DP15595 Integrated epi-econ assessment
We formulate an economic time use model and add to it an epidemiological SIR
block. In the event of an epidemic, households shift their leisure time from activities
with a high degree of social interaction to activities with less, and also choose to
work more from home. Our model highlights the different actions taken by young
individuals, who are less severely affected by the disease, and by old individuals, who
are more vulnerable. We calibrate our model to time use data from ATUS, employment
data, epidemiological data, and estimates of the value of a statistical life. There are
qualitative as well as quantitative differences between the competitive equilibrium and
social planner allocation and, moreover, these depend critically on when a cure arrives.
Due to the role played by social activities in people's welfare, simple indicators such
as deaths and GDP are insufficient for judging outcomes in our economy.