recent

15 MIT startups to watch

Why restrictive immigration may be bad for U.S. entrepreneurship

How investors can play the Fed in market downturns

Credit: Mimi Phan / iStock

Ideas Made to Matter

Public Policy

Age-based reopening could soften the economic blow while saving lives

By

The discussion about how to reopen the U.S. economy is often framed as one of two stark choices: Keep the entire population on lockdown for a long time, and risk a slump on par with the Great Depression —  or reopen the entire economy at once, and watch friends and family members die in the millions.

A working paper from four MIT economics professors provides a third option: A targeted lockdown that protects Americans over the age of 65 until a COVID-19 vaccine can be developed while reopening the economy sooner for those at a lower risk. Depending on how such a policy is implemented, the result could be as many as 1.37 million lives saved.

“It can seem like the choices and possible outcomes are extremely grim, but they don’t have to be if you adopt smart policies,” said Michael D. Whinston, a co-author of the paper and an economics professor at MIT Sloan. “Targeted policies based on age can lead to very large improvements in the possible outcomes for society. They can lead to substantial reductions in both deaths and economic losses.”

Lockdowns and restrictions have begun to be tested in court across the United States, though an age-based lockdown has not been prominently tested. Some states have made age a feature of non-mandatory restrictions, such as the “Safer-at-Home” advisory in Massachusetts. There, residents over 65 are told to stay at home except for essential needs, even as younger residents return to other activities.

Fewer deaths, faster economic recovery

The paper uses the existing Susceptible-Infectious-Recovered framework to model the spread of COVID-19. The paper then accounts for multiple levels of risk among different segments of the U.S. population, as well as different levels of interaction with other people through work or small group activities. The authors further assume that it will take a year and a half to develop a COVID-19 vaccine.

Under a safety-focused uniform lockdown, which would aim to keep the overall mortality rate at 0.2% of the adult population, the infection rate peaks at 5% of the U.S. population. However, the economic cost is a 37.3% reduction of one year’s GDP, and the lockdown lasts a year and a half. Under an economy-focused uniform lockdown, with an aim to limit the economic impact to a 10% drop in GDP, the infection rate peaks at 9% and the fatality rate increases to 1.05% of the population.

An age-based lockdown, combined with other factors, could keep economic losses to 7% of GDP, compared to 37% under a tight lockdown scenario.

Neither of these policies are optimal, Whinston said. “Not locking down is in general a bad policy, because death and illness have bad economic costs as well. We still want to protect lives and prevent illness,” he said. A full lockdown, meanwhile, is assumed to be no more than 75% effective, he added: “People still go to the store. They still see friends.”

In an optimal lockdown, which the authors describe as “semi-targeted,” Americans over 65 are kept under a strict lockdown until a vaccine is developed, while working-age Americans from 20 to 65 experience “a less severe and shorter lockdown.”

For this age group, which represents 79% of American adults, the lockdown ends in stages, possibly focusing first on lower-risk individuals and those in essential jobs. “It doesn’t go from 100 to 0 all at once,” Whinston said.

Under a semi-targeted lockdown policy that focuses on keeping the total fatality rate at 0.2%, the economic loss drops to 24.9% of one year’s GDP, compared to 37.3% in the safety-focused uniform lockdown modeled by the authors.

Or, under a semi-targeted lockdown that aims to limit economic losses to 10% of one year’s GDP, the fatality rate drops to 0.48%, or less than half the rate of the economy-focused uniform lockdown scenario. This would save 1.37 million American lives, the authors note. 

“If we protect the elderly, there will be fewer deaths, and it becomes feasible and more attractive for young and middle-aged to no longer be locked down,” Whinston said. “When the young and the middle-aged go back to work, we prevent to a substantial degree the infection of older Americans.”

Implementing additional policies on top of a targeted lockdown would lead to additional gains, Whinston noted. Limiting social interactions between those older than 65 and those younger than 65 would reduce the number of younger Americans impacted by the lockdown and also reduce the length of the lockdown to about a year. One scenario modeled by the authors saw a fatality rate as low as 0.02% of the adult population and economic losses of 7% GDP.

Dedicated services for older Americans could help

The paper’s authors are aware of the difficulty of a large-scale, year-long lockdown for older Americans. There are an estimated 52 million Americans over the age of 65, Whinston noted. About 10% live with family members, another 4% live in nursing homes, and the remainder live on their own or with elderly partners. Each group has unique needs that must be accounted for — and there are high-risk individuals under the age of 65 to consider as well.

In an op-ed in Time, the authors offer a number of proposals, such as an Elder Care Corps of newly employed college graduates who provide shopping and home-care services and are willing to live together in isolation from others. Private-sector solutions could also help, such as dedicated delivery teams to serve elderly populations and regular testing of nursing home employees, Whinston said.

“We are not unaware of the challenges, and we know it is far from trivial, but the gains of a targeted lockdown are large,” Whinston said. “If we protect the elderly, we enable economic recovery by the young and the middle-aged.”