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The efficacy of lockdowns was debated at the start of the pandemic and continues to this day. Sweden, famously, chose not to implement a lockdown. As Anders Tegnell, remarked:
`Closedown, lockdown, closing borders — nothing has a historical scientific basis, in my view.’

Lyman Stone of the American Enterprise Institute expresses it more forcefully:

`Here’s the thing: there’s no evidence of lockdowns working. If strict lockdowns actually saved lives, I would be all for them, even if they had large economic costs. But the scientific and medical case for strict lockdowns is paper-thin.’

The quotes above reveal an imprecision at the heart of the debate. What exactly is a lockdown? Tegnell uses a variety of words that suggest a variety of policies that can be lumped together. Stone is careful to say there is no evidence in support of strict lockdowns. Suggesting that `less’ strict lockdowns might be beneficial. So, lets speculate about the other extreme: no lockdown relaxed or otherwise.

The presence of infected individuals increases the cost of certain interactions. If infected individuals don’t internalize this cost, then, in the absence of any intervention we will observe a reduction in the efficient level of economic activity.

How will this manifest itself? Agents may adopt relatively low cost precautionary actions like wearing masks. On the consumer side they will substitute away from transactions that expose them to the risk of infection. For example, take out rather than sit down and delivery versus shopping in person. In short, we will see a drop in the demand for certain kinds of transactions. Absent subsidies for hospital care, we should expect an increase in price (or wait times) for medical care further incentivizing precautionary actions on the part of individuals.

The various models of network formation in the face of contagion we have (eg Erol and Vohra (2020)) all suggest we will see changes in how individuals socialize. They will reduce the variety of their interactions and concentrate them in cliques of `trusted’ agents.

On the supply side, firms will have to make costly investments to reduce the risk of infection to customers and possibly workers. The ability of firms to pass these costs onto their customers or their suppliers will depend on the relative bargaining power of each. Restaurant workers, for example, may demand increased compensation for the risks they bear, but this will occur at the same time as a drop in demand for their services.

To summarize, a `no lockdown’ policy will, over time, resemble a lockdown policy. Thus, the question is whether there is a  coordinated lockdown policy that is superior to an uncoordinated one that emerges endogenously.

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