However, the total impact of demographics on future HCE and LTCE is dwarfed by the exogenous time trend, which is due to medical progress and increasing generosity of public LTC insurance.
    Keywords: health care expenditures, aging, red-herring hypothesis, non-parametric methods
    JEL: H51 J11 I19
    Date: 2020
  9. By: Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall Castello
    Abstract: In 1980, a few years after the democratization process, Spain raised the minimum working age from 14 to 16, while the compulsory education age remained at 14. This reform changed the within-cohort incentives to remain in the educational system. Using a difference-in-differences approach, we analyze the gender asymmetries in mortality generated by this change. The reform, through its effects on education, decreased mortality at ages 14-29 among men (6.4%) and women (8.9%), mainly from the reduction in deaths due to traffic accidents. However, the reform also increased mortality for prime-age women (30-45) by 7%. This last effect is driven by increases in HIV mortality, as well as by diseases related to the nervous and circulatory system. We show that health habits of women deteriorated as a consequence of the reform, but this was not the case for men. The gender differences in the impact of education on smoking and drinking are driven by the gender equalization process that the affected women were experiencing when the reform took place. All in all, these patterns help explain the narrowing age gap in life expectancy between women and men in many developed countries while, at the same time, they provide important policy implications for middle income countries that are undergoing those gender equalization process right now.
    Keywords: minimum working age, education, mortality, gender
    JEL: I12 I20 J10
    Date: 2020–04
  10. By: Kei Ikegami (Graduate School of Economics, The University of Tokyo); Ken Onishi (Federal Reserve Board); Naoki Wakamori (Faculty of Economics, The University of Tokyo)
    Abstract: Physicians may change their practices when introducing advanced medical equip-ment, and, in particular, they tend to overuse it. We investigate further in efficiency arising from physicians at surrounding hospitals. Using the panel data on the Japanese hospitals, we find that there exists a business-stealing effect: Hospitals lose their patients because of MRI adoption by nearby public hospitals, and, to compensate for the loss of patients, physicians take more MRI scans per patient. Our results suggest that the decision to adopt medical equipment needs to be made collectively rather than individually to avoid not only excessive adoption but also further physician-induced demand.
    Date: 2020–04
  11. By: Matz Dahlberg; Per-Anders Edin; Erik Gr\"onqvist; Johan Lyhagen; John \"Osth; Alexey Siretskiy; Marina Toger
    Abstract: Sweden has adopted far less restrictive social distancing policies than most countries following the COVID-19 pandemic. This paper uses data on all mobile phone users, from one major Swedish mobile phone network, to examine the impact of the Coronavirus outbreak under the Swedish mild recommendations and restrictions regime on individual mobility and if changes in geographical mobility vary over different socio-economic strata. Having access to data for January-March in both 2019 and 2020 enables the estimation of causal effects of the COVID-19 outbreak by adopting a Difference-in-Differences research design. The paper reaches four main conclusions: (i) The daytime population in residential areas increased significantly (64 percent average increase); (ii) The daytime presence in industrial and commercial areas decreased significantly (33 percent average decrease); (iii) The distance individuals move from their homes during a day was substantially reduced (38 percent decrease in the maximum distance moved and 36 percent increase in share of individuals who move less than one kilometer from home); (iv) Similar reductions in mobility were found for residents in areas with different socioeconomic and demographic characteristics. These results show that mild government policies can compel people to adopt social distancing behavior.
    Date: 2020–04
  12. By: Andrew I. Friedson; Drew McNichols; Joseph J. Sabia; Dhaval Dave
    Abstract: On March 19, 2020, California Governor Gavin Newsom issued Executive Order N-33-20 2020, which required all residents of the state of California to shelter in place for all but essential activities such as grocery shopping, retrieving prescriptions from a pharmacy, or caring for relatives. This shelter-in-place order (SIPO), the first such statewide order issued in the United States, was designed to reduce COVID-19 cases and mortality. While the White House Task Force on the Coronavirus has credited the State of California for taking early action to prevent a statewide COVID-19 outbreak, no study has examined the impact of California’s SIPO. Using daily state-level coronavirus data and a synthetic control research design, we find that California’s statewide SIPO reduced COVID-19 cases by 144,793 to 232,828 and COVID-19 deaths by 1,836 to 4,969 during the first three weeks following its enactment. Conservative back of the envelope calculations suggest that there were approximately 2 to 4 job losses per coronavirus case averted and 113 to 300 job losses per life saved during this short-run post-treatment period.
