nep-hea New Economics Papers
on Health Economics
Issue of 2020‒06‒29
fifty-five papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. Voluntary Regulation: Evidence from Medicare Payment Reform By Liran Einav; Amy Finkelstein; Yunan Ji; Neale Mahoney
  2. Common Practice: Spillovers from Medicare on Private Health Care By Michael L. Barnett; Andrew Olenski; Adam Sacarny
  3. Identifying the Effects of Scientific Information and Recommendations on Physicians’ Prescribing Behavior By Dubois, Pierre; Tuncel, Tuba
  4. Cash-For-Care, or Caring for Cash? The Effects of a Home Care Subsidy on Maternal Employment, Childcare Choices, and Children's Development By Collischon, Matthias; Kühnle, Daniel; Oberfichtner, Michael
  5. Mental health and employment: a bounding approach using panel data By Bryan, M.; Rice, N.; Roberts, J.; Sechel, C.
  6. The Impact of Automatic Enrolment on the Mental Health Gap in Pension Participation: Evidence from the UK By Karen Arulsamy; Liam Delaney
  7. Is it better to intermarry? Ethnic composition of marriages and suicide risk among native-born and migrant persons in Sweden By Anna Oksuzyan; Sven Drefahl; Jennifer Caputo; Siddartha Aradhya
  8. Medicaid Expansion and the Mental Health of College Students By Benjamin W. Cowan; Zhuang Hao
  9. Econometric Models of Fertility By Miranda, Alfonso; Trivedi, Pravin K.
  10. Death, sex and fertility: Female infanticide in rural Spain, 1750-1950 By Francisco J. Beltrán Tapia; Francisco J. Marco-Gracia
  11. Holiday, Just One Day Out of Life: Birth Timing and Post-natal Outcomes By Mireille Jacobson; Maria Kogelnik; Heather Royer
  12. How to Get Away with Merger: Stealth Consolidation and Its Real Effects on US Healthcare By Thomas G. Wollmann
  13. Drinking Is Different! Examining the Role of Locus of Control for Alcohol Consumption By Caliendo, Marco; Hennecke, Juliane
  14. The Response to Dynamic Incentives in Insurance Contracts with a Deductible: Evidence from a Differences-in-Regression-Discontinuities Design By Klein, Tobias; Salm, Martin; Upadhyay, Suraj
  15. Social Security, Labor Supply and Health of Older Workers: Quasi-Experimental Evidence from a Large Reform By Saporta-Eksten, Itay; Shurtz, Ity; Weisburd, Sarit
  16. Health Shocks and the Evolution of Earnings over the Life-Cycle By Michael Keane; Elena Capatina; Shiko Maruyama
  17. Short-Run Health Consequences of Retirement and Pension Benefits: Evidence from China By Plamen Nikolov; Alan Adelman
  18. Hospital Resources: Persistent Reallocation under Price Changes By Wozny, Florian
  19. Willingness to Pay for Better Air Quality: The case of China By Liu, L-Q.; Yin, Z-L.; Xie, B-C.; Zhou, W.
  20. Bounding the Predictive Values of COVID-19 Antibody Tests By Charles F. Manski
  21. Trust in the Time of Corona By Brück, Tilman; Ferguson, Neil T.N.; Justino, Patricia; Stojetz, Wolfgang
  22. Financing Vaccines for Global Health Security By Jonathan T. Vu; Benjamin K. Kaplan; Shomesh Chaudhuri; Monique K. Mansoura; Andrew W. Lo
  23. Economic Policy Incentives to Preserve Lives and Livelihoods By Chang, Roberto; Velasco, Andrés
  24. The COVID-19 pandemic and its impact on inequality of opportunity in psychological distress in the UK By Davillas, Apostolos; Jones, Andrew M.
  25. The Impact of the Coronavirus Lockdown on Mental Health: Evidence from the US By Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C.
  26. Covid-19: Testing Inequality in New York City By Schmitt-Grohé, Stephanie; Teoh, Ken; Uribe, Martin
  27. Disparities in Vulnerability to Severe Complications from COVID-19 in the United States By Emily E. Wiemers; Scott Abrahams; Marwa AlFakhri; V. Joseph Hotz; Robert F. Schoeni; Judith A. Seltzer
  28. A two-phase dynamic contagion model for Covid-19 By Chen, Zezhun; Dassios, Angelos; Kuan, Valerie; Lim, Jia Wei; Qu, Yan; Surya, Budhi; Zhao, Hongbiao
  29. Plasma-based COVID-19 treatments in developing nations pose a high risk of an HIV epidemic By Ferreira, Leonardo M.R.; Mostajo-Radji, Mohammed A
  30. COVID-19 Mortality in Rich and Poor Countries : A Tale of Two Pandemics ? By Schellekens,Philip; Sourrouille,Diego M.
  31. Did the Wisconsin Supreme Court Restart a COVID-19 Epidemic? Evidence from a Natural Experiment By Dhaval M. Dave; Andrew I. Friedson; Kyutaro Matsuzawa; Drew McNichols; Joseph J. Sabia
  32. Negative shocks predict change in cognitive function and preferences: Assessing the negative affect and stress hypothesis in the context of the COVID-19 pandemic and the lockdown mitigation strategy By Bogliacino, Francesco; codagnone, cristiano; Montealegre, Felipe; Folkvord, F.; Gómez, Camilo Ernesto; Charris, Rafael Alberto; Liva, Giovanni; Villanueva, Francisco Lupiañez; Veltri, Giuseppe Alessandro Prof
  33. COVID-19 Lockdowns and Decline in Traffic Related Deaths and Injuries By Oguzoglu, Umut
  34. An Economic Model of the COVID-19 Epidemic: The Importance of Testing and Age-Specific Policies By Brotherhood, Luiz; Kircher, Philipp; Santos, Cezar; Tertilt, Michèle
  35. Socio-Demographic Factors Associated with Self-Protecting Behavior during the COVID-19 Pandemic By Papageorge, Nicholas W.; Zahn, Matthew V.; Belot, Michèle; van den Broek-Altenburg, Eline; Choi, Syngjoo; Jamison, Julian C.; Tripodi, Egon
  36. A Simple Macro-model of Covid-19 with Special Reference to India By Parui, Pintu
  37. The Persuasive Effect of Fox News: Non-Compliance with Social Distancing During the Covid-19 Pandemic By Andrey Simonov; Szymon K. Sacher; Jean-Pierre H. Dubé; Shirsho Biswas
  38. Global Behaviors and Perceptions in the COVID-19 Pandemic By Caria, Stefano; Fetzer, Thiemo; Fiorin, Stefano; Goetz, Friedrich; Gomez, Margarita; Haushofer, Johannes; Hensel, Lukas; Ivchenko, Andriy; Jachimowicz, Jon M.; Kraft-Todd, Gordon; Reutskaja, Elena; Roth, Christopher; Witte, Marc; Yoeli, Erez
  39. Health versus Wealth: On the Distributional Effects of Controlling a Pandemic By Glover, Andrew; Heathcote, Jonathan; Krueger, Dirk; Rios-Rull, Jose-Victor
  40. Global Behaviors and Perceptions at the Onset of the COVID-19 Pandemic By Fetzer, Thiemo; Witte, Marc; Hensel, Lukas; Jachimowicz, Jon M.; Haushofer, Johannes; Ivchenko, Andriy; Caria, Stefano; Elena Reutskaja,; Roth, Christopher; Fiorin, Stefano; Gomez, Margarita; Kraft-Todd, Gordon; Goetz, Friedrich M.; Yoeli, Erez
  41. Restarting the economy while saving lives under Covid-19 By Favero, Carlo A.; Ichino, Andrea; Rustichini, Aldo
  42. Markov switching models for happiness during a pandemic: The New-Zealand experience By Rossouw, Stephanie; Greyling, Talita; Adhikari, Tamanna; Morrison, Phillip S.
  43. A Simple Planning Problem for COVID-19 Lockdown By Alvarez, Fernando; Argente, David; Lippi, Francesco
  44. Short-Term Impact of COVID-19 on Consumption and Labor Market Outcomes: Evidence from Singapore By Kim, Seonghoon; Koh, Kanghyock; Zhang, Xuan
  45. Inequality in the Impact of the Coronavirus Shock: New Survey Evidence for the US By Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C.
