How to Balance Lives and Livelihoods in a Pandemic

Abstract

Abstract The COVID-19 crisis and the policy responses to it have impacted many different areas of common concern including public health and the economy. This raises difficult questions about how to balance these concerns in making policy decisions. In this chapter, we review a number of tools that welfare economics offers for conceptualizing and studying such trade-offs. We argue that social welfare analysis is the most useful method for doing so. We show how concerns for the distributive and other effects of a policy on individual wellbeing can be evaluated using a Social Welfare Function (SWF) and survey some of the main features of such functions. As an illustration, we then use this approach to model and evaluate the implications for social welfare of the adoption of pandemic policies that vary in terms of the stringency of the controls that they impose on individual behaviour. Our model reveals how such evaluations not only are determined by empirical facts but may also depend on key judgments about the relative importance of the different determinants of individual wellbeing (health, income, longevity, and so on) and about the extent to which special concern should be given to the worse-off. In doing so, it illustrates how critical transparent modelling of these concerns is in developing responses to pandemics of this kind.