    JEL: H75 I18
    Date: 2020–04
  13. By: Karen A. Kopecky; Tao Zha
    Abstract: The rapid spread of COVID-19 is having devastating effects on the global economy. With death curves beginning to bend, governments will soon need to determine when and how to relax lockdown measures. The crucial question is: what are the public health consequences of reopening the economy? In this article, we argue that the observed decline in daily deaths could be due to two scenarios: social distancing measures and herd immunity. Both the widely used SIR model and the data collected thus far cannot distinguish these two scenarios. Such an identification problem generates a large degree of uncertainty about the public health consequences of restarting the economy. Comprehensive testing can help resolve this uncertainty by quickly and accurately identifying new cases so that future outbreaks could be contained by isolation and contact tracing measures.
    Keywords: COVID-19; social distancing; identification problem; death curve; lockdown; herd immunity; reopening the economy; testing
    JEL: E6 H12 I1
    Date: 2020–04–27
  14. By: Zachary A. Bethune; Anton Korinek
    Abstract: We analyze the externalities that arise when social and economic interactions transmit infectious diseases such as COVID-19. Individually rational agents do not internalize that they impose infection externalities upon others when the disease is transmitted. In an SIR model calibrated to capture the main features of COVID-19 in the US economy, we show that private agents perceive the cost an additional infection to be around $80k whereas the social cost including infection externalities is more than three times higher, around $286k. This misvaluation has stark implications for how society ultimately overcomes the disease: for a population of individually rational agents, the precautionary behavior by the susceptible flattens the curve of infections, but the disease is not overcome until herd immunity is acquired. The resulting economic cost is high; an initial sharp decline in aggregate output followed by a slow recovery over several years. By contrast, the socially optimal approach in our model focuses public policy measures on the infected in order to contain the disease and quickly eradicate it, which produces a much milder recession. If targeting the infected is impossible, the optimal policy in our model is still to aggressively contain and eliminate the disease, and the social cost of an extra infection rises to $586k.
    JEL: E1 E65 H12 H23 I18
    Date: 2020–04
  15. By: George J. Borjas
    Abstract: New York City is the hot spot of the COVID-19 pandemic in the United States. This paper merges information on the number of tests and the number of infections at the New York City zip code level with demographic and socioeconomic information from the decennial census and the American Community Surveys. People residing in poor or immigrant neighborhoods were less likely to be tested; but the likelihood that a test was positive was larger in those neighborhoods, as well as in neighborhoods with larger households or predominantly black populations. The rate of infection in the population depends on both the frequency of tests and on the fraction of positive tests among those tested. The non-randomness in testing across New York City neighborhoods indicates that the observed correlation between the rate of infection and the socioeconomic characteristics of a community tells an incomplete story of how the pandemic evolved in a congested urban setting.
    JEL: I10 J10
    Date: 2020–04
  16. By: Jeffrey E. Harris
    Abstract: New York City’s multitentacled subway system was a major disseminator – if not the principal transmission vehicle – of coronavirus infection during the initial takeoff of the massive epidemic that became evident throughout the city during March 2020. The near shutoff of subway ridership in Manhattan – down by over 90 percent at the end of March – correlates strongly with the substantial increase in the doubling time of new cases in this borough. Maps of subway station turnstile entries, superimposed upon zip code-level maps of reported coronavirus incidence, are strongly consistent with subway-facilitated disease propagation. Local train lines appear to have a higher propensity to transmit infection than express lines. Reciprocal seeding of infection appears to be the best explanation for the emergence of a single hotspot in Midtown West in Manhattan. Bus hubs may have served as secondary transmission routes out to the periphery of the city.
