CULTURE 'Smart containment' can save lives, shorten recession: study


'Smart containment' can save lives, shorten recession: study


02:35, April 25, 2020

northwestern uni (ap).jpg

Northwestern University, Evanston, Illinois. (Photo: AP)

CHICAGO, April 24 (Xinhua) -- Selective quarantine can reduce the number of COVID-19 deaths while lessening negative economic impacts, according to a study posted on the website of Northwestern University (NU) on Thursday.

In "The Macroeconomics of Epidemics," economists from NU and the Free University of Berlin propose a solution they call "smart containment," which they say leads to a much smaller recession and fewer deaths than under the "simple containment strategy," which is closer to existing policies in which containment applies equally to everyone, regardless of their health status.

Under "smart containment," infected people don't work. This policy means that susceptible people can work without the risk of becoming infected. Because so many people are working the economy does not suffer in any meaningful way from a recession. Moreover, the overall death toll of the epidemic is very small, with the number of infected people declining monotonically from its initial level to zero.

"We were surprised by the large potential gains from 'smart containment' policies which impose selective quarantine measures based on people's health status," said Martin Eichenbaum, a professor of economics in NU's Weinberg College of Arts and Sciences. "Compared to cruder lock-down policies, 'smart containment' produces a small recession and much fewer deaths from the epidemic. These results highlight the importance of quickly developing reliable tests to check whether people are infected or have recovered from the infection."

"Our model suggests that containment measures will have to extend beyond April 30 and is very clear that the longer policy makers take to implement containment measures, the more severe the recession will be and the more people will die," Eichenbaum said.

While abandoning containment policies prematurely leads to an initial economic recovery, it also leads to a large rise in infection rates, thereby causing a new, persistent recession.

The reaction to the working paper has been very enthusiastic and supportive, Eichenbaum said.

The study has been published by the National Bureau of Economic Research.

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