We develop a multi-risk SIR model (MR-SIR) where infection, hospitalization and fatality rates vary between groups—in particular between the “young”, “the middleaged” and the “old”. Our MR-SIR model enables a tractable quantitative analysis of optimal policy similar to those already developed in the context of the homogeneous agent SIR models. For baseline parameter values for the COVID-19 pandemic applied to the US, we find that optimal policies differentially targeting risk/age groups significantly outperform optimal uniform policies and most of the gains can be realized by having stricter lockdown policies on the oldest group. Intuitively, a strict and long lockdown for the most vulnerable group both reduces infections and enables less strict lockdowns for the lower-risk groups. We also study the impacts of social distancing, the matching technology, the expected arrival time of a vaccine, and testing with or without tracing on optimal policies. Overall, targeted policies that are combined with measures that reduce interactions between groups and increase testing and isolation of the infected can minimize both economic losses and deaths in our model.
Daron Acemoglu an Institute Professor at MIT and an elected fellow of the National Academy of Sciences, the Turkish Academy of Sciences, the American Academy of Arts and Sciences, the Econometric Society, the European Economic Association, and the Society of Labor Economists.
He is the author of five books, including Why Nations Fail: Power, Prosperity, and Poverty and The Narrow Corridor: States, Societies, and the Fate of Liberty (both with James A. Robinson). His academic work covers a wide range of areas, including political economy, economic development, economic growth, inequality, labor economics and economics of networks.
Daron Acemoglu has received the inaugural T. W. Shultz Prize from the University of Chicago in 2004, and the inaugural Sherwin Rosen Award for outstanding contribution to labor economics in 2004, Distinguished Science Award from the Turkish Sciences Association in 2006, the John von Neumann Award, Rajk College, Budapest in 2007, the Carnegie Fellowship in 2017, the Jean-Jacques Laffont Prize in 2018, and the Global Economy Prize in 2019. He was awarded the John Bates Clark Medal in 2005, the Erwin Plein Nemmers Prize in 2012, and the 2016 BBVA Frontiers of Knowledge Award. He holds Honorary Doctorates from the University of Utrecht, the Bosporus University, University of Athens, Bilkent University, the University of Bath, the Ecole Normale Superieure, Saclay Paris, and the London Business School.