    JEL: I1 I12 I14 I18 I28
    Date: 2020–04
  17. By: Stephanie Schmitt-Grohé; Ken Teoh; Martín Uribe
    Abstract: Motivated by reports in the media suggesting unequal access to Covid-19 testing across incomes, we analyze zip-code level data on the number of Covid-19 tests, test results, and income per capita in New York City. We find that the number of tests administered is evenly distributed across income levels. In particular, the test distribution across income levels is significantly more egalitarian than the distribution of income itself: The ten percent of the city's population living in the richest zip codes received 11 percent of the Covid-19 tests and 29 percent of the city's income. The ten percent of the city's population living in the poorest zip codes received 10 percent of the tests but only 4 percent of the city's income. At the same time, we find significant disparity in the fraction of tests that come back negative for the Covid-19 disease across income levels: moving from the poorest zip codes to the richest zip codes is associated with an increase in the fraction of negative Covid-19 test results from 38 to 65 percent.
    JEL: I14 R1
    Date: 2020–04
  18. By: Darrin Baines (University of Bournemouth); Robert J R Elliott (University of Birmingham)
    Abstract: COVID-19 is an unprecedented global health crisis that will have immeasurable consequences for our economic and social well-being. Tedros Adhanom Ghebreyesus, the director general of the World Health Organization, stated ''We're not just fighting an epidemic; we're fighting an infodemic''. Currently, there is no robust scientific basis to the existing definitions of false information used in the fight against the COVID-19 infodemic. The purpose of this paper is to demonstrate how the use of a novel taxonomy and related model (based upon a conceptual framework that synthesizes insights from information science, philosophy, media studies and politics) can produce new scientific definitions of mis-, dis- and malinformation. We undertake our analysis from the viewpoint of information systems research. The conceptual approach to defining mis-, dis- and malinformation can be applied to a wide range of empirical examples and, if applied properly, may prove useful in fighting the COVID-19 infodemic. In sum, our research suggests that: (i) analyzing all types of information is important in the battle against the COVID-19 infodemic; (ii) a scientific approach is required so that different methods are not used by different studies; (iii) ''misinformation'', as an umbrella term, can be confusing and should be dropped from use; (iv) clear, scientific definitions of information types will be needed going forward; (v) malinformation is an overlooked phenomenon involving reconfigurations of the truth.
    Keywords: COVID-19, infodemic, misinformation, disinformation, malinformation
    Date: 2020–04
  19. By: Martín Gonzalez-Eiras (University of Copenhagen); Dirk Niepelt (Study Center Gerzensee, University of Bern, CEPR, CESifo)
    Abstract: We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently experienced by the US optimally triggers a reduction in economic activity by two thirds, for about 50 days, or approximately 9.5 percent of annual GDP.
    Date: 2020–04
  20. By: Youting Guo (School of Economics and Management, Wuhan University, China); Jason Shachat (School of Economics and Management, Wuhan University, China; Department of Economics and Finance, Durham University Business School, United Kingdom); Matthew J. Walker (Department of Economics and Finance, Durham University Business School, United Kingdom); Lijia Wei (School of Economics and Management, Wuhan University, China)
    Abstract: At the onset of an epidemic, can viral social media videos induce the high levels of trust and pro-sociality required for a successful community response? Shortly after the outbreak of the COVID-19 virus in Wuhan, China, we conducted an experiment assessing the impact of viral videos on individual preferences and pro-social behaviour. Prior to the experiment, participants viewed one of three videos culled from Chinese social media: a central government leader visiting a local hospital and supermarket, health care volunteers transiting to Wuhan, or an emotionally neutral video unrelated to the emergency. Viewing one of the first two videos leads to higher levels of prosociality and increased ambiguity aversion relative to the third video. The leadership video, however, induces lower levels of trust. Our results suggest ways to craft more effective crisis response efforts and provide insights into how the direction of information in hierarchies influences trust in community members.
