DP15129 | Health vs. Economy: Politically Optimal Pandemic Policy

Publication Date

08/04/2020

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Abstract

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.