How much and when should we limit economic activity to ensure the health-care system is not overwhelmed?
In a recent working paper entitled "Optimal epidemic suppression under an ICU constraint", network members Laurent Miclo, Daniel Spiro and Jörgen Weibull analyze this question and show that "flattening the curve" is not theoretically optimal, instead one should "fill the box".
The paper develops a theoretical epidemic-economic model. The analysis is fully analytical (unlike most of the recent economic literature which relies on simulations). "Flattening the curve" is taken to roughly mean constant suppression. This means ICU max-capacity is reached only at the peak of the curve. This is not theoretically optimal since it implies costly suppression also when the ICU capacity is not threatened. Both before, but especially after the peak. The optimal policy ("Filling the box") instead prescribes: 1) no regulation early, 2) then severe lockdown when the ICU max capacity is nearing (a discontinuity) and gradual relief thereafter, aiming at keeping the infection curve flat under ICU max-capacity, 3) no regulation at the end. The optimal infection curve looks like a box. Filling it essentially says: avoid using costly suppression while keeping idle health-care resources. The paper discusses what extensions may change the result.
Link to paper here
Posted by: Daniel Spiro,
Dept of Economics, Uppsala University