  46. Self-employment in the Covid-19 crisis: A CEP Covid-19 analysis By Blundell, Jack; Machin, Stephen
  47. Gender Differences in COVID-19 Related Attitudes and Behavior: Evidence from a Panel Survey in Eight OECD Countries By Vincenzo Galasso; Vincent Pons; Paola Profeta; null null; Sylvain Brouard; Martial Foucault
  48. Compulsory face mask policies do not affect community mobility in Germany By Kovacs, Roxanne; Dunaiski, Maurice; Tukiainen, Janne
  49. How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World? By Titan M. Alon; Minki Kim; David Lagakos; Mitchell VanVuren
  50. Black Lives Matter Protests, Social Distancing, and COVID-19 By Dave, Dhaval M.; Friedson, Andrew I.; Matsuzawa, Kyutaro; Sabia, Joseph J.; Safford, Samuel
  51. Divided We Stay Home: Social Distancing and Ethnic Diversity By Georgy Egorov; Ruben Enikolopov; Alexey Makarin; Maria Petrova
  52. Evaluating the Effectiveness of Regional Lockdown Policies in the Containment of Covid-19: Evidence from Pakistan By Hamza Umer; Muhammad Salar Khan
  53. Does the COVID-19 Pandemic Disproportionately Affect the Poor? Evidence from a Six-Country Survey By Dang, Hai-Anh; Huynh, Toan L. D.; Nguyen, Manh-Hung
  54. Were Urban Cowboys Enough to Control COVID-19? Local Shelter-in-Place Orders and Coronavirus Case Growth By Dhaval M. Dave; Andrew I. Friedson; Kyutaro Matsuzawa; Joseph J. Sabia; Samuel Safford
  55. Equilibrium Social Distancing By Toxvaerd, F.M.O

  1. By: Liran Einav; Amy Finkelstein; Yunan Ji; Neale Mahoney
    Abstract: Government programs are often offered on an optional basis to market participants. We explore the economics of such voluntary regulation in the context of a Medicare payment reform, in which one medical provider receives a single, predetermined payment for a sequence of related healthcare services, instead of separate service-specific payments. This “bundled payment” program was originally implemented as a 5-year randomized trial, with mandatory participation by hospitals assigned to the new payment model, but after two years participation was unexpectedly made voluntary for half of these hospitals. Using detailed claim-level data, we document that voluntary participation is more likely for hospitals who can increase revenue without changing behavior (“selection on levels”) and for hospitals that had large changes in behavior when participation was mandatory (“selection on slopes”). To assess outcomes under counterfactual regimes, we estimate a simple model of responsiveness to and selection into the program. We find that the current voluntary regime generates inefficient transfers to hospitals and reduces social welfare compared to the status quo, but that alternative (feasible) designs could substantially reduce these inefficient transfers. Our analysis highlights key design elements to consider under voluntary regulation.
    JEL: H51 I13 I18
    Date: 2020–05
  2. By: Michael L. Barnett; Andrew Olenski; Adam Sacarny
    Abstract: Efforts to raise the productivity of the U.S. health care system have proceeded slowly. One potential explanation is the fragmentation of payment across insurers. Each insurer's efforts to improve care could influence how doctors practice medicine for other insurers, leading to unvalued externalities. We study these externalities by examining the unintended private insurance spillovers of a public insurer's intervention. In 2015, Medicare randomized warning letters to doctors to curtail overuse of antipsychotics. Even though the letters did not mention private insurance, they reduced prescribing to privately insured patients by 12%. The reduction to Medicare patients was 17%, and we cannot reject one-for-one spillovers. The results imply that physicians experience large costs to setting insurer-specific medical practice styles. If private insurers conducted a similar intervention with their own limited information, they would stem half as much prescribing as a social planner able and willing to better target the intervention. Our findings establish that insurers can affect health care well outside their direct purview, raising the question of how to match their private objectives with their scope of influence.
    JEL: H44 I13 I18
    Date: 2020–05
  3. By: Dubois, Pierre; Tuncel, Tuba
    Abstract: We investigate how the prescribing behavior of physicians reacts to scientific information and recommendations released by public authorities. Taking the example of antidepressant drugs, we use French panel data on exhaustive prescriptions made by a representative sample of general practitioners to more than 110,000 depressed patients between 2000 and 2008. New results revealing an increase in suicidal thinking among children taking selective serotonin reuptake inhibitors (SSRIs) were reported in 2004 and prompted the release of new guidelines by public health authorities. We identify the effect of this unexpected warning on physicians’ drug choices while addressing that possibility that patient heterogeneity may be correlated with unobserved physician characteristics. While the warning decreased the average probability of prescribing SSRIs, we find that physicians’ responses to the warning were very heterogeneous and larger if the physician had a higher preference for prescribing SSRIs before the warning.
    Keywords: Physician behavior; prescription; antidepressants; mixed logit
    JEL: I10 D12 C25
    Date: 2020–06
  4. By: Collischon, Matthias (University of Erlangen-Nuremberg); Kühnle, Daniel (University of Duisburg-Essen); Oberfichtner, Michael (Institute for Employment Research (IAB), Nuremberg)
    Abstract: How parents respond to changes in the price of childcare is an important, though not fully understood, public policy question. Our paper provides new comprehensive evidence on how a home care subsidy jointly affects maternal labour market outcomes, childcare choices, and children's development. We examine a German reform from 2013 which introduced a home care subsidy of initially 100 Euros per month for families who do not use subsidised childcare. Exploiting a date-of-birth cut-off in eligibility and using administrative data on employment and child development alongside survey data on childcare usage, we show that the reform reduced mothers' likelihood to return to work within three years by only 1.4 percentage points, but decreased childcare enrolment for one- and two-year olds by 5 percentage points. We find no effect on children's skill development at age six. Our findings imply that the subsidy accrued almost completely as windfall gains to families who would not have used formal childcare anyway.
    Keywords: childcare choices, maternal labour supply, cash-for-care, home care subsidy, children's development, windfalls gains
    JEL: J13 J18 J22
    Date: 2020–05
  5. By: Bryan, M.; Rice, N.; Roberts, J.; Sechel, C.
    Abstract: The disability employment gap is an issue of concern in most Western developed economies. This paper provides important empirical evidence on the influence of mental health on the probability of being in employment for prime age workers. We use longitudinal data and recently developed techniques, which use selection on observable characteristics to provide information on selection along unobservable factors, to estimate an unbiased effect of changes in mental health. Our results suggest that selection into mental health is almost entirely based on time-invariant characteristics, and hence fixed effects estimates are unbiased in this context. Our results indicate that transitioning into poor mental health leads to a reduction of 1.6 percentage points in the probability of employment. This is approximately 10 per cent of the raw employment gap. This effect is substantially smaller than the typical instrumental variable estimates, which dominate the literature, and often provide very specific estimates of a local average treatment effect based on an arbitrary exogenous shock. These findings should provide some reassurance to practitioners using fixed effects methods to investigate the impacts of health on work. They should also be useful to policy makers as the average effect of mental health on employment for those whose mental health changes is a highly relevant policy parameter.
    Keywords: mental health; employment; fixed effects; Oster bounds; UKHLS;
    JEL: I12 J14 J24
    Date: 2020–06
  6. By: Karen Arulsamy (School of Economics & Geary Institute for Public Policy, University College Dublin); Liam Delaney (School of Economics & Geary Institute for Public Policy, University College Dublin)
    Abstract: A large body of evidence shows that individuals with poor mental health have lower income over the lifespan but a dearth of evidence exists on how poor mental health affects savings behaviour. In this paper, we provide novel evidence of a mental health gap in pension participation in the UK using nationally representative longitudinal data from Understanding Society (UKHLS). Beginning in 2012, the UK government introduced automatic enrolment enabling us to assess the impact of one of the largest pension policy reforms in the world on this mental health gap. We measure mental health using the General Health Questionnaire (GHQ-12) which is a commonly used tool for measuring psychological distress. Prior to automatic enrolment, we find that male private sector employees with poor mental health are 3.2 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.6 percentage points less likely to participate in a workplace pension scheme after controlling for key observables including age, education, race, marital status, number of children, occupation type, industry type, presence of a physical health condition and cognitive ability. The implementation of automatic enrolment completely removes the mental health gap in pension participation. By documenting the impact of automatic enrolment on the mental health gap in pension participation, we provide additional support for automatic enrolment policies which have already been shown to reduce gaps in pension participation among female and low income employees.
