Epidemic responses under uncertainty

We examine how policymakers react to a pandemic with uncertainty around key epidemiological and economic policy parameters by embedding a macroeconomic SIR model in a robust control framework. Uncertainty about disease virulence and severity leads to stricter and more persistent quarantines, while uncertainty about the economic costs of mitigation leads to less stringent quarantines. On net, an uncertainty-averse planner adopts stronger mitigation measures. Intuitively, the cost of underestimating the pandemic is out-of-control growth and permanent loss of life, while the cost of underestimating the economic consequences of quarantine is more transitory.

Automated summary

This study examines how policymakers respond to uncertainty in key epidemiological and economic parameters during a pandemic. The findings show that uncertainty about disease severity leads to stricter and longer-lasting quarantines, while uncertainty about the economic costs of mitigation leads to less stringent quarantines. Overall, risk-averse planners adopt stronger mitigation measures to avoid the potentially catastrophic consequences of underestimating the pandemic.