Pandemic Economics PDF
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PANDEMIC ECONOMICS Pandemic Economics applies economic theory to the Covid-19 era, exploring the micro and macro dimensions of the pre-pandemic, pandemic, and post-pandemic phases. Using core economic tools such as marginal analysis, cost-benefit analysis, and opportunity cost, this book explores the breadth of economic outcomes from the pandemic. It shows that a tradeoff between public health and economic health led to widespread problems, including virus infections and unemployment. Taking an international and comparative approach, the book shows that because countries implemented different economic policies, interventions, and timelines during the crisis, outcomes varied with respect to the extent of recession, process of recovery, availability of medical equipment, public health, and additional waves of the virus. Pedagogical features are weaved throughout the text, including country case studies, key terms, suggested further reading, and discussion questions for solo or group study. On top of this, the book offers online supplements comprising PowerPoint slides, test questions, extra case studies, and an instructor guide. This textbook will be a valuable resource for advanced undergraduate and postgraduate courses on pandemic economics, macroeconomics, health economics, public policy, and related areas. Thomas R. Sadler is Professor of Economics at Western Illinois University. He teaches courses on Pandemic Economics, Energy Economics, and Environmental Economics. His research focuses on environmental policy, professional sports leagues, and technological change. PANDEMIC ECONOMICS Thomas R. Sadler First published 2022 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2022 Thomas R. Sadler The right of Thomas R. Sadler to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Sadler, Thomas R., author. Title: Pandemic economics/Thomas R. Sadler. Description: Milton Park, Abingdon, Oxon; New York, NY: Routledge, 2021. | Includes bibliographical references and index. | Identifiers: LCCN 2021003147 (print) | LCCN 2021003148 (ebook) | ISBN 9780367679774 (hardback) | ISBN 9780367679040 (paperback) | ISBN 9781003133629 (ebook) Subjects: LCSH: COVID-19 (Disease)–Economic aspects. | Economic history–21st century. Classification: LCC HC59.3 .S23 2021 (print) | LCC HC59.3 (ebook) | DDC 330.9–dc23 LC record available at https://lccn.loc.gov/2021003147 LC ebook record available at https://lccn.loc.gov/2021003148 ISBN: 978-0-367-67977-4 (hbk) ISBN: 978-0-367-67904-0 (pbk) ISBN: 978-1-003-13362-9 (ebk) Typeset in Interstate by Deanta Global Publishing Services, Chennai, India Visit the Support Material: www .routledge .com /9780367679040 BRIEF CONTENTS List of figures xix List of tables xxii Preface xxiii Acknowledgments xxiv An overview of the book xxv Learning objectives xxvi 1 Introduction to pandemic economics 1 PART I INVESTIGATION AND RECOGNITION 21 2 Economics of optimal disease control 23 3 Globalization, networks, and contagion 43 PART II THE PANDEMIC PHASE: SHUTDOWN, RECESSION, AND RECOVERY 63 4 Theories of economic shutdown 65 5 Recession, forecasting, and economic policy 85 6 Economics of recovery 106 PART III ECONOMIC ANALYSIS OF PANDEMIC OUTCOMES 127 7 Healthcare economics 129 8 Inequality of outcomes 149 vi Brief contents 9 Energy, the environment, and climate change 168 10 Economics of education 189 11 Economics of technology and innovation 208 12 International economic perspectives 227 13 New economic geography 249 14 Game theory and mutual interdependence 269 15 A trail of disruption 291 Index 311 DETAILED CONTENTS List of figures xix List of tables xxii Preface xxiii Acknowledgments xxiv An overview of the book xxv Learning objectives xxvi 1 Introduction to pandemic economics 1 Pandemic economics 1 The economic approach 2 Economic methodology 2 Economics and epidemiology 3 From containment to recovery 4 Economic costs of the downturn 4 Confirmed cases 5 A pandemic origin story 6 Zoonoses 6 Black swan 7 Black elephant 8 Previous pandemics and economic history 9 Plague pandemics 9 Virulence 9 Plague of Justinian 10 Black Death 10 Modern Plague 11 Additional disease outbreaks 11 Smallpox 12 Spanish flu 12 Acquired Immune Deficiency Syndrome 12 SARS-CoV-1 12 Disease outbreaks and scientific advance 13 Disease outbreaks and human civilization 13 Rules of pandemic economics 13 To reopen the economy, control the disease 13 During pandemics, people respond to incentives 14 Pandemics impede the process of globalization 14 Flattening the epidemic curve creates economic costs 15 Government intervention is not the only cause of economic damage 15 During economic shutdown, governments should help 15 viii Detailed contents Economies do not follow optimal recovery paths 15 Regions that reopen with haste experience secondary outbreaks 16 Government and business connections influence pandemic outcomes 16 Pandemics require collective responses and collaboration 16 Policy should rely on science 16 In the presence of a shortage, price may not adjust 17 Both economics and ethics influence vaccine distribution 17 Pandemics reorient relationships and lead to calls for change 17 Summary 17 Chapter takeaways 18 Terms and concepts 18 Questions 19 References 19 PART I INVESTIGATION AND RECOGNITION 21 2 Economics of optimal disease control 23 Economic cost and the control of infectious disease 23 Progression of ideas in economics 24 Competing ideas 24 Relativism 25 Absolutism 26 Synthesis of relativism and absolutism 26 Extraordinary and ordinary research 27 Paradigm and paradigm shift 27 Economics of science, knowledge, and information 28 Optimal disease control 29 Susceptible, Infected, and Recovered Model 29 Rates of infection and recovery 29 Important parameters 30 Epidemic curve 30 Reproduction statistics 31 Basic reproduction number (R ) 31 0 Measuring the value of R 32 0 Variance in potential outcomes 32 Characteristics of the basic reproduction number 33 Shapes of additional infection waves 33 Social distancing 34 Effective reproduction number (R) 34 e Herd immunity 35 Limitations of the SIR model 36 The economic approach to optimal disease control 36 Optimal targeted lockdowns 37 Equilibrium social distancing 38 Value of human life 38 Summary 39 Chapter takeaways 40 Terms and concepts 40 Questions 41 References 41 Detailed contents ix 3 Globalization, networks, and contagion 43 Systems of interconnection 43 Globalization 44 Epochs of globalization 45 The current epoch 45 Global flows 46 Types of global flows 46 Liquid modernity 46 Choke points 47 Global arrangements 48 Networks 48 Economics of networks 49 Network structure 49 Network characteristics 50 Network size 51 Network topologies 51 Superspreaders 51 Network applications 53 Disease networks 53 Energy networks 54 Supply chain networks 55 Innovation networks 56 Contagion 57 Contagion and negative flows 57 Contagion as a process 57 Measuring the likelihood of outcomes 58 Summary 58 Chapter takeaways 59 Terms and concepts 59 Questions 60 References 61 PART II THE PANDEMIC PHASE: SHUTDOWN, RECESSION, AND RECOVERY 63 4 Theories of economic shutdown 65 Shutdown interval 65 Flattening the epidemic curve 66 Nonpharmaceutical interventions 66 Swiss cheese model of pandemic defense 67 Sheltering-in-place 67 Social distancing 68 Quarantines 68 Public health benefits of nonpharmaceutical interventions 69 Tradeoff between health and the economy 69 Assimilation of workers 69 Suboptimal position 70 Theories of economic shutdown 70
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