DP15129 Health vs. Economy: Politically Optimal Pandemic Policy

Author(s): Desiree Desierto, Mark Koyama
Publication Date: August 2020
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Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15129

Pandemics have heterogeneous effects on the health and economic outcomes of members of the population. To stay in power, politician-policymakers have to consider the health vulnerability-economic vulnerability (HV-EV) profiles of their coalition. We show that the politically optimal pandemic policy (POPP) reveals the HV-EV profile of the smallest, rather than the largest, group in the coalition. The logic of political survival dictates that the preferences of the least loyal, most pivotal, members of the coalition determine policy.