Optimal social distancing and the economics of uncertain vaccine arrival. (7th August 2022)

• Record Type: Journal Article
• Authors: Iverson, Terrence; Karp, Larry; Peri, Alessandro
• Other Names: Amir Rabah guestEditor.; Boucekkine Raouf guestEditor.
• Is Part Of: Journal of public economic theory. Volume 24:Number 5(2022)
• Page Start: 1071
• Page End: 1100
• Publication Date: 2022-08-07
• Subjects: Economic policy -- Periodicals; Finance, Public -- Periodicals; 338.9005
• DOI: 10.1111/jpet.12606
• Languages: English
• ISSNs: 1097-3923

Abstract

Abstract: We analytically identify two mechanisms that explain why a later arrival time for a pandemic‐ending vaccine has an ambiguous effect on optimal social‐distancing policy. We assess the net effect of these channels using a quantitative model solved for over a thousand parameter combinations. Optimal policy and welfare comparisons are both highly sensitive to beliefs about vaccine arrival. A policy of moving quickly to herd immunity by requiring social distancing for only the most vulnerable might be loosely justified for expected vaccine arrivals over 2 years, but becomes catastrophic if the expected arrival is within a year.