Applied Learning Assignment: Covid-19 Economics
The purpose of this assignment is for you to analyze the COVID-19 pandemic from a point of view of an economist. In this assignment you will examine the impact of this pandemic on economic performance and evaluate public policy created in response to it. Some of the topics discussed here might seem a bit controversial, but we will really be applying the same type of analysis that is typically used to evaluate any public policy. Not only will you be connecting theoretical concepts from economics to COVID-19, but we will also be discussing the best methods for dealing with difficult-to-measure costs and benefits, such as the value of time and of human life.
Basic Instructions
In the sections below you are supposed to answer a set of questions. The purpose of these questions is to first guide you through theoretical concepts in economics and then show you how you can apply this knowledge to actual situation and to compile these component ideas in to a new whole.
You will also be asked to make and defend judgement based on evidence and external criteria.
You should first try to answer those questions individually. Each response should include at least one solid paragraph. In your answers, you are encourage to include podcasts, graphs, videos, and most importantly hyperlinks. Your assignment/ web-page should look and feel similar to a page like this:
https://abcnews.go.com/Health/explaining-coronavirus-death-toll-predictions-improving/story?id=70073130
There is text, videos, images, and hyperlinks, all used for the purpose of providing more information on the topic.
You are also encouraged to then take all the work from your questions below and knit it into one coherent essay that has an introduction, main body, and conclusion. In the introduction you should first briefly summarize the issue. In the main body you should go into details explaining and defining the terms and connecting it to COVID19. Finally, provide an overall conclusion.
You will also be asked to make and defend judgement based on evidence and external criteria.
You should first try to answer those questions individually. Each response should include at least one solid paragraph. In your answers, you are encourage to include podcasts, graphs, videos, and most importantly hyperlinks. Your assignment/ web-page should look and feel similar to a page like this:
https://abcnews.go.com/Health/explaining-coronavirus-death-toll-predictions-improving/story?id=70073130
There is text, videos, images, and hyperlinks, all used for the purpose of providing more information on the topic.
You are also encouraged to then take all the work from your questions below and knit it into one coherent essay that has an introduction, main body, and conclusion. In the introduction you should first briefly summarize the issue. In the main body you should go into details explaining and defining the terms and connecting it to COVID19. Finally, provide an overall conclusion.
How to Submit Your Assignment
As part of this assignment you are required to create a website with all the text, graphs, and links that are relevant for analysis posted online.
Click here for more instructions on how to create your website.
Feel free to talk to me about your assignments and send me your preliminary versions for comments and review in order to improve your work and ultimately your grade on this assignment. Feel free to discuss your assignments with other students, however all essays must be written individually by each student. No co-authoring allowed.
Click here for more instructions on how to create your website.
Feel free to talk to me about your assignments and send me your preliminary versions for comments and review in order to improve your work and ultimately your grade on this assignment. Feel free to discuss your assignments with other students, however all essays must be written individually by each student. No co-authoring allowed.
Background Information:
Before you start answering the questions below, you should read the following chapters:
Module 4: Welfare Economics
Module 5: Externalities: Problems and Solutions
Module 6: Public Goods
In addition, you should also carefully ready the material posted at my website about CORONAVIRSU ECONOMICS. It will hopefully provide you with almost all the information needed to complete this assignment. I will also try to update the site as much as I can with the most relevant information.
Module 4: Welfare Economics
Module 5: Externalities: Problems and Solutions
Module 6: Public Goods
In addition, you should also carefully ready the material posted at my website about CORONAVIRSU ECONOMICS. It will hopefully provide you with almost all the information needed to complete this assignment. I will also try to update the site as much as I can with the most relevant information.
Fundamental Definitions:
- Define the term market failure.
- Define what is an externality and how it relates to market failure.
- Provide few (at least 3) examples of positive and negative externalities and explain why they are externalities.
- Consider some of the issues related to Covid-19 pandemic. Provide at least one example of people’s behavior that could be classified as a positive externality and one as a negative externality. Explain your answer and provide some evidence, such a links to newspaper articles.
- What are rival or rivalrous goods? Provide 3 examples and explain/justify your answer.
- What are non-rival or non-rivalrous goods? Provide 3 examples and explain/justify your answer.
- What are excludable goods? Provide 3 examples and explain/justify your answer.
- What are non-excludable goods? Provide 3 examples and explain/justify your answer.