    Keywords: Mental health; psychological distress; pensions; savings; automatic enrolment; financial security; longitudinal studies
    JEL: J32 D91
    Date: 2020–06–05
  7. By: Anna Oksuzyan (Max Planck Institute for Demographic Research, Rostock, Germany); Sven Drefahl (Max Planck Institute for Demographic Research, Rostock, Germany); Jennifer Caputo (Max Planck Institute for Demographic Research, Rostock, Germany); Siddartha Aradhya
    Abstract: Marriage is protective against suicide across populations, including for persons of different ethnicities and immigrant backgrounds. However, the well-being benefits of marriage are contingent upon marital characteristics—such as conflict and quality—that may vary among persons of different migration backgrounds in interaction with the migration background of their spouse. Leveraging Swedish register data, we compare suicide mortality hazard among married persons on the basis of their and their spouse’s migration background. We find that relative to those in a native Swede-Swede union, Swedish men married to female immigrants and immigrant women married to native men are at higher risk of death by suicide, while immigrants of both genders who are married to someone from their birth country have lower suicide mortality risk. The findings support hypotheses about the strains that may be encountered by those who intermarry, as well as the potential selection of individuals into inter- and intra-ethnic marriages.
    Keywords: Sweden, immigrants, mental health, mixed marriage, population registers, suicide
    JEL: J1 Z0
    Date: 2020
  8. By: Benjamin W. Cowan; Zhuang Hao
    Abstract: Reported mental health problems have risen dramatically among U.S. college students over time, as has treatment for these problems. An open question is how healthcare access affects diagnosis of mental illness and treatments such as prescription psychotropic medication use. We examine the effect of state-level Medicaid expansion following the 2014 implementation of the Affordable Care Act on the diagnosis of mental health conditions and psychotropic prescription drug use of a national sample of college students. We find that students from disadvantaged backgrounds are more likely to report being on public insurance after 2014 in expansion states relative to non-expansion states, while more advantaged students do not see this increase. Both diagnosis of common mental health conditions and psychotropic drug use increase following expansion for disadvantaged students relative to advantaged ones, which translates into an elimination of the pre-treatment gap in these outcomes by family background in expansion states. However, these changes are not associated with short-term improvements in measures of mental health status or academic outcomes.
    JEL: I12 I13 I14
    Date: 2020–06
  9. By: Miranda, Alfonso (CIDE, Mexico City); Trivedi, Pravin K. (University of Queensland)
    Abstract: This paper reviews some key contributions to econometric analysis of human fertility in the last 20 years, with special focus on discussion of prevailing econometric modeling strategies. We focus on the literature that highlights the role of the key drivers of the birth outcomes, including age at entry into motherhood, the number of children, and the time between births. Our overall approach is to highlight the use of single equation reduced form modelling, which has important advantages but has the limitation of typically being unable to shed light on detailed causal mechanisms through which exogenous factors such as birth control and infant mortality, and policy variables such as child allowances and tax incentives, impact fertility. Structural models that embed causal mechanisms explicitly are better suited for this objective. We start with a description of the subject matter, including a brief review of existing theories of fertility behaviour and a detailed discussion of the sources of data that are available to the analyst. At this point we stress the intrinsic dynamic nature of fertility decisions and how such dynamics create data with empirical features that pose important challenges for modelling. Once the nature of the problem and the characteristics of the data are spelled out, we proceed to review the different econometric approaches that have been used for modelling fertility outcomes with cross-section and panel data.
    Keywords: econometrics of fertility, cross-section and panel data models, count data models, hazard (survival) models
    JEL: C21 C23 C41 J13
    Date: 2020–06
  10. By: Francisco J. Beltrán Tapia (Norwegian University of Science and Technology); Francisco J. Marco-Gracia (Universidad de Zaragoza)
    Abstract: Relying on longitudinal micro data from a Spanish rural region between 1750 and 1950, this article evidences that families mortally neglected a significant fraction of their female babies. On the one hand, baptism records exhibit exceptionally high sex ratios at birth, especially during the 19th century. On the other hand, our data shows that having no previous male siblings increased both the probability of male baptisms and female mortality during the first day of life. These findings seem to be concentrated at higher parities and among landless and semi-landless families which were subject to harsher economic conditions and therefore more likely to resort to extreme decisions under difficult circumstances. Crucially, the fact that the results are robust to employing data from birth and death registers rules out the possibility that under-registration explains this pattern. Lastly, although these practices were definitely more important during the traditional demographic regime, discriminatory patterns affecting female mortality shortly after birth were still visible during the first decades of the 20th century, thus proving that son preference continued to be a strong cultural norm within these societies.
    Keywords: Sex ratios, Infant mortality, Infanticide, Gender discrimination
    JEL: I14 I15 J13 J16 N33
    Date: 2020–06
  11. By: Mireille Jacobson; Maria Kogelnik; Heather Royer
    Abstract: Fewer births occur on major US holidays than would otherwise be expected. We use California data to study the nature and health implications of this birth date manipulation. We document 18% fewer births on the day of and just after a holiday. Cesarean sections account for roughly half of the decline. Using insights from the tax bunching and test score manipulation literature, we show that “missing” holiday births are displaced to a window of time 11 days before the holiday through 16 days after the holiday. Delivery type does not change over this window, consistent with a pure retiming of births rather than an increase in the use of procedures such as cesarean sections. Despite the change in timing, we find little evidence of any adverse health consequences for babies born around a holiday. Even among high-risk pregnancies, which are more likely to be retimed, we find a minimal impact of holiday-related birth timing manipulation on infant health. Finally, while some of the retiming seems to be driven by patients’ preferences, provider incentives appear to play a crucial role in holiday-related birth retiming. At Kaiser Permanente hospitals, where systemwide financial incentives discourage providers from electively timing births, the dip in births on holidays is less than for hospitals overall. This suggests that holiday retiming occurs more frequently among providers who face less of a disincentive to electively schedule births.
    JEL: I11 I12 J13
    Date: 2020–06
  12. By: Thomas G. Wollmann
    Abstract: Most US mergers are not reported to the government on the basis of their size, which can effectively exempt them from antitrust scrutiny, thereby leading to anticompetitive behavior. This paper studies premerger notification exemptions in the US dialysis industry. Over two decades, dialysis providers attempted over 4,000 facility acquisitions, half of which were not reported to the nation’s competition authorities. I estimate the effect of premerger notification exemptions on antitrust enforcement rates, and then I estimate the impact of the resulting market structure changes on patient health outcomes. First, I find that exemptions severely limit enforcement. Most striking, proposed facility acquisitions that would result in monopoly are blocked more than 80% of the time when apart of reportable mergers but less than 2% of the time when apart of exempt ones. Second, I find that the resulting market structure changes reduce the quality of care, evidenced by higher hospitalization rates and lower survival rates.
    JEL: D4 D43 I11 K21 L0 L1 L11 L13 L4 L40
    Date: 2020–05
  13. By: Caliendo, Marco (University of Potsdam); Hennecke, Juliane (Auckland University of Technology)
    Abstract: Unhealthy behavior can be extremely costly from a micro- and macroeconomic perspective and exploring the determinants of such behavior is highly important from an economist's point of view. We examine whether locus of control (LOC) can explain alcohol consumption as an important domain of health behavior. LOC measures how much an individual believes that she is in control of the consequences of her own actions for her life's future outcomes. While earlier literature showed that an increasing internal LOC is associated with increased health-conscious behavior in domains such as smoking, exercise or diets, we find that drinking seems to be different. Using German panel data from the Socio-Economic Panel (SOEP) we find a significant positive effect of having an internal LOC on the probability of moderate and regular drinking. We suggest and discuss two likely mechanisms for this relationship and find interesting gender dierences. While social investments play an important role for both men and women, risk perceptions are especially relevant for men.
    Keywords: locus of control, alcohol consumption, health behavior, risk perception, social investment
    JEL: I12 D91
    Date: 2020–05
  14. By: Klein, Tobias; Salm, Martin; Upadhyay, Suraj
    Abstract: We develop a new approach to quantify how patients respond to dynamic incentives in health insurance contracts with a deductible. Our approach exploits two sources of variation in a differences-in-regression-discontinuities design: deductible contracts reset at the beginning of the year, and cost-sharing limits change over the years. Using rich claims-level data from a large Dutch health insurer we find that individuals are forward-looking. Changing dynamic incentives by increasing the deductible by e100 leads to a reduction in healthcare spending of around 3% on the first days of the year and 6% at the annual level. The response to dynamic incentives is an important part of the overall effect of cost-sharing schemes on healthcare expenditures-much more so than what the previous literature has suggested.
