Optimal Management of a Pandemic in the Short Run and the Long Run
Social policy to limit interactions can slow the spread of infection, but this benefit comes at the cost of reduced output. We solve an optimal control problem to choose the degree of interaction to maximize an objective function that rewards output and penalizes excess deaths. Optimal policy restricts the degree of interaction—permanently and perhaps substantially—but, surprisingly, not so much as to eradicate the disease. This finding holds regardless of how much weight the objective function places on excess deaths, provided the weight is finite. Complete eradication is optimal only if achieved by science or medicine.
The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.