The Economic Consequences of R = 1: Towards a Workable Behavioural Epidemiological Model of Pandemics

24 Pages Posted: 20 Aug 2020 Last revised: 10 Jan 2022

See all articles by Joshua S. Gans

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Date Written: January 9, 2022

Abstract

This paper reviews the literature on incorporating behavioural elements into epidemiological models of pandemics. While modelling behaviour by forward-looking rational agents can provide some insight into the time paths of pandemics, the non-stationary nature of Susceptible-Infected-Removed (SIR) models of viral spread makes characterisation of resulting equilibria difficult. Here I posit a shortcut that can be deployed to allow for a tractable equilibrium model of pandemics with intuitive comparative statics and also a clear prediction that effective reproduction numbers (that is, R) will tend towards 1 in equilibrium. This motivates taking R = 1 as an equilibrium starting point for analyses of pandemics with behavioural agents. The implications of this for the analysis of widespread testing, tracing, isolation and mask-use is discussed.

Note: Funding: None.

Conflict of Interest: NO conflicts of interests or financial interests.

Keywords: COVID-19, epidemiology, SIR model, pandemics

JEL Classification: I12, I18

Suggested Citation

Gans, Joshua S., The Economic Consequences of R = 1: Towards a Workable Behavioural Epidemiological Model of Pandemics (January 9, 2022). Available at SSRN: https://ssrn.com/abstract=3662452 or http://dx.doi.org/10.2139/ssrn.3662452

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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