    Keywords: Dynamic incentives; Health Insurance; Patient cost-sharing
    JEL: H51 I13
    Date: 2020–04
  15. By: Saporta-Eksten, Itay (Tel Aviv University); Shurtz, Ity (Ben Gurion University); Weisburd, Sarit (Tel Aviv University)
    Abstract: We study the effects of public pension systems on the retirement timing of older workers and, in turn, the health consequences of delaying retirement by those workers. Causal inference relies on a social security reform in Israel that shifted payments from husbands to their (non-working) wives, thereby substantially reducing the implied tax on the husband's employment while keeping overall household wealth constant. Using administrative social security data, we estimate extensive-margin labor supply elasticities w.r.t. the average net-of-tax rate of about 0.43 for men over 65. Using the reform to instrument for employment, we find that working an additional full year at old age decreases longevity. This mortality effect occurs after age 75 and is driven by workers holding blue-collar jobs. Finally, we evaluate the effect of the reform on earnings. The results imply a small value for an additional year of life, suggesting that workers underestimate the health cost of employment at older ages.
    Keywords: labor supply, social security, tax reform, health, mortality
    JEL: H55 J14 J17 J22 J26
    Date: 2020–05
  16. By: Michael Keane (School of Economics, UNSW Business School, UNSW Sydney); Elena Capatina (Research School of Economics, Australian National University); Shiko Maruyama (Economics Discipline Group, UTS Business School, University of Technology Sydney)
    Abstract: We study the contribution of health shocks to earnings inequality and uncertainty in labor market outcomes. We calibrate a life-cycle model of labor supply and savings that incorporates health and health shocks. Our model features endogenous wage formation via human capital accumulation, employer sponsored health insurance, and meanstested social insurance. We find a substantial part of the impact of health shocks on earnings arises via reduced human capital accumulation. Health shocks account for 15% of lifetime earnings inequality for U.S. males, with two-thirds of this due to behavioral responses. In particular, it is optimal for low-skill workers – who often lack employer sponsored insurance – to curtail labor supply to maintain eligibility for means-tested transfers that protect them from high health care costs. This causes low-skill workers to invest less in human capital. Provision of public health insurance can alleviate this problem and enhance labor supply and human capital accumulation.
    Keywords: Health, Health Shocks, Human Capital, Income Risk, Precautionary Saving, Earnings Inequality, Health Insurance, Welfare
    JEL: D91 E21 I14 I31
    Date: 2020–06
  17. By: Plamen Nikolov; Alan Adelman
    Abstract: This paper examines the impact of the New Rural Pension Scheme (NRPS) in China. Exploiting the staggered implementation of an NRPS policy expansion that began in 2009, we use a difference-in-difference approach to study the effects of the introduction of pension benefits on the health status, health behaviors, and healthcare utilization of rural Chinese adults age 60 and above. The results point to three main conclusions. First, in addition to improvements in self-reported health, older adults with access to the pension program experienced significant improvements in several important measures of health, including mobility, self-care, usual activities, and vision. Second, regarding the functional domains of mobility and self-care, we found that the females in the study group led in improvements over their male counterparts. Third, in our search for the mechanisms that drive positive retirement program results, we find evidence that changes in individual health behaviors, such as a reduction in drinking and smoking, and improved sleep habits, play an important role. Our findings point to the potential benefits of retirement programs resulting from social spillover effects. In addition, these programs may lessen the morbidity burden among the retired population.
    Date: 2020–06
  18. By: Wozny, Florian (IZA)
    Abstract: Changes in medical expenses may force hospitals to reallocate their resources, which potentially come at the detriment of healthcare quality. Using data on the universe of German hospitals, I investigate resource reallocations between capital stock, human resources, services and the organizational structure in case of reform-induced treatment price shocks at the hospital level. To identify a causal effect, I develop a unique identification strategy where I exploit hospitals' exposure to snowfall. A particularity of the reform led to exogenous treatment price shocks at hospital level in response to weather-induced excess of patients. The results show that higher prices induce hospitals to hire more physicians and nurses and encourage fewer mergers and privatization and less closures while not affecting the capital stock. In addition, hospitals become less specialized and reduce their treatment volume. These effects persist long after the treatment price shocks have vanished.
    Keywords: hospital care, DRG, management
    JEL: I11 L10 L21
    Date: 2020–05
  19. By: Liu, L-Q.; Yin, Z-L.; Xie, B-C.; Zhou, W.
    Abstract: Air pollution is a big threat to human beings and has attract worldwide attention from governments and scholars. Based on the survey of happiness in China, this paper attempts to analyze the impact of local air quality on the happiness of individuals, and to evaluate the monetary value of mitigating air pollution. Through merging individual happiness data in a nationally representative survey with daily air quality index (AQI) according to the date and location of each respondent, it calculates the marginal rate of substitution (MRS) between air quality and income, and then estimates respondents’ willingness to pay (WTP) for better air quality. Moreover, it has further explored the differences of WTPs among groups. This study reaches the conclusion that happiness is positively associated with income but negatively correlated with air pollution. Besides, individual happiness is heavily influenced by income, age, gender, health condition, marital status and other variables. Furthermore, WTPs differ greatly among groups and the estimated average WTP of whole sample is 549.36RMB(or 0.90% of annual household income) per year per family for one unit reduction in AQI.
    Keywords: Happiness, Willingness to pay, Air pollution, China
    JEL: L94
    Date: 2020–05–21
  20. By: Charles F. Manski
    Abstract: COVID-19 antibody tests have imperfect accuracy. There has been lack of clarity on the meaning of reported rates of false positives and false negatives. For risk assessment and clinical decision making, the rates of interest are the positive and negative predictive values of a test. Positive predictive value (PPV) is the chance that a person who tests positive has been infected. Negative predictive value (NPV) is the chance that someone who tests negative has not been infected. The medical literature regularly reports different statistics, sensitivity and specificity. Sensitivity is the chance that an infected person receives a positive test result. Specificity is the chance that a non-infected person receives a negative result. Knowledge of sensitivity and specificity permits one to predict the test result given a person’s true infection status. These predictions are not directly relevant to risk assessment or clinical decisions, where one knows a test result and wants to predict whether a person has been infected. Given estimates of sensitivity and specificity, PPV and NPV can be derived if one knows the prevalence of the disease, the rate of illness in the population. There is considerable uncertainty about the prevalence of COVID-19. This paper addresses the problem of inference on the PPV and NPV of COVID-19 antibody tests given estimates of sensitivity and specificity and credible bounds on prevalence. I explain the methodological problem, show how to estimate bounds on PPV and NPV, and apply the findings to some tests authorized by the FDA.
    JEL: C13 I10
    Date: 2020–05
  21. By: Brück, Tilman (ISDC - International Security and Development Center); Ferguson, Neil T.N. (ISDC - International Security and Development Center); Justino, Patricia (UNU-WIDER); Stojetz, Wolfgang (ISDC - International Security and Development Center)
    Abstract: The global spread of COVID-19 is one of the largest threats to people and governments since the Second World War. The on-going pandemic and its countermeasures have led to varying physical, psychological, and emotional experiences, shaping not just public health and the economy but also societies. We focus on one pillar of society—trust—and explore how trust correlates with the individual experiences of the pandemic. The analysis is based on a new global survey—'Life with Corona'—and uses simple correlational statistics. We show that those who have had contact with sick people and those that are unemployed exhibit lower trust in people, institutions, and in general. By contrast, no such differences exist for those who have personally experienced symptoms of the disease. These associations vary across contexts and are not driven by concerns about personal health or the health of loved ones, but rather by increased levels of worry and stress. Our findings suggest that the effects of the pandemic go well beyond immediate health concerns, leading to important normative changes that are likely to shape how societies will emerge from the pandemic
    Keywords: COVID-19, coronavirus, pandemic, survey data, trust, well-being
    JEL: D91 I12 I31 O12
    Date: 2020–06
  22. By: Jonathan T. Vu; Benjamin K. Kaplan; Shomesh Chaudhuri; Monique K. Mansoura; Andrew W. Lo
    Abstract: Recent outbreaks of infectious pathogens such as Zika, Ebola, and COVID-19 have underscored the need for the dependable availability of vaccines against emerging infectious diseases (EIDs). The cost and risk of R&D programs and uniquely unpredictable demand for EID vaccines have discouraged vaccine developers, and government and nonprofit agencies have been unable to provide timely or sufficient incentives for their development and sustained supply. We analyze the economic returns of a portfolio of EID vaccine assets, and find that under realistic financing assumptions, the expected returns are significantly negative, implying that the private sector is unlikely to address this need without public-sector intervention. We have sized the financing deficit for this portfolio and analyze several potential solutions, including price increases, enhanced public-private partnerships, and subscription models through which individuals would pay annual fees to obtain access to a portfolio of vaccines in the event of an outbreak.