    Keywords: Viral Social Media; Pro-Sociality; Risk Attitude; Health Communications; Experiment
    JEL: C93 H12 I12
    Date: 2020
  21. By: Tarek A. Hassan (Boston University, NBER, and CEPR); Laurence van Lent (Tilburg University); Stephan Hollander (Frankfurt School of Finance and Management); Ahmed Tahoun (London Business School)
    Abstract: Using tools described in our earlier work (Hassan et al., 2019, 2020), we develop textbased measures of the costs, benefits, and risks listed firms in the US and over 80 other countries associate with the spread of Covid-19 and other epidemic diseases. We identify which firms expect to gain or lose from an epidemic disease and which are most affected by the associated uncertainty as a disease spreads in a region or around the world. As Covid-19 spreads globally in the first quarter of 2020, we find that firms’ primary concerns relate to the collapse of demand, increased uncertainty, and disruption in supply chains. Other important concerns relate to capacity reductions, closures, and employee welfare. By contrast, financing concerns are mentioned relatively rarely. We also identify some firms that foresee opportunities in new or disrupted markets due to the spread of the disease. Finally, we find some evidence that firms that have experience with SARS or H1N1 have more positive expectations about their ability to deal with the coronavirus outbreak.
    Keywords: Epidemic diseases, pandemic, exposure, virus, firms, uncertainty, sentiment, machine learning
    JEL: I15 I18 D22 G15
    Date: 2020–04
  22. By: Marianne, Ojo
    Abstract: The exact dates of the first COVID-19 outbreaks may remain an unresolved mystery. Unless reliable sources and records can be traced and retained, efforts to trace when initial infections took place, may even constitute a greater task than the other question relating to how it was instigated – the latter having (it appears) to have been partially resolved. The uncertainty and lack of knowledge about the nature of the transmitting organism, as well as the manner of transmission, still constitutes a puzzle and it is even possible that many patients might have died long before the prominence of infections became known to authorities. It is also now acknowledged that humans may have contracted the virus unknowingly without manifesting the usual symptoms. How is it then possible to verify whether many deaths prior to the official reporting outbreak timing of the 12th December 2019, were not linked to asymptomatic patients? Furthermore, does the transmitting agent bear similarities to the flu virus – in which case, it becomes a seasonal problem? This underlines how vital it is to secure vaccines and antibodies which can combat its spread. Amongst several other objectives, this paper not only aims to highlight why global coordination and certainty of information is so vital, but also highlight measures which have been, and could be undertaken, to address and mitigate the COVID-19 outbreak.
    Keywords: bond markets; exchange rates; spill over effects; asset buying programme; monetary policy; Bayesian Vector Autoregression model; multiplier effect; continuous monitoring
    JEL: E58 F16 F32 F62 G38
    Date: 2020–04
  23. By: Roberto Chang; Andrés Velasco
    Abstract: The Covid-19 pandemic has motivated a myriad of studies and proposals on how economic policy should respond to this colossal shock. But in this debate it is seldom recognized that the health shock is not entirely exogenous. Its magnitude and dynamics themselves depend on economic policies, and the explicit or implicit incentives those policies provide. To illuminate the feedback loops between medical and economic factors we develop a minimal economic model of pandemics. In the model, as in reality, individual decisions to comply (or not) with virus-related public health directives depend on economic variables and incentives, which themselves respond to current economic policy and expectations of future policies. The analysis yields several practical lessons: because policies affect the speed of virus transmission via incentives, public health measures and economic policies can complement each other, reducing the cost of attaining desired social goals; expectations of expansionary macroeconomic policies during the recovery phase can help reduce the speed of infection, and hence the size of the health shock; the credibility of announced policies is key to rule out both self-fulfilling pessimistic expectations and time inconsistency problems. The analysis also yields a critique of the current use of SIR models for policy evaluation, in the spirit of Lucas (1983).
    JEL: E6 F4 H12
    Date: 2020–04
  24. By: Miltiadis Makris
    Abstract: Motivated by the current coronavirus epidemic, we analyse a SIR model of an epidemic but with endogenous social distancing and calibrate it to UK data to study various hypothetical scenarios of government intervention regarding social distancing. We explicitly take into account that (a) there is heterogeneity among the population in terms of infection-induced fatality rates and thereby private decisions on social distancing, and that (b), due to limited resources available for health services, mortality rates may depend on the stock of infected people who become seriously ill because of the infection.
