Why should we listen to economists when making or evaluating pandemic-related policy, rather than just, say, epidemiologists? I’ve been asked that question a lot in interviews on my book, Economics In One Virus.

Epidemiology is, of course, a rich discipline, so it is easy to overstate its limits when looking at the application in COVID-19 alone. But during this pandemic, epidemiological models have been famously prominent in predicting disease trends which have then led to major policy changes. A new working paper by Nicholas Papageorge summarizes some of the key problems with such models:

Many models from epidemiology are not designed to capture tradeoffs between health and economic well-being and few are equipped to predict how these tradeoffs interact with individuals’ preferences to affect behavior. Policies based on these models are unlikely to reflect societal preferences or to capture how preferences influence behavior and, thus, disease spread.

Models with epidemiological processes that do incorporate behavior change or health-wealth tradeoffs (most from economics) drastically limit individual-level heterogeneity to remain tractable. This makes it difficult to understand variation in behavioral responses and distributional consequences of the pandemic, which should be central to any evaluation of pandemic-related policy.

Given the available set of models, it is difficult to fully address relevant policy questions, such as whether the long-run effects of social-distancing justify the costs—and if so, for whom and under what circumstances. We are in no position to evaluate more complex dynamic tradeoffs, such as whether the short-run benefits of school closures justify the long run (indeed, inter-generational) costs.

In other words, many epidemiological models are simply focused on disease spread assuming behaviors undertaken by the population. They do not allow us to balance the full range of costs and benefits of decisions to mitigate disease spread, nor to consider how these broader costs and benefits themselves influence people’s decisions to interact.

To assess whether there are net benefits to COVID-19 restrictions you would need to know how much different people value the mitigation of death risks the policies aim to deliver, the value different people place on banned leisure and socializing activities, and how people would adjust their behavior voluntarily to the changing prevalence of the disease. These require economic analysis. Even when the epidemiological models incorporate some of these considerations, they often oversimplify across very large groups to keep the models easy to play with, ignoring the rich variation of how people might react given their very personal situations or the different risks in various environments.

Economics, of course, does not promise clean answers to these questions for any “planner.” But as a discipline, it is, at its broadest, the study of human action or behavior in a world of ever-changing constraints. So insights from economics—on incentives, on behavioral responses to risk changes, on stripping lockdowns into their smaller marginal components, on making decisions in a world of uncertainty, on understanding how people’s preferences would update with new information or over time, and how politics interacts with policy—are crucial in thinking through or in evaluating pandemic-related decisions.

To summarize: applied epidemiology in this pandemic has been focused on communicable disease transmission and what can be done to curb it, without an overall framework for evaluating the impacts of the policies beyond the direct health effects. Its models often oversimplify human behavior to examine broad trends in infections and deaths. While that can be useful in providing a high-level picture of what might occur, economic insights are therefore hugely important both in making broader evaluations of decisions and highlighting where the simplism of the modelling can lead us astray.

Peter Van Doren warned us last year that you cannot just “listen to the science” in making pandemic-related decisions. When considering the path of a pandemic and the effects of government interventions, you cannot and should not just “listen to the epidemiologists” either.

–

For some fun examples of the economic principles and ideas mentioned here, Economics In One Virus can be bought from the Cato store or your country’s relevant Amazon store.

I recently appeared on AEI’s Jim Pethokoukis’s excellent Political Economy podcast to discuss the book.