    JEL: G11 G12 G31 G32 G38 H12 H41 H51 I11 I18 L11 L52 Q54
    Date: 2020–05
  23. By: Chang, Roberto; Velasco, Andrés
    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).
    Keywords: COVID-19; crisis; Pandemics
    Date: 2020–04
  24. By: Davillas, Apostolos; Jones, Andrew M.
    Abstract: We use data from Wave 9 of UK Household Longitudinal Study (UKHLS) and the April 2020 Wave of the UKHLS COVID-19 survey to compare measures of ex ante inequality of opportunity (IOp) in psychological distress, as measured by the General Health Questionnaire (GHQ), before (Wave 9) and at the initial peak (April 2020) of the pandemic. Based on a Caseness measure, the prevalence of psychological distress increases from 18.3% to 28.3% between Wave 9 and April 2020. Also, there is a systematic increase in total inequality in the Likert GHQ-12 score. However, measures of IOp have not increased. Specifically, the proportion of total inequality attributed to circumstances has declined, consistent with the notion that the pandemic is, to some extent, a leveller as far as psychological distress is considered. A Shapley-Shorrocks decomposition analysis shows that in the pre-COVID-19 period the largest contributors to IOp were financial strain, employment status and housing conditions. In contrast, in April 2020, these factors decline in their shares and age and gender now account for a larger share. The contribution of working in an industry related to the COVID-19 response plays a small role at Wave 9, but more than triples its share in April 2020. Household composition and parental occupation also increase their shares during the pandemic.
    Keywords: COVID-19,inequality of opportunity,GHQ,mental health,psychological distress
    JEL: C1 D63 I12 I14
    Date: 2020
  25. By: Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C.
    Abstract: The coronavirus outbreak has caused significant disruptions to people’s lives. We document the impact of state-wide stay-at-home orders on mental health using real time survey data in the US. The lockdown measures lowered mental health by 0.085 standard deviations. This large negative effect is entirely driven by women. As a result of the lockdown measures, the existing gender gap in mental health has increased by 66%. The negative effect on women’s mental health cannot be explained by an increase in financial worries or childcare responsibilities.
    Keywords: COVID-19, Mental health, Gender, Recessions, Coronavirus
    JEL: I10 I14 I18 I30
    Date: 2020–05–07
  26. By: Schmitt-Grohé, Stephanie; Teoh, Ken; Uribe, Martin
    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.
    Keywords: Coronavirus; Covid-19 testing; Gini coefficient; health; income distribution; inequality; Lorenz curves
    JEL: I14 R1
    Date: 2020–04
  27. By: Emily E. Wiemers; Scott Abrahams; Marwa AlFakhri; V. Joseph Hotz; Robert F. Schoeni; Judith A. Seltzer
    Abstract: This paper provides the first nationally representative estimates of vulnerability to severe complications from COVID-19 overall and across race-ethnicity and socioeconomic status. We use the Panel Study of Income Dynamics (PSID) to examine the prevalence of specific health conditions associated with complications from COVID-19 and to calculate, for each individual, an index of the risk of severe complications from respiratory infections developed by DeCaprio et al. (2020). We show large disparities across race-ethnicity and socioeconomic status in the prevalence of conditions, including hypertension, which are associated with the risk of severe complications from COVID-19. Moreover, we show that these disparities emerge early in life, prior to age 65, leading to higher vulnerability to such complications. Our results suggest particular attention should be paid to the risk of adverse outcomes in midlife for non-Hispanic blacks, adults with a high school degree or less, and low-income Americans.
    JEL: I1 I14 I24 J1 J11 J14
    Date: 2020–06
  28. By: Chen, Zezhun; Dassios, Angelos; Kuan, Valerie; Lim, Jia Wei; Qu, Yan; Surya, Budhi; Zhao, Hongbiao
    Abstract: In this paper, we propose a continuous-time stochastic intensity model, namely, two-phase dynamic contagion process (2P-DCP), for modelling the epidemic contagion of COVID-19 and investigating the lockdown effect based on the dynamic contagion model introduced by Dassios and Zhao (2011). It allows randomness to the infectivity of individuals rather than a constant reproduction number as assumed by standard models. Key epidemiological quantities, such as the distribution of final epidemic size and expected epidemic duration, are derived and estimated based on real data for various regions and countries. The associated time lag of the effect of intervention in each country or region is estimated. Our results are consistent with the incubation time of COVID-19 found by recent medical study. We demonstrate that our model could potentially be a valuable tool in the modeling of COVID-19. More importantly, the proposed model of 2P-DCP could also be used as an important tool in epidemiological modelling as this type of contagion models with very simple structures is adequate to describe the evolution of regional epidemic and worldwide pandemic.
    Keywords: Covid-19; coronavirus; stochastic intensity model; two-phase dynamic contagion process; lockdown
    JEL: I10 H00 E60
    Date: 2020–06–10
  29. By: Ferreira, Leonardo M.R. (University of California, San Francisco); Mostajo-Radji, Mohammed A
    Abstract: Convalescent plasma therapy holds promise as a transient treatment for COVID-19. Yet, blood products are important sources of HIV infection in developing nations. Great care must be taken to prevent plasma therapy from fueling HIV epidemics in the developing world.
    Date: 2020–06–12
  30. By: Schellekens,Philip; Sourrouille,Diego M.
    Abstract: COVID-19 can be described as a heat-seeking missile speeding toward the most vulnerable in society. That metaphor applies not just to the vulnerable in the rich world; the vulnerable in the rest of the world are not more immune. Yet, despite the extensive spread of the virus, the mortality toll remains highly concentrated in high-income countries. Developing countries represent 85 percent of the global population, but only 21 percent of the pandemic's death toll. This unusual inequality creates the impression that the world is subjected to two different pandemics in terms of their impact. This paper documents the observed inequality with a new indicator that expresses severity relative to pre-pandemic patterns. It argues that the excessive skew towards rich countries is inconsistent with demography. Simulations based on reasonable ranges for infectivity and fatality suggest that the developing country share in global fatalities could rise by a factor of three (from 21 to 69 percent). Environmental and host-specific factors will influence these results but are unlikely to overturn them. While data quality has a role in explaining ?excess inequality?, the more compelling explanation is that the pandemic has yet to run its course through the age distributions of the world.
    Keywords: Law and Justice Institutions,Health Care Services Industry,Public Health Promotion,Disease Control&Prevention,Global Environment
    Date: 2020–05–28
  31. By: Dhaval M. Dave; Andrew I. Friedson; Kyutaro Matsuzawa; Drew McNichols; Joseph J. Sabia
    Abstract: Both the White House and state governors have explicitly linked thresholds of reduced COVID-19 case growth to the lifting of statewide shelter-in-place orders (SIPOs). This “hardwired” policy endogeneity creates empirical challenges in credibly isolating the causal effect of lifting a statewide SIPO on COVID-19-related health. To break this simultaneity problem, the current study exploits a unique natural experiment generated by a Wisconsin Supreme Court decision. On May 13, 2020, the Wisconsin Supreme Court abolished the state’s “Safer at Home” order, ruling that the Wisconsin Department of Health Services unconstitutionally usurped legislative authority to review COVID-19 regulations. We capitalize on this sudden, dramatic, and largely unanticipated termination of a statewide SIPO to estimate its effect on social distancing and COVID-19 case growth. Using a synthetic control design, we find no evidence that the repeal of the state SIPO impacted social distancing, COVID-19 cases, or COVID-19-related mortality during the fortnight following enactment. Estimated effects were economically small and nowhere near statistically different from zero. We conclude that the impact of shelter-in-place orders is likely not symmetric across enactment and lifting of the orders.
    JEL: H75 I18
    Date: 2020–06
  32. By: Bogliacino, Francesco (Universidad Nacional de Colombia); codagnone, cristiano; Montealegre, Felipe (Universidad Nacional de Colombia); Folkvord, F.; Gómez, Camilo Ernesto (Centro de Investigaciones para el Desarrollo); Charris, Rafael Alberto (Universidad Nacional de Colombia); Liva, Giovanni; Villanueva, Francisco Lupiañez; Veltri, Giuseppe Alessandro Prof (University of Trento)
    Abstract: In the context of the current COVID-19 pandemic, households throughout the world have to cope with negative shocks, either because of the disease or the various mitigation strategies that have caused massive unemployment and financial insecurity. Previous research has shown that negative shocks impair cognitive function and change risk, time and social preferences. In this study, we analyze the results of a longitudinal multi-country survey conducted in Italy (N=1,652), Spain (N=1,660) and the United Kingdom (N=1,578). We measure cognitive function using the Cognitive Reflection Test and preferences traits using an experimentally validated set of questions to assess the differences between people exposed to a shock compared to the rest of the sample. We measure four possible types of shocks: labor market shock, health shock, occurrence of stressful events, and mental health shock. Additionally, we randomly assign participants to groups with either a recall of negative events (more specifically, a mild reinforcement of stress or of fear/anxiety), or to a control group (to recall neutral or joyful memories), in order to assess whether or not stress and negative emotions drive a change in preferences. Results show that people affected by shocks performed worse in terms of cognitive functioning, are more risk loving, and are more prone to punish others (negative reciprocity). Data do not support the hypotheses that the result is driven by stress or by negative emotions.