- Define private goods? In your definition make sure that you use rive/nonrival and excludable/non-excludable terms. Provide 3 examples and explain/justify your answer.
- Define public goods? In your definition make sure that you use rive/nonrival and excludable/non-excludable terms. In addition, how are public goods related to market failure? Provide 3 examples and explain/justify your answer.
- What is a free rider?
- Define common goods? In your definition make sure that you use rival/nonrival and excludable/non-excludable terms. In addition, how are common goods related to market failure? Provide 3 examples and explain/justify your answer.
- What is meant by “the tragedy of the commons”?
- What are club goods? In your definition make sure that you use rive/nonrival and excludable/non-excludable terms. In addition, how are club goods related to market failure? Provide 3 examples and explain/justify your answer.
- Put the terms 1) private goods, 2) public goods, 3) common goods, and 4) club goods into the following table:
Connection to COVID19
Now focus on COVID 19 pandemic.
16. In the context of this pandemic, provide an example to explain the concept of a private good. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
17. In the context of this pandemic, provide an example to explain the concept of a public good. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
18. In the context of this pandemic, provide an example to explain the concept of a free rider. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
19. In the context of this pandemic, provide an example to explain the concept of a tragedy of the commons. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
16. In the context of this pandemic, provide an example to explain the concept of a private good. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
17. In the context of this pandemic, provide an example to explain the concept of a public good. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
18. In the context of this pandemic, provide an example to explain the concept of a free rider. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
19. In the context of this pandemic, provide an example to explain the concept of a tragedy of the commons. What should the government roll be in this case? What public policy do you recommend, if any? Explain your answer and provide links to the related material.
Few Interesting Economics Research Articles Related to COVID-19 pandemic
20. Read the working paper The Impact of COVID-19 on Gender Equality by Titan M. Alon, Matthias Doepke, Jane Olmstead-Rumsey, Michèle Tertilt.
What do they say about gender equality as result of the shelter-in-place, shutdowns, or lockdowns orders? 200 word summary
21. Read the working paper (introduction and conclusion will suffice – the rest of the paper might be a bit too technical) Health versus Wealth: On the Distributional Effects of Controlling a Pandemic by Andrew Glover, Jonathan Heathcote, Dirk Krueger, Jose-Victor Rios-Rull.
What are some of the “distributional implications” mentioned in this paper as a result of the “lock-down” policies? 200 word summary
What do they say about gender equality as result of the shelter-in-place, shutdowns, or lockdowns orders? 200 word summary
21. Read the working paper (introduction and conclusion will suffice – the rest of the paper might be a bit too technical) Health versus Wealth: On the Distributional Effects of Controlling a Pandemic by Andrew Glover, Jonathan Heathcote, Dirk Krueger, Jose-Victor Rios-Rull.
What are some of the “distributional implications” mentioned in this paper as a result of the “lock-down” policies? 200 word summary
Cost-Benefit Analysis
|
22. Provide some estimates and evidence of how much will our economy shrink as a result of the shelter-in-place, shutdowns, or lockdowns orders. In other words, how much will GDP shrink as a result of this shutdown?
23. Can you think of any other side effects, negative consequences of this lockdown – besides the decrease in the GDP? Provide evidence for your answers. Here as some suggestions about the topics you could include:
|
Coronavirus impact: Surgery delays tough on patients, doctors in San FranciscoWhat are elective surgeries? How are they being effected as a result of CoVid19 epidemic?
|
24.How does our society value human life? What methods do economists use to estimate the value human life? What is the statistical value of a single life in the US?
This is obviously one of more controversial issues - so I would like to make sure that you understand this issue.
When the government is making decisions about how much of a public good to provide they use cost-benefit analysis to compare the costs and benefits of public projects and policy to decide if they should be undertaken. In principle, cost-benefit analyses are accounting exercises, a way of adding up the benefits and costs of a project or policy and then comparing them. In practice, however, cost-benefit analyses are rich economic exercises that bring to bear macroeconomic reasoning and a host of interesting empirical evidence.
Please read this article: What Should The Government Spend To Save A Life?
Here is a interesting article on the value of statistical life: No One Values Your Life More Than the Federal Government
"When a federal agency wants to implement a new regulation, it often needs to answer one basic question first: Do the benefits outweigh the costs? One way of calculating how beneficial a regulation might be is to measure how many deaths it would prevent, and what each life saved is worth."
