In the context of this pandemic, an example of a private good is food. The government's role in this case should be to provide resources such as food to families who are unable to make ends meet. For example, there are families who are living paycheck to paycheck; however, during this pandemic, people have lost their jobs and are not getting paid. These low income families are struggling to provide food for their families. Some short term public policies could include expansion of food assistance benefits to people who do not have access to food, paid sick leave for people living paycheck to paycheck, and unemployment benefits for low income families. See Link: https://www.ppic.org/blog/the-covid-19-crisis-is-affecting-low-income-workers/ See Link: https://www.nejm.org/doi/full/10.1056/NEJMp2005638
In the context of this pandemic, an example of a public good would be a public park. In this case the government's role should be to reduce access to public areas where there is a possibility of high concentration of people. One public policy that can be enacted by the government to reduce the risk of spreading is to close all public parks. Another possibility to reduce risk would be to limit the number of people would be to enforce a maximum amount of visitors to parks. This can be enforced by police officers on site. See Link: https://parks.ny.gov/covid19/
In the context of this pandemic, an example of a free rider would be a person who goes out to public areas, knowing that the majority of people are staying home. There is an incentive to free ride on the efforts of other people because one person does not believe that they can spread the disease if it is only that person outside. One public policy that the government can enact would be to close all public places. See Link: https://thehill.com/changing-america/opinion/488654-why-so-many-people-are-still-going-out-and-congregating-in-groups
In the context of this pandemic, an example of a tragedy of the commons would be hoarding resources without necessary use. For example, many people are hoarding goods such as toilet paper. There is a fear that is driving people to hoard goods at this uncertain time; however, this leads to a depletion of a shared resource. One public policy that the government can enact is limiting the amount of necessities a person can purchase from a store. For example, store owners can restrict customers to two rolls of toilet paper at a time. See Link: https://nypost.com/2020/04/09/how-a-global-pandemic-lead-to-a-toilet-paper-shortage/
Analysis of Research Articles:
Article: "The Impact of COVID-19 on Gender Equality" Shelter-in-place orders have been recommended to slow down the spread of the Corona Virus. This includes shutdowns of schools and daycare services, as well as discouragement of informal care performed by relatives. This article addresses the concerns of workplace flexibility for men and women as well as childcare provision within married couples. The author emphasizes how gender differences are in usual downturns. Women's jobs are generally less changing than men's due to shutdowns, making the gap even larger. They also have to compensate for higher unemployment risk than their husbands because their jobs usually have a higher volatility. Since childcare services such as daycare are shutting down, and women have a higher unemployment risk, they will need to take childcare provision into their own hands. The reason why childcare provision will not fall into the hands of the husband is because men generally have less flexible work arrangements, since they generally have more essential jobs. Therefore, if one spouse has to quit working, it only makes sense if it is the wife. This will unfortunately cause some women to drop out of the workforce altogether, especially if children remain out of school. The authors hope that gender equality can result from the Corona Virus, despite these facts. They hope that there will be changes in social norms and role models, especially if some men need to take more responsibility in the house, including providing childcare and assessing schooling responsibilities.
Article: "Health versus Wealth: On the Distributional Effect of Controlling a Pandemic" This working paper addresses how the health of individuals and the wealth of the economy is clashing during the Corona Virus pandemic. Lock-down policies have very large distributional implications as a result of the "lock-down" policies. One distributional implication that society is facing during this pandemic is the restriction of social interaction. The trade-off in this scenario is stopping the spread of the Corona Virus, but it is also slowing the economy. For example, restaurants and bars need to close to slow the spread, but the economy is struggling because people are not spending money, which means that people are not making money. Another distributional implication that society is facing during this pandemic is explained in the extent of mitigation policy. Mitigation slows the spread of the Corona Virus by reducing the rate at which susceptible workers become infected. The trade-off in this scenario is that the market income for these workers reduces to zero. This redistribution, though desirable because less people are exposed, is costly. This is because of the static social planner problem that more consumption inequality makes redistribution more costly. Another distributional implication is between young and old and healthy versus sick. These are different groups in the economy that have different views about mitigation strategy. This is because workers cannot allocate across sectors.
How much will GDP shrink as a result of this shutdown?
This graph from U.S. Department of Commerce shows the changes in real GDP from the years 2016 to 2020. As shown in the graph, GDP remained above the zero line from the years 2016 to 2019. America's GDP fluctuated between one percent and four percent throughout these years. So far, this graph shows that GDP has decreased to negative 4.8 percent in the year 2020. This is when businesses started to shut down. As a result of this continued shutdown, America's GDP will continue to decrease. Between quarter four of 2019 and quarter one of 2020, GDP has dropped by seven percent. If GDP continues to decrease due to the result of shelter in place, shutdowns and lock-down orders, it will probably be around 30 to 50 percent change during quarantine. More information at Fortune: (https://fortune.com/2020/04/20/coronavirus-business-impact-us-economy-2020-covid-19/.)
Side Effects or Negative Consequences as a result of this shutdown (besides the decrease in GDP): 1. Unemployment increase due to the fact that people need to be social distancing and there is less business during quarantine. Many jobs are laying off workers. (https://abcnews.go.com/Business/us-economy-lost-205-million-jobs-april-unemployment/story?id=70558779) "the worst since the Great Depression" 2. Domestic Violence increase since people are staying home with abusive parents and spouses, and are not able to escape to school and work. https://www.nytimes.com/2020/04/06/world/coronavirus-domestic-violence.html (Read Lele's story under "Lockdown and Intimate Terrorism" section for one person's encounter with horrific domestic abuse.) 3. Mental Health Decline since people are not used to being contained in their respective houses for extended periods of time. Also, work and school uncertainty and an inability to exercises the way they used to. (Depression, Anxiety, affecting physical health) https://www.theguardian.com/society/2020/apr/24/mental-health-coronavirus-lockdown-helplines ("In Alabama, calls to the hotline are up 50% since the start of the pandemic")
How does our society value human life? What methods do economists use to estimate the value of human life? What is the statistical value of a single human life in the US? The society we live in provides "costs" of human life. The U.S. Office of Management and Budget puts the value of a human life between $7 million and $9 million. Economists estimate value human lives based on the choices we make that involve risky behavior. This includes smoking cigarettes, driving a car, eating under cooked meat or having a risky job. "One way to calculate the value of a human life is to look at how much more money a worker earns for doing a risky job. Suppose working in a coal mine pays $10,000 a year more than working a safer desk job, and that coal miners have a 1% greater chance of dying on the job." (https://www.theglobalist.com/the-cost-of-a-human-life-statistically-speaking/) I do not think that it is possible to calculate the amount of lives saved as a result of this lock-down. But if we did we would have to factor in slowing the Corona Virus curve during lock-down, as well as decreasing pollution, decreasing accidents, and decreasing crime rates. For example, this article https://www.forbes.com/sites/jeffmcmahon/2020/03/16/coronavirus-lockdown-may-have-saved-77000-lives-in-china-just-from-pollution-reduction/#1c81350734fe explains that the Corona Virus lock-down has saved 77,000 lives just from decreasing pollution alone in China. This number does not even take into account the decreased crime rates and the decreased spreading of the Corona Virus. Similarly, this article https://www.france24.com/en/20200424-lockdown-saved-as-many-as-60-000-lives-in-france-study-shows explains that 60,000 lives have been saved in France alone due to the fact that lock-down has encouraged containment of the virus. These numbers do not even begin to show the amount of lives being saved worldwide as a result of this lock-down. This lock-down has been a beneficial way to increase the number of lives saved around the world.