    Date: 2020–06–01
  33. By: Oguzoglu, Umut (University of Manitoba)
    Abstract: This paper investigates the decline in traffic accidents, fatalities and injuries during the months that COVID-19 stay-at-home orders implemented in Turkey. Taking into account the decline in accidents in March and April together, these rates roughly translate to 200 traffic related deaths and 17,600 injuries avoided during the months that stay-at-home orders were in place. The Difference in Difference estimates that exploit variation in quarantine orders among small cities, I also show that stricter rules in April are responsible for the decline of accidents with death or injury by 35 percent, death by 72 percent and injuries by 19 percent.
    Keywords: COVID-19, safer-at-home, lockdowns, traffic accidents, fatality, injury, Turkey
    JEL: P48 Q53 Q58
    Date: 2020–05
  34. By: Brotherhood, Luiz (University of Barcelona); Kircher, Philipp (European University Institute); Santos, Cezar (Getulio Vargas Foundation, Brazil); Tertilt, Michèle (University of Mannheim)
    Abstract: This paper investigates the role of testing and age-composition in the Covid-19 epidemic. We augment a standard SIR epidemiological model with individual choices regarding how much time to spend working and consuming outside the house, both of which increase the risk of transmission. Individuals who have flu symptoms are unsure whether they caught Covid-19 or simply a common cold. Testing reduces the time of uncertainty. Individuals are heterogeneous with respect to age. Younger people are less likely to die, exacerbating their willingness to take risks and to impose externalities on the old. We explore heterogeneous policy responses in terms of testing, confinements, and selective mixing by age group.
    Keywords: COVID-19, testing, social distancing, age-specific policies
    JEL: E17 C63 D62 I10 I18
    Date: 2020–05
  35. By: Papageorge, Nicholas W. (Johns Hopkins University); Zahn, Matthew V. (Johns Hopkins University); Belot, Michèle (European University Institute); van den Broek-Altenburg, Eline (University of Vermont); Choi, Syngjoo (Seoul National University); Jamison, Julian C. (University of Exeter); Tripodi, Egon (European University Institute)
    Abstract: Disease spread is in part a function of individual behavior. We examine the factors predicting individual behavior during the Covid-19 pandemic in the United States using novel data collected by Belot et al. (2020). Among other factors, we show that people with lower income, less flexible work arrangements (e.g., an inability to tele-work) and lack of outside space at home are less likely to engage in behaviors, such as social distancing, that limit the spread of disease. We also find evidence that region, gender and beliefs predict behavior. Broadly, our findings align with typical relationships between health and socio-economic status. Moreover, they suggest that the burden of measures designed to stem the pandemic are unevenly distributed across socio-demographic groups in ways that affect behavior and thus potentially the spread of illness. Policies that assume otherwise are unlikely to be effective or sustainable.
    Keywords: COVID-19, health, income, behavior
    JEL: I10 I14
    Date: 2020–06
  36. By: Parui, Pintu
    Abstract: Motivated by the prevailing severe situation in India, we extend the SIR(S) model of infectious diseases to incorporate demand dynamics and its interaction with Covid-19 spread. We argue that, on one hand, spread of Covid-19 creates panic among consumers and firms and negatively affects economic activity. On the other hand, economy activity intensifies the spread of the infection. Initially assuming that recovered individuals do not develop antibody and become susceptible again, we capture the interaction between economic activity and spread of the disease in a two-dimensional dynamical system. We show that a large fiscal expansion combined with measures to boost community health as well as improve health sector's capacity to provide critical care can at the same time improve the economy and control the spread of the disease. We also find a slightly counter-intuitive result that a fiscal contraction can, under certain conditions, increase output and reduce number of infected individuals. However, we show that such a policy also increases fragility in the system. Finally assuming that only a fraction of recovered individuals become susceptible to contracting the diseases again, we obtain richer dynamics in a three-dimensional dynamical system. The paper also highlights the important role of speed of adjustment in the goods market in stability properties of steady state including emergence of limit cycles.
    Keywords: Effective Demand, Animal Spirits, Consumer Confidence, Cycles, Fiscal Policy, Public Health, Covid-19
    JEL: E21 E32 E62 H51
    Date: 2020–05–25
  37. By: Andrey Simonov; Szymon K. Sacher; Jean-Pierre H. Dubé; Shirsho Biswas
    Abstract: We test for and measure the effects of cable news in the US on regional differences in compliance with recommendations by health experts to practice social distancing during the early stages of the COVID-19 pandemic. We use a quasi-experimental design to estimate the causal effect of Fox News viewership on stay-at-home behavior by using only the incremental local viewership due to the quasi-random assignment of channel positions in a local cable line-up. The average partial effect of Fox News viewership in a zipcode implies that 1 percentage point increase in cable viewership reduces the propensity to stay at home by 8.9 percentage points compared to the pre-pandemic average. We find a persuasion rate of Fox News on non-compliance with stay-at-home behavior during the crisis of about 33.5%-50% across our various social distancing metrics.
    JEL: D72 I12 I18 L82
    Date: 2020–05
  38. By: Caria, Stefano; Fetzer, Thiemo; Fiorin, Stefano; Goetz, Friedrich; Gomez, Margarita; Haushofer, Johannes; Hensel, Lukas; Ivchenko, Andriy; Jachimowicz, Jon M.; Kraft-Todd, Gordon; Reutskaja, Elena; Roth, Christopher; Witte, Marc; Yoeli, Erez
    Abstract: We conducted a large-scale survey covering 58 countries and over 100,000 respondents between late March and early April 2020 to study beliefs and attitudes towards citizens' and governments' responses to the COVID-19 pandemic. Most respondents reacted strongly to the crisis: they report engaging in social distancing and hygiene behaviors, and believe that strong policy measures, such as shop closures and curfews, are necessary. They also believe that their government and their country's citizens are not doing enough and under- estimate the degree to which others in their country support strong behavioral and policy responses to the pandemic. The perception of a weak government and public response is associated with higher levels of worries and depression. Using both cross-country panel data and an event-study, we additionally show that strong government reactions correct misperceptions, and reduce worries and depression. Our findings highlight that policy-makers not only need to consider how their decisions affect the spread of COVID-19, but also how such choices influence the mental health of their population.
    Keywords: COVID19; government response; mental health; Perceptions; social distancing
    Date: 2020–04
  39. By: Glover, Andrew; Heathcote, Jonathan; Krueger, Dirk; Rios-Rull, Jose-Victor
    Abstract: Many countries are shutting non-essential sectors of the economy to slow the spread of COVID-19. The gains and losses from these policies are very unequally distributed. Older individuals have most to gain from slowing virus diffusion. Younger workers in sectors that are shuttered have the most to lose. In this paper we first extend a standard epidemiological model of disease progression to include heterogeneity by age, and multiple sources of disease transmission. We then incorporate the epidemiological block into a multi-sector economic model in which workers differ by sector (basic and luxury) as well as by health status. Individuals value consumption, life, and health. We study optimal mitigation policies of a utilitarian government that can redistribute resources across individuals, but where such redistribution is costly. We show that optimal redistribution- and mitigation policies interact and thus the utilitarian government chooses a very different mitigation policy path than would be suggested by a representative agent setting. This policy reflects a compromise between the strongly diverging preferred policy paths across the subgroups of the population.