    Keywords: COVID-19, Epidemiology, SIR model, Social Distancing, Externalities
    Date: 2020–04
  25. By: Lengwiler, Yvan (University of Basel)
    Abstract: The COVID-19 pandemic and the partial shutdown of the economy has highlighted the lack of measurements of economic activity that are available with a short lag and at high frequency. The consumption of electricity is a candidate for such a proxy.
    Keywords: COVID-19, electricity, seasonal adjustment, weather data
    JEL: C50 E01
    Date: 2020–04–28
  26. By: Leonardo Costa Ribeiro (Cedeplar-UFMG); Américo Tristão Bernardes (UFOP)
    Abstract: The number of COVID-19 infected people in each country is a crucial factor to determine public policies. It guides the governments to strengthen movement restrictions of people or to relieve it. The number of infected people is very important to forecast the needs of the health systems, which are collapsing in many countries. Thus, underreporting of infected people is a huge problem, since authorities do not know the real problem and act in darkness. In the present work, we discuss this subject for the Brazilian case. We take the time series of acute respiratory syndromes reported in the health public system in the last ten years and estimated the number for March/20 when the COVID-19 appeared in Brazil. Our results show a 7.7:1 rate of underreporting, meaning that the real cases in Brazil should be, at least, seven times the publicized number.
    Keywords: Corona virus, COVID-19; Underreporting; Brazil
    JEL: C15 I18
    Date: 2020–04
  27. By: Francesc Obiols-Homs
    Abstract: I develop an extension of a canonical epidemiology model in which the policy in place determines the probability of transmission of an epidemic disease. I use the model to evaluate the effects of isolating symptomatic individuals, of increasing social distancing and of tests of different quality: a poor quality test that can only discriminate between healthy and infected individuals (such as polymerase chain reaction -PCR- or Rapid Diagnostic Test), and a high quality test that is able to discriminate between immune and vulnerable healthy, and infected individuals (such as a serology test like Neutralization Assay). I find that isolating symptomatic individuals has a large effect at delaying and reducing the pick of infections. The combination of this policy with the poor quality test represents only a negligible improvement, whereas with the high quality test there is an additional delaying and reduction in the pick of infections. Social distancing alone cannot achieve similar effects without incurring in enormous output losses. I explore the combined effect of social distancing at early stages of the epidemic with a following period of tests and find that the best outcome is obtained with a light reduction of human interaction for about three months together with a subsequent test of the population over 40 days.
    Keywords: COVID-19, social distancing, Testing
    JEL: E1 E65 H12 I1
    Date: 2020–04
  28. By: Ho Fai Chan; Ahmed Skali; David Savage; David Stadelmann; Benno Torgler
    Abstract: Behavioural responses to pandemics are less shaped by actual mortality or hospitalization risks than they are by risk attitudes. We explore human mobility patterns as a measure of behavioural responses during the COVID-19 pandemic. Our results indicate a strong negative relationship between mobility reduction and risk-taking preferences. We find that the sharp decline in movement after the WHO (World Health Organization) declared COVID-19 to be a pandemic can be attributed to risk attitudes, especially for visits to places classified as retail and recreation, transit stations and workplaces. This suggests that individuals with risk-averse attitudes are more likely to adjust their behavioural activity in response to the declaration of a pandemic even prior to most official government lockdowns. We also find regions with higher risk aversion report a larger relative reduction in frequency of visits to places such as retail shops, grocery stores, parks, and public transport during the weekends compared to weekdays, whereas risk-loving regions are more likely to go to workplaces and less likely to stay at home during the weekends. There is also evidence to suggest that in areas with a larger share of older people in the population, risk-loving individuals are more likely to restrain themselves from taking public transport, engaging in non-essential retail shopping, going to workplaces, and staying home. Finally, we also find that the rate of behavioural adjustment, measured as the effect of mobility change after the first recorded death in the country, is sharper when the population have a larger risk pool population independent of government lockdowns.