Here is another interesting, but slightly more technical paper: The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World
"Individuals make decisions everyday that reflect how they value health and mortality risks, such as driving an automobile, smoking a cigarette, and eating a medium-rare hamburger. Many of these choices involve market decisions, such as the purchase of a hazardous product or working on a risky job. Because increases in health risks are undesirable, there must be some other aspect of the activity that makes it attractive. Using evidence on market choices that involve implicit tradeoffs between risk and money, economists have developed estimates of the value of a statistical life (VSL). This article provides a comprehensive review and evaluation of the dozens of such studies throughout the world that have been based on market decisions.
These VSL estimates in turn provide governments with a reference point for assessing the benefits of risk reduction efforts. The long history of government risk policies ranges from the draining of swamps near ancient Rome to suppress malaria to the limits on air pollution in developed countries over the past 30 years (McNeill 1976, OECD 2001). All such policy choices ultimately involve a balancing of additional risk reduction and incremental costs. The proper value of the risk reduction benefits for government policy is society’s willingness to pay for the benefits. In the case of mortality risk reduction, the benefit is the value of the reduced probability of death that is experienced by the affected population, not the value of the lives that have been saved ex post. The economic literature has focused on willingness-to-pay (willingness-to-accept) measures of mortality risk since Schelling’s (1968) discussion of the economics of life saving. "
This is obviously one of more controversial issues - so I would like to make sure that you understand this issue.
When the government is making decisions about how much of a public good to provide they use cost-benefit analysis to compare the costs and benefits of public projects and policy to decide if they should be undertaken. In principle, cost-benefit analyses are accounting exercises, a way of adding up the benefits and costs of a project or policy and then comparing them. In practice, however, cost-benefit analyses are rich economic exercises that bring to bear macroeconomic reasoning and a host of interesting empirical evidence.
Please read this article: What Should The Government Spend To Save A Life?
Here is a interesting article on the value of statistical life: No One Values Your Life More Than the Federal Government
"When a federal agency wants to implement a new regulation, it often needs to answer one basic question first: Do the benefits outweigh the costs? One way of calculating how beneficial a regulation might be is to measure how many deaths it would prevent, and what each life saved is worth."
Here is another interesting, but slightly more technical paper: The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World
"Individuals make decisions everyday that reflect how they value health and mortality risks, such as driving an automobile, smoking a cigarette, and eating a medium-rare hamburger. Many of these choices involve market decisions, such as the purchase of a hazardous product or working on a risky job. Because increases in health risks are undesirable, there must be some other aspect of the activity that makes it attractive. Using evidence on market choices that involve implicit tradeoffs between risk and money, economists have developed estimates of the value of a statistical life (VSL). This article provides a comprehensive review and evaluation of the dozens of such studies throughout the world that have been based on market decisions.
These VSL estimates in turn provide governments with a reference point for assessing the benefits of risk reduction efforts. The long history of government risk policies ranges from the draining of swamps near ancient Rome to suppress malaria to the limits on air pollution in developed countries over the past 30 years (McNeill 1976, OECD 2001). All such policy choices ultimately involve a balancing of additional risk reduction and incremental costs. The proper value of the risk reduction benefits for government policy is society’s willingness to pay for the benefits. In the case of mortality risk reduction, the benefit is the value of the reduced probability of death that is experienced by the affected population, not the value of the lives that have been saved ex post. The economic literature has focused on willingness-to-pay (willingness-to-accept) measures of mortality risk since Schelling’s (1968) discussion of the economics of life saving. "
What is the economic value of human life
In this talk, the speaker also mentions the importance of media and statistics that they provide in their reporting.
In that regard, I would like to point out two very misleading types of information that has been flooding the media regarding COVID19:
The first one has to do with comparing the death toll across different countries. Here is a link to one such site: https://www.worldometers.info/coronavirus/
This statistic can be very misleading, because it doesn't take into consideration the size of the population in each country. For example, the death toll of 10,000 in Italy is NOT the same as the death toll of 10,000 in the US. Population of Italy is a about 60.3 million, while the population of the US is 328.2 million. Hence, although the number of deaths is the same in these two countries, the impact of this death toll is very different.