    Keywords: COVID-19; Economic Policy; redistribution
    Date: 2020–04
  40. By: Fetzer, Thiemo (University of Warwick); Witte, Marc; Hensel, Lukas; Jachimowicz, Jon M.; Haushofer, Johannes; Ivchenko, Andriy; Caria, Stefano (University of Warwick); Elena Reutskaja,; Roth, Christopher (University of Warwick); Fiorin, Stefano; Gomez, Margarita; Kraft-Todd, Gordon; Goetz, Friedrich M.; Yoeli, Erez
    Abstract: We conducted a large-scale survey covering 58 countries and over 100,000 respondents between late March and early April 2020 to study beliefs and attitudes towards citizens’ and governments’ responses to the COVID-19 pandemic. Most respondents reacted strongly to the crisis: they report engaging in social distancing and hygiene behaviors, and believe that strong policy measures, such as shop closures and curfews, are necessary. They also believe that their government and their country’s citizens are not doing enough and underestimate the degree to which others in their country support strong behavioral and policy responses to the pandemic. The perception of a weak government and public response is associated with higher levels of worries and depression. Using both cross-country panel data and an event-study, we additionally show that strong government reactions correct misperceptions, and reduce worries and depression. Our findings highlight that policy-makers not only need to consider how their decisions affect the spread of COVID-19, but also how such choices influence the mental health of their population.
    Keywords: JEL Classification:
    Date: 2020
  41. By: Favero, Carlo A.; Ichino, Andrea; Rustichini, Aldo
    Abstract: We provide, calibrate and test a realistic model of the spread of SARS-Cov-2 in an economy where the population has different age groups and sectors. The model takes into account factors that have proved to be essential in explaining features of the effect of the epidemic, in particular the constraint in the number of Intensive Care Units available in a region and the different response to the epidemic of individuals of different ages. We characterize the policies of containment of the epidemic that are efficient with respect to important outcomes such as number of fatalities and GDP loss. Our main finding is that prudent policies of gradual return to work even in the short period, may save many lives with limited economic costs, as long as a threshold is not reached. Further attempts to reduce fatalities beyond this threshold cause GDP losses that become extremely large. The policies that allow this safe return to productive activity are a combination of selection criteria of individual allowed to return to work on the basis of age and risk of the sector in which they are employed.
    Keywords: COVID19; post lockdown policies; SEIR model
    JEL: D6 H84 I12 I18
    Date: 2020–04
  42. By: Rossouw, Stephanie; Greyling, Talita; Adhikari, Tamanna; Morrison, Phillip S.
    Abstract: This paper estimates Markov switching models with daily happiness (GNH) data from New Zealand for a period inclusive of the Covid-19 global health pandemic. This helps us understand the dynamics of happiness due to an external shock and provides valuable information about its future evolution. Furthermore, we determine the probabilities to transition between states of happiness and estimate the duration in these states. In addition, as maximising happiness is a policy priority, we determine the factors that increase happiness, especially during the pandemic to ensure rapid restoration of happiness levels post the Covid-19 shock. The results show New Zealand is currently in an unhappy state which is lasting longer than predicted. To increase the happiness levels to pre-pandemic levels, policymakers could allow free mobility, create economic stimuli, and allow international travel between New Zealand and low-risk Covid-19 countries.
    Keywords: Happiness,Covid-19,Big data,Markov switching model,New Zealand
    JEL: C55 I12 I31 J18
    Date: 2020
  43. By: Alvarez, Fernando; Argente, David; Lippi, Francesco
    Abstract: We study the optimal lockdown policy for a planner who controls the fatalities of a pandemic while minimizing the output costs of the lockdown. The policy depends on the fraction of infected and susceptible in the population, prescribing a severe lockdown beginning two weeks after the outbreak, covering 60% of the population after a month, and gradually withdrawing to 20% of the population after 3 months. The intensity of the optimal lockdown depends on the gradient of the fatality rate with respect to the infected, and the availability of antibody testing that yields a welfare gain of 2% of GDP.
    Keywords: Dynamic programming; epidemic control; lockdown; Quarantine
    JEL: C61 I10 I18
    Date: 2020–04
  44. By: Kim, Seonghoon (Singapore Management University); Koh, Kanghyock (Korea University); Zhang, Xuan (Goethe University Frankfurt)
    Abstract: We examine the short-term impact of COVID-19 on consumption spending and labor market outcomes. Using monthly panel data of individuals mainly aged 50–70 in Singapore, we find that COVID-19 reduced consumption spending and labor market outcomes immediately after its outbreak, and its negative impact quickly evolved. At its peak, the pandemic reduced total household consumption spending by 22.8% and labor income by 5.9% in April. Probability of full-time work also went down by 1.2 pp and 6.0 pp in April and May, respectively, but employment and self-employment were only mildly affected. Our heterogeneity analysis indicates that the reduction in consumption spending was greater among those with higher net worth, while the decreases in labor market outcomes were greater among those with lower net worth. However, we find little evidence that those in worse health status experienced larger reductions in consumption spending and labor market outcomes. Reductions in consumption spending correlated with increased risk avoidance behavior, the nationwide partial lockdown, worsening economic outlook, and reduced income.
    Keywords: COVID-19, pandemic, consumption spending, labor market, monthly panel data
    JEL: E2 I12 H2 J01
    Date: 2020–06
  45. By: Adams-Prassl, A.; Boneva, T.; Golin, M; Rauh, C.
    Abstract: Using new US survey data collected on March 24th 2020, we already find that: 65% of workers engaged in less paid work over the past week than usually. 11% of workers had already lost their job due to COVID-19. For those still in work, the expected probability of job loss within the next four months is 40%. On average, workers expect to earn 39% less in the next four months compared to usual. As a consequence, workers expect there is a 56% chance of having problems paying their bills. 93% of respondents expect to have problems paying usual bills with above zero probability. The harsh impacts are not evenly distributed across the population; the young ,and low income earners have been hit hardest. Workers without paid sick leave are more likely to go to work in close proximity to others.
    Keywords: COVID-19
    Date: 2020–04–01
  46. By: Blundell, Jack; Machin, Stephen
    Abstract: We report results from the LSE-CEP Survey of UK Self-employment May 2020.1 The self-employed have been hit particularly hard by the Covid-19 crisis, with approximately three quarters reporting less work in April 2020 than usual. The largest reductions in self-employment hours and income are among lower-income, older individuals without employees. There are no gender differences in the aggregate, however this is due to self-employed women being more likely to be able to work from home. Comparing men who can work from home against women who can work from home, women are more negatively affected than men. A third of self-employed workers have felt that their health was at risk while working during the coronavirus crisis, and this was significantly higher among those who work in app-based jobs. On average, higher-income workers are more likely to apply for the Coronavirus Self-employment Income Support Scheme. Over 40% of those who had not applied are unsure whether they are eligible. On average, the self-employed expect their work to return to normal in September 2020. A fifth think it will take until 2021 and 1 in 20 expect that their work will never return back to normal. The self-employed value income support highly. On average they are prepared to sacrifice 10% of their regular income to be guaranteed similar support for future shocks. Solo self-employed individuals value income support by twice as much as the self-employed with employees.
    Keywords: coronavirus; Covid-19
    JEL: R14 J01 N0
    Date: 2020–05
  47. By: Vincenzo Galasso (Università Bocconi); Vincent Pons (Harvard Business School); Paola Profeta (Università Bocconi); null null (Toulouse School of Economics (TSE)); Sylvain Brouard (Centre de recherches politiques de Sciences Po); Martial Foucault (Centre de recherches politiques de Sciences Po)
    Abstract: Using original data from two waves of a survey conducted in March and April 2020 in eight OECD countries (N = 21,649), we show that women are more likely to see COVID-19 as a very serious health problem, to agree with restraining public policy measures adopted in response to it, and to comply with them. Gender differences in attitudes and behavior are substantial in all countries, robust to controlling for a large set of sociodemographic, employment, psychological, and behavioral factors, and only partially mitigated for individuals who cohabit or have direct exposure to COVID-19. The results are not driven by differential social desirability bias. They carry important implications for the spread of the pandemic and may contribute to explain gender differences in vulnerability to it.
    Date: 2020–06
  48. By: Kovacs, Roxanne; Dunaiski, Maurice; Tukiainen, Janne
    Abstract: There is currently a heated debate about whether to introduce policies requiring the general public to wear protective face masks to contain COVID-19. A key concern is that compulsory face mask policies will make the public feel safer (due to risk compensation), and may consequently undermine the most important public-health advice to contain COVID-19 – which is to reduce mobility and maintain social distancing. This study provides first evidence on the impact of compulsory face mask policies on community mobility. We use a difference-in-differences design, which exploits the staggered implementation of compulsory face mask policies by German states. We use anonymised GPS data from Google's Location History feature to measure daily mobility in public spaces (groceries and pharmacies, transport hubs and workplaces). We find no evidence that compulsory face mask policies affect community mobility in public spaces in Germany. The evidence provided in this paper makes a crucial contribution to ongoing debates about how to best manage the COVID-19 pandemic.