    Date: 2020–04
  29. By: Andree,Bo Pieter Johannes
    Abstract: The fast spread of severe acute respiratory syndrome coronavirus 2 has resulted in the emergence of several hot-spots around the world. Several of these are located in areas associated with high levels of air pollution. This study investigates the relationship between exposure to particulate matter and COVID-19 incidence in 355 municipalities in the Netherlands. The results show that atmospheric particulate matter with diameter less than 2.5 is a highly significant predictor of the number of confirmed COVID-19 cases and related hospital admissions. The estimates suggest that expected COVID-19 cases increase by nearly 100 percent when pollution concentrations increase by 20 percent. The association between air pollution and case incidence is robust in the presence of data on health-related preconditions, proxies for symptom severity, and demographic control variables. The results are obtained with ground-measurements and satellite-derived measures of atmospheric particulate matter as well as COVID-19 data from alternative dates. The findings call for further investigation into the association between air pollution and SARS-CoV-2 infection risk. If particulate matter plays a significant role in COVID-19 incidence, it has strong implications for the mitigation strategies required to prevent spreading.
    Date: 2020–04–24
  30. By: David Gershon; Alexander Lipton; Hagai Levine
    Abstract: We analyze an approach to managing the COVID-19 pandemic without shutting down the economy while staying within the capacity of the healthcare system. We base our analysis on a detailed heterogeneous epidemiological model, which takes into account different population groups and phases of the disease, including incubation, infection period, hospitalization, and treatment in the intensive care unit (ICU). We model the healthcare capacity as the total number of hospital and ICU beds for the whole country. We calibrate the model parameters to data reported in several recent research papers. For high- and low-risk population groups, we calculate the number of total and intensive care hospitalizations, and deaths as functions of time. The main conclusion is that countries, which enforce reasonable hygienic measures on time can avoid lockdowns throughout the pandemic provided that the number of spare ICU beds per million is above the threshold of about 100. In countries where the total number of ICU beds is below this threshold, a limited period quarantine to specific high-risk groups of the population suffices. Furthermore, in the case of an inadequate capacity of the healthcare system, we incorporate a feedback loop and demonstrate that quantitative impact of the lack of ICU units on the death curve. In the case of inadequate ICU beds, full- and partial-quarantine scenarios outcomes are almost identical, making it unnecessary to shut down the whole economy. We conclude that only a limited-time quarantine of the high-risk group might be necessary, while the rest of the economy can remain operational.
    Date: 2020–04
  31. By: Holtemöller, Oliver
    Abstract: In this paper, a simple integrated model for the joint assessment of epidemic and economic dynamics is developed. The model can be used to discuss mitigation policies like shutdown and testing. Since epidemics cause output losses due to a reduced labor force, temporarily reducing economic activity in order to prevent future losses can be welfare enhancing. Mitigation policies help to keep the number of people requiring intensive medical care below the capacity of the health system. The optimal policy is a mixture of temporary partial shutdown and intensive testing and isolation of infectious persons for an extended period of time.
    Keywords: coronavirus,economic growth,epidemic modeling
    JEL: E1 H0 I1
    Date: 2020
  32. By: Ghasemi, Abdolrasoul; Boroumand, Yasaman; Shirazi, Masoud
    Abstract: The issue of coronavirus outbreak in the world, though new, is equally pervasive. It has posed a new and ambiguous challenge to the economic growth of countries around the world. Undoubtedly, the efforts of countries to curb the spread of this virus and reduce the number of deaths are necessary for other strategies that will be taken in other areas, especially in the economic field. Comparing countries only based one the statistics on virus spread and mortality without considering the contextual variables, can be misleading. Thus using dynamic data envelopment analysis, this study calculated the performance of 19 selected countries in two dimensions: inefficiency of preventing coronavirus spread and inefficiency of preventing deaths caused by coronavirus from February 2 to April 12. According to the study, the inefficiency trend of preventing coronavirus spread in Singapore, South Korea, China and Australia are decreasing during the period under review and the inefficiency trend of other countries, which of course differ in terms of inefficiency, are increasing with different slopes. Also, Australia, Finland, Japan, Malaysia, Singapore and Thailand have experienced less inefficiency in preventing deaths caused by coronavirus compared to other countries. Stringency index and global health security (GHS) index have been used as well, to analyze the findings and at the end some suggestions have been presented.
    Keywords: Coronavirus, Covid19, DEA, Window Analysis, Efficiency, Government
    JEL: C61 I18
    Date: 2020–04–15

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