On the other hand, comparing the death toll in New York State, or even the toll here in NYC to that of Italy, things look quite different. As I am writing this, the death toll in NY State is over 10,000. (11,586 to be exact, and rising). The population of NY State is about 19.5 million. At the same time, the number of deaths in Italy is 21,645. So, Italy has 4 times as many people as New York but "only" (please forgive the poor wording here) twice as many deaths. The situation for New York City is even worse. Apparently, most of the deaths in the State of New York are in NYC and it is reported that at least 8,000 deaths are attributed to COVID19. The population of NYC is 8.4 million.
So, the statistics is actually somewhat favorable for the US as a whole, but absolutely disastrous for New York state and almost unimaginable for NYC.
In that regard, I would like to point out two very misleading types of information that has been flooding the media regarding COVID19:
The first one has to do with comparing the death toll across different countries. Here is a link to one such site: https://www.worldometers.info/coronavirus/
This statistic can be very misleading, because it doesn't take into consideration the size of the population in each country. For example, the death toll of 10,000 in Italy is NOT the same as the death toll of 10,000 in the US. Population of Italy is a about 60.3 million, while the population of the US is 328.2 million. Hence, although the number of deaths is the same in these two countries, the impact of this death toll is very different.
On the other hand, comparing the death toll in New York State, or even the toll here in NYC to that of Italy, things look quite different. As I am writing this, the death toll in NY State is over 10,000. (11,586 to be exact, and rising). The population of NY State is about 19.5 million. At the same time, the number of deaths in Italy is 21,645. So, Italy has 4 times as many people as New York but "only" (please forgive the poor wording here) twice as many deaths. The situation for New York City is even worse. Apparently, most of the deaths in the State of New York are in NYC and it is reported that at least 8,000 deaths are attributed to COVID19. The population of NYC is 8.4 million.
So, the statistics is actually somewhat favorable for the US as a whole, but absolutely disastrous for New York state and almost unimaginable for NYC.
|
In addition, news agencies and social media are circulating even more disturbing statistics. For example, this was in the article few weeks back:
https://www.businessinsider.com/coronavirus-death-rate-by-country-2020-3 One of the biggest issues with this graph is the problem with testing. As it is well know by know, we are experiencing severe problems with testing for corona virus. As a result, the patients that do get tested are the ones experiencing some form of fairly obvious symptoms. This means that the death rates are completely exaggerated. For example, imagine that only the patients with the most sever symptoms, for example, the ones that require the use of ventilators, are tested and that unfortunately, all of them die. Well, in that case, the death rate, as calculated by this statistics is 100%. This is clearly not the case here. For example, studies in China and Iceland and Italy, show that most people that are infected with COVID19 don't show any signs of illness. This means that the statistics reported here are completely false. The only way to know death rate of a disease it to take a random sample in the population and then see what the outcomes are. This issues is nicely discussed in the article Want to know how many people have the coronavirus? Test randomly. As a result of this, I believe that at this point the media should actually stop reporting the number of confirmed coronavirus cases, since it completely misses the point. |
Absolutely Required Episode on the issue of the Value of Human Life
|
|
Peter Singer lives his life based on a simple idea — that one must always consider what will most reduce suffering and increase happiness. As the world grapples with an unprecedented moral dilemma — what to do in the face of the Covid-19 pandemic — we take a deep dive into Peter Singer's ideas and the difficult choices they present.
|
The Tragedy of Costs and Benefits - In the fight against COVID-19, weighing costs and benefits is indispensable for moral clarity. At the same time, we must not forget its limits.
Counting the cost of saving lives “at any cost” - a opinion article about the costs of saving lives
25. Provide some estimates and evidence about the number of lives saved as a result of the lockdown? How can one determine how many lives will be saved?
Policy Analysis
26. What is a paycheck protection program that was just passed in response to the COVID19 pandemic recession? What are some issues with it?
27. What is US Corona Virus Stimulus package? Can you explain who gets what, and how much, according to this stimulus.
28. Given your analysis above, do you believe that the policies implemented both by the Federal and State governments make sense. Why/ why not?
29. Can you come up with a different and possibly better approach for handling this pandemic? Be as precise as possible and provide data and evidence for your argument.
27. What is US Corona Virus Stimulus package? Can you explain who gets what, and how much, according to this stimulus.
28. Given your analysis above, do you believe that the policies implemented both by the Federal and State governments make sense. Why/ why not?
29. Can you come up with a different and possibly better approach for handling this pandemic? Be as precise as possible and provide data and evidence for your argument.
