Assignment #2

Connection to COVID 19

16. In the context of the pandemic, provide en 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 answers and provide links to the related material.

During the pandemic a example of private good is masks. The government roll in this case should be that they should enforce people to wear masks. Have tons of masks to distribute to the people and medical workers.

-https://www.nytimes.com/2020/04/15/nyregion/coronavirus-face-masks-andrew-cuomo.html

17. In the context of the pandemic, provide an example to explain the concept of a public good. What should the government role be in this case? What public policy do you recommend, if any? Explain your answers and provide links to the related material.

A public good during this pandemic is the having the state government make masks free and people would have easy access to them. . The role of the government should be in this case that they should have masks distributed to the people and enough for as long as the pandemic is happening

-https://www.cnbc.com/2020/04/06/new-york-city-will-have-enough-n95-masks-for-the-week-but-still-faces-other-coronavirus-shortages-de-blasio-says.html

18. In the context of the pandemic, provide an example to complain the concept of free rider. What should the government role be in this case? What policy do you recommend if any? Explain your answers and provide links related to the material.

A free rider in this pandemic would be the people not wearing masks because others around them are wearing mask. The government role in this case that they should be finding vaccines and other possible treatments to contain the virus.

19. In the context of the pandemic, provide an example to explain the concept of a tragedy of the commons. What should be the government role in this case? What policy do you recommend, if any? Explain your answers and provide links to the related material.

A tragedy of the commons in this pandemic ventilators. The ventilators would help those hospital patients who are not able to breath on their own. The government role in this case is to make sure they are stocked up with ventilators and have plenty to distribute to the hospitals throughout the country and also have more for backup

-https://nypost.com/2020/04/12/de-blasio-says-nyc-has-enough-ventilators-ppe-for-coming-week/

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- Ramsey, Michele Terlit. What do they say about gender equality as a result of the shelter in place, shutdowns, or lockdowns orders (200 word summary)

The working paper The Impact of COVID-19 on Gender Equality explains how which gender has been mostly effect during the pandemic. The COVID-19 pandemic has caused an economic turmoil. During recessions in previous years it was males who were greatly affected their lost their jobs because of the sector the job was in but during this pandemic its women who had suffered more. With social distancing order in place daycare's are closed and schooling has been moved to online working mothers are struggling to deal with the change because daycare's was a place the kids would stay while the mothers are at work. School kept the kids from morning to afternoon so parents was able to work during those hours too. Now fathers are now taking care of the households work and kids because their division work did not fit as being essential. Men are able to change the work environment during the crisis. More women will face potentially loss employment. Since women are affected more government could come up with helpful resources which is government subsidies to replace pay for workers who need to provide child care due to daycare and schools closed which they are not able to work, removing the requirement to be actively seeking work to be eligible for unemployment insurance over the same period, suspending work requirements from government assistance programs and extending benefits to workers voluntary separating from employment to provide child care.

21. Read the working paper ( introduction and conclusion will suffice- the rest of the paper might be too technical) Health versus Wealth: On the Distributional Effects 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

The working paper Health versus Wealth: On the Distributing Effects of Controlling a Pandemic discusses how different groups prefer different policies. Lock-down policies are put into place to reduce viral spread will naturally focus on reducing activity in sectors in which there is a social aspect to consumption and sectors that produce goods or services perceived to be luxuries. Lock-down policies create a need for potentially large redistribution public policies. A structure is created with 1- a household sector with heterogeneous individuals, 2- an epidemiological block where consumption, production, caring for the sick and purely social interactions determine health transitions during the epidemic, lastly 3- a government with tools for mitigation and redistribution. On the household side, it is broken up into three types of people there is young workers in a basic sector, young workers in a luxury sector, and old retired people. The output of workers in the two sectors is combined to produce a single final consumption good. Workers are immobile across sectors. The output of the basic sector is assumed to be so essential that it will not make sense to reduce employment and output in that sector in order to reduce the spread of the disease. The opposite is that the policy maker has a potential incentive to shut down part of the economic activity in the luxury sector in order to reduce the rate at which infection spreads. A model was built to explain the economic activity and health are jointly determined. Those in the model are determined by age, sector, and health status. Those studies are optimal economic mitigation policies and was argued that costly redistribution reduces the desire of the government to engage in those policies. The elderly gain much more than the young from extensive reductions in economic activity than the young. Those working in the shuttered sector are impacted more.

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?

During the shutdown the economy the GDP would shrink 24 %. Since the outbreak of the virus and the lock down in place the US would go into another recession.

