The common interests of health protection and the economy: evidence from scenario calculations of COVID-19 containment policies

Abstract

We develop a novel approach integrating epidemiological and economic models that allows data-based simulations during a pandemic. We examine the economically optimal opening strategy that can be reconciled with the containment of a pandemic. The empirical evidence is based on data from Germany during the SARS-CoV-2 pandemic. Our empirical findings reject the view that there is necessarily a conflict between health protection and economic interests and suggest a non-linear U-shape relationship: it is in the interest of public health and the economy to balance non-pharmaceutical interventions in a manner that further reduces the incidence of infections. Our simulations suggest that a prudent strategy that leads to a reproduction number of around 0.75 is economically optimal. Too restrictive policies cause massive economic costs. Conversely, policies that are too loose lead to higher death tolls and higher economic costs in the long run. We suggest this finding as a guide for policy-makers in balancing interests of public health and the economy during a pandemic.

The Challenge of Estimating the Direct and Indirect Effects of COVID-19 Interventions —Toward an Integrated Economic and Epidemiological Approach

“…While the studies discussed so far in this section focus on the role of "voluntary" behavioral adjustments versus government intervention to contain the pandemic at a given point in time, it should be noted that there is an important intertemporal dimension. In particular, early NPIs may have had immediate costs due to limited economic activity but may enable more economic activity later because infection rates had been reduced earlier (Dorn et al, 2022;König & Winkler, 2021).…”

“…For policy advice and modeling of intervention strategies, it is important to disentangle which costs are caused by the pandemic and which are a result of strategies of social distancing to fight the pandemic. Debates emphasizing a trade-off between the fight against the pandemic and its economic and social costs are, however, misleading (an der Heiden & Buchholz, 2020; Dorn et al, 2022;Hellewell et al, 2020;Ferguson et al, 2020). It is in the interest of both health and economic well-being to follow a balanced strategy to contain the pandemic (see Dorn et al, 2022).…”

“…Debates emphasizing a trade-off between the fight against the pandemic and its economic and social costs are, however, misleading (an der Heiden & Buchholz, 2020; Dorn et al, 2022;Hellewell et al, 2020;Ferguson et al, 2020). It is in the interest of both health and economic well-being to follow a balanced strategy to contain the pandemic (see Dorn et al, 2022).…”

“…On the one hand, economic activity and economic well-being decrease because people get sick or are afraid of getting sick and therefore limit their consumption or their labor input. Full economic recovery is therefore impossible without containing the spread of the virus (e.g., Dorn et al, 2022). On the other hand, unemployment, structural economic decline, income and learning losses, or social distress due to the pandemic or social distancing measures have effects on health outcomes and mortality (e.g., Goolsbee & Syverson, 2021).…”

Longitudinal study of mental health changes in residents affected by an initial outbreak of COVID-19 in China

“…However, with the continual evolution of the virus and the development of vaccines, the symptoms of infection eased and became mild or even asymptomatic ( 7 ). Many Western countries gradually lifted the COVID-19 precautions that were in place to prevent the spread of the pandemic, such as social distancing, mask wearing, public and private gatherings, and reopened schools ( 8 – 10 ). However, in contrast to Western countries, China continued to enforce strict policies to prevent and contain COVID-19 because of the country's large population and limited medical resources ( 11 ).…”