    Keywords: COVID-19,face masks,social distancing,community mobility
    JEL: D9 H12 I12 I18
    Date: 2020
  49. By: Titan M. Alon; Minki Kim; David Lagakos; Mitchell VanVuren
    Abstract: The COVID-19 pandemic has already led to dramatic policy responses in most advanced economies, and in particular sustained lockdowns matched with sizable transfers to much of the workforce. This paper provides a preliminary quantitative analysis of how aggregate policy responses should differ in developing countries. To do so we build an incomplete-markets macroeconomic model with epidemiological dynamics that features several of the main economic and demographic distinctions between advanced and developing economies relevant for the pandemic. We focus in particular on differences in population structure, fiscal capacity, healthcare capacity, the prevalence of ``hand-to-mouth'' households, and the size of the informal sector. The model predicts that blanket lockdowns are generally less effective in developing countries at reducing the welfare costs of the pandemic, saving fewer lives per unit of lost GDP. Age-specific lockdown policies, on the other hand, may be even more potent in developing countries, saving more lives per unit of lost output than in advanced economies.
    JEL: E2 E6 I15 I28 O17 O41
    Date: 2020–05
  50. By: Dave, Dhaval M. (Bentley University); Friedson, Andrew I. (University of Colorado Denver); Matsuzawa, Kyutaro (San Diego State University); Sabia, Joseph J. (San Diego State University); Safford, Samuel (San Diego State University)
    Abstract: Sparked by the killing of George Floyd in police custody, the 2020 Black Lives Matter protests have brought a new wave of attention to the issue of inequality within criminal justice. However, many public health officials have warned that mass protests could lead to a reduction in social distancing behavior, spurring a resurgence of COVID-19. This study uses newly collected data on protests in 315 of the largest U.S. cities to estimate the impacts of mass protests on social distancing and COVID-19 case growth. Event-study analyses provide strong evidence that net stay-at-home behavior increased following protest onset, consistent with the hypothesis that non-protesters' behavior was substantially affected by urban protests. This effect was not fully explained by the imposition of city curfews. Estimated effects were generally larger for persistent protests and those accompanied by media reports of violence. Furthermore, we find no evidence that urban protests reignited COVID-19 case growth during the more than two and a half weeks following protest onset. We conclude that predictions of broad negative public health consequences of Black Lives Matter protests were far too narrowly conceived.
    Keywords: urban protests, social distancing, coronavirus, COVID-19
    JEL: H75 I18
    Date: 2020–06
  51. By: Georgy Egorov; Ruben Enikolopov; Alexey Makarin; Maria Petrova
    Abstract: Voluntary social distancing plays a vital role in containing the spread of the disease during a pandemic. As a public good, it should be more commonplace in more homogeneous and altruistic societies. However, for healthy people, observing social distancing has private benefits, too. If sick individuals are more likely to stay home, healthy ones have fewer incentives to do so, especially if the asymptomatic transmission is perceived to be unlikely. Theoretically, we show that this interplay may lead to a stricter observance of social distancing in more diverse and less altruistic societies. Empirically, we find that, consistent with the model, the reduction in mobility following the first local case of COVID-19 was stronger in Russian cities with higher ethnic fractionalization and cities with higher levels of xenophobia. For identification, we predict the timing of the first case using pre-existing patterns of internal migration to Moscow. Using SafeGraph data on mobility patterns, we confirm that mobility reduction in the United States was also higher in counties with higher ethnic fractionalization. Our findings highlight the importance of strategic incentives of different population groups for the effectiveness of public policy.
    JEL: D64 D74 I12
    Date: 2020–05
  52. By: Hamza Umer; Muhammad Salar Khan
    Abstract: To slow down the spread of Covid-19, administrative regions within Pakistan imposed complete and partial lockdown restrictions on socio-economic activities, religious congregations, and human movement. Here we examine the impact of regional lockdown strategies on Covid-19 outcomes. After conducting econometric analyses (Regression Discontinuity and Negative Binomial Regressions) on official data from the National Institute of Health (NIH) Pakistan, we find that the strategies did not lead to a similar level of Covid-19 caseload (positive cases and deaths) in all regions. In terms of reduction in the overall caseload (positive cases and deaths), compared to no lockdown, complete and partial lockdown appeared to be effective in four regions: Balochistan, Gilgit Baltistan (GT), Islamabad Capital Territory (ICT), and Azad Jammu and Kashmir (AJK). Contrarily, complete and partial lockdowns did not appear to be effective in containing the virus in the three largest provinces of Punjab, Sindh, and Khyber Pakhtunkhwa (KPK). The observed regional heterogeneity in the effectiveness of lockdowns advocates for a careful use of lockdown strategies based on the demographic, social, and economic factors.
    Date: 2020–06
  53. By: Dang, Hai-Anh (World Bank); Huynh, Toan L. D. (Otto-Beisheim-Hochschule, Koblenz); Nguyen, Manh-Hung (Toulouse School of Economics)
    Abstract: The COVID-19 pandemic has wrought havocs on economies around the world. Yet, barely any evidence currently exists on the distributional impacts of the pandemic. We provide the first study that offers new theoretical and empirical evidence on the distributional impacts of the pandemic on different income groups in a multi-country setting. Analyzing rich individual-level data from a six-country survey, we find that while the outbreak has no impacts on household income losses, it results in a 65-percent reduction in the expected own labor income for the second-poorest income quintile. The impacts of the pandemic are most noticeable in terms of savings, with all the four poorer income quintiles suffering reduced savings ranging between 5 and 7 percent compared to the richest income quintile. The poor are also less likely to change their behaviors, both in terms of immediate prevention measures against COVID-19 and healthy activities. We also find countries to exhibit heterogeneous impacts. The United Kingdom has the least household income loss and expected labor income loss, and the most savings. Japanese are least likely to adapt behavioral changes, but Chinese, Italians, and South Koreans wash their hands and wear a mask more often than Americans.
    Keywords: income quintiles, poverty, COVID-19, behavior changes
    JEL: D00 H00 I1 I3 O1
    Date: 2020–06
  54. By: Dhaval M. Dave; Andrew I. Friedson; Kyutaro Matsuzawa; Joseph J. Sabia; Samuel Safford
    Abstract: One of the most common policy prescriptions to reduce the spread of COVID-19 has been to legally enforce social distancing through state or local shelter-in-place orders (SIPOs). This paper is the first to explore the comparative effectiveness of early county-level SIPOs versus later statewide mandates in curbing COVID-19 growth. We exploit the unique laboratory of Texas, a state in which the early adoption of local SIPOs by densely populated counties covered almost two-thirds of the state’s population prior to Texas’s adoption of a statewide SIPO on April 2, 2020. Using an event study framework, we document that countywide SIPO adoption is associated with a 14 percent increase in the percent of residents who remain at home full-time, a social distancing effect that is largest in urbanized and densely populated counties. Then, we find that in early adopting counties, COVID-19 case growth fell by 19 to 26 percentage points two-and-a-half weeks following adoption of a SIPO, a result robust to controls for county-level heterogeneity in outbreak timing, coronavirus testing, and border SIPO policies. This effect is driven nearly entirely by highly urbanized and densely populated counties. We find that approximately 90 percent of the curbed growth in COVID-19 cases in Texas came from the early adoption of SIPOs by urbanized counties, suggesting that the later statewide shelter-in-place mandate yielded relatively few health benefits.
    JEL: H75 I18 R0
    Date: 2020–05
  55. By: Toxvaerd, F.M.O
    Abstract: This paper presents an economic model of an epidemic in which susceptible individuals may engage in costly social distancing in order to avoid becoming infected. Infected individuals eventually recover and acquire immunity, thereby ceasing to be a source of infection to others. Under non-cooperative and forward-looking decision making, equilibrium social distancing arises endogenously around the peak of the epidemic, when disease prevalence reaches a critical threshold determined by preferences. Spontaneous, uncoordinated social distancing thus acts to flatten the curve of the epidemic by reducing peak prevalence. In equilibrium, social distancing stops once herd immunity sets in, but acts to extend the duration of the epidemic beyond the benchmark of a non-behavioral epidemiological model. Comparative statics with respect to the model parameters indicate that the curve becomes flatter (i) the more infectious the disease is and (ii) the more severe the health consequences of the disease are for the individuals.
    Keywords: Economic epidemiology, social distancing, non-pharmaceutical interventions, infection control
    JEL: C73 I18
    Date: 2020–03–30

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