General Theories of Epidemics
Paper Session
Tuesday, Jan. 5, 2021 10:00 AM - 12:00 PM (EST)
- Chair: Flavio Toxvaerd, University of Cambridge
Spending Less After (Seemingly) Bad News
Abstract
We show that household consumption displays excess sensitivity to salient macro-economic news, even when the news is not real. When the announced local unemployment rate reaches a 12-month maximum, local consumers in that area reduce discretionary spending by 2% relative to consumers in areas with the same macro-economic fundamentals. The consumption of low income households displays greater excess sensitivity to salience. The decrease in spending is not reversed in subsequent months; instead, negative news persistently reduces future spending for two to four months. Announcements of 12-month unemployment maximums also lead consumers to reduce their credit card repayments by 3.6%. Households in treated areas act as if they are more financially constrained than those in untreated areas with the same fundamentals.Disclosure in Epidemics
Abstract
We study information disclosure as a policy tool to minimize welfare losses in epidemics through mitigating healthcare congestion. We first present a stylized model of the healthcare congestion game to show that congestion occurs only when individuals expect the disease to be sufficiently severe. Congestion leads to misallocation of scarce healthcare resources. We find that coarse information disclosure, compared with full transparency, can be welfare-improving, as it can help avoid some congestion when the true severity level is high. The optimal disclosure policy features a middle censorship rule, which censors an intermediate range of severity levels and fully reveals all other states. When information is censored, the healthcare system is run at its full capacity without congestion, and thus, achieves ex post efficiency. In an epidemic, if the disease is more infectious, the optimal censorship range expands; and if the healthcare system is more prepared, the optimal disclosure policy censors (weakly) higher severity levels, but fully reveals (strictly) lower severity levels.Is the Phone Mightier than the Virus? Cell Phone Access and Epidemic Containment Efforts
Abstract
This paper examines the impact of mobile phone access on the containment of an epidemic. We study this question in the context of the 2014 Ebola Virus Disease (EVD) outbreak in Liberia. Combining proprietary data on cell phone towers and EVD cases, we estimate a high-resolution radio-wave propagation model that uses variations in terrain topography and the spatial distribution of cell phone towers to predict signal strength on the ground. We then employ a regression discontinuity design that compares villages at the margin of the signal strength threshold required for coverage. We find that having access to cell phone coverage leads to a 10.8 percentage point reduction in the likelihood that a village has an EVD case. Results from a novel survey collected following the epidemic suggest that this is mostly explained by cellphone access facilitating emergency care provision rather than improving access to outbreak-related information.The Epidemic Effect: Global Governance Institutions Mitigate the Effects of Epidemics
Abstract
Epidemics can have deleterious effects on economic development except mitigated through global governance institutions. We examine the effects of sudden exposure to disease on economic outcomes using evidence from the African meningitis belt. Meningitis shocks reduce economic activity and child health outcomes in periods when the World Health Organization (WHO) does not declare an epidemic year. These effects are reversed when the WHO declares an epidemic. We find evidence that the influx of disaster aid in response to WHO declarations may partly explain the results. We document an increase in World Bank health projects approved and funded during epidemic years.JEL Classifications
- I1 - Health