- https://markets.businessinsider.com/news/stocks/us-gdp-drop-record-2q-amid-coronavirus-recession-goldman-sachs-2020-3-1029018308

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:

• ​​Unemployment and Health Insurance

- https://www.vox.com/policy-and-politics/2020/3/27/21197279/coronavirus-us-unemployment-health-insurance

• ​How coronavirus could impact futures of students entering high school, college

​​- https://news.uchicago.edu/story/how-coronavirus-could-impact-futures-students-entering-high-school-college

The article How coronavirus could impact futures of students entering high school, college explains how the virus can impact the future of high school students entering college. There would be a gap between low income and high income families. Low income families would not be able to cover the basic needs such as deposits. Some might depend on their children to have a job to bring in more income to the household which might lower the chance of the student of going to college. Schools being closed have changed everything some students depended on teachers and guidance counselors to guide them the the college process because some might be first generation college students and need the necessary guidance to fill out important paper work and balance out what college is best suited for them. The students might have to take a bigger role and put their college career on hold because with the pandemic happening some students might have to be home and have a bigger responsibility which consist of taking care of younger siblings and housework duties. The article ​​Unemployment and Health Insurance explains the workers that are most vulnerable to losing their jobs are those who work in service or retail industries. Cooks, waiters/wait-stresses, sales workers and cashiers are jobs with the highest uninsured rates in the US. The food industry service has most workers on Medicaid. Those jobs does not pay very well and the business they work sometimes do not offer health insurance. 1/3 of retails provide health benefits and service industry is behind for providing health coverage. People do not want to go to the hospital if they are sick because they do not the funds to cover the cost of the hospital bill. The biggest problem is that people might wait until they are very sick before they go to the hospital but the thing is they can get people sick but those who are sick do not want to go to the hospital if the sickness is mild and they do not want to pay a big hospital bill since they do not have health insurance.

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?

Society value human life as priceless. Methods economists use to estimate the value of human life is by putting a dollar sign on it. Weighing the cost to businesses with the benefit in lives. We do put a value on risks to life we pay for safety features, we demand more for dangerous work. So the value of a statistical life is technically a measure of the value of risk, and it lets you compare the cost of a regulation in dollars to the benefit in probable lives saved. The statistical value of single life in the US is 10 million dollars

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?

The amount of lives that was saved a result of the lockdown was many an estimate between 50 % to 80% of lives could have been saved if their was lockdown implemented earlier. One can determine how many lives will be saved if there is more testing being done. They would be able to track down the virus spread and be accurate of how many has contracted the virus, who was able to recover from of it and lastly who has built antibodies for the virus.

-https://www.bloomberg.com/news/articles/2020-03-23/economic-shutdown-is-estimated-to-save-600-000-american-lives

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?

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage, interest or utilities. The issues with that money would run out quickly. Businesses would not be able to pay their workers on time. Also when applying for the loan online the website might jam up because so many people is on the website and the loan would be process properly because of the delay.

-https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

27. What is US Corona Virus Stimulus package? Can you explain who gets what, and how much, according to this stimulus.

The stimulus package is a $2 trillion relief package is sending money directly to individuals , greatly expanding unemployment coverage, student loan changes, different retirement account rules and more. Those who get the check is 1,2000 for those who make 75,000 dollars or less, 2,400 for married couples who in total make 150,000 dollars or less and 1,200 for head of households who make 112,500 dollars or less . Families will get an additional $500 per child below age 17. Most college students would not get the check because they are dependent and rely on their parents for expenses.

-https://smartasset.com/financial-advisor/coronavirus-stimulus-checks-how-much-will-you-get

28. Given your analysis above, do you believe that the policies implemented both by the Federal and State governments make sense. Why/ why not?

I believe the policies implemented by the state governments make sense because the lockdown and social distancing policy has worked. A lot of lives has been saved because of those policies especially in NYC one of the biggest and hardest states hit hardest by the virus. If the policy was implemented earlier numbers of lives could have been saved even more. Shutting down non essential jobs was good because it meant people was not going to by outside for unnecessary reason less people would be outside. One of the most important policies that the state government was wearing masks cause it's saving others and slowing down the spread of the virus. The policies implemented by the federal government is signing the stimulus package because it helps those who are having a hard time during the pandemic.

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.

If I was the president and handling this pandemic firstly I would have had a pandemic unit of experts learning about new / possible viruses and preparing for the what if plus make sure a vaccine is being created. Secondly the moment the virus was appearing I would have implemented a lockdown throughout the country weather people liked it or not because it would save many lives and number of infections would have been easy to manage. Thirdly I would had medical equipment stocked up to the max and then some more and have it distributed to other states especially those who have bigger populations. Fourthly I would have had put a huge federal aide package on the side if the economy was going down. Would have sent checks to the people and businesses during the length of the lockdown. Fourthly communicate with state governors and see what help do they need and get updates from all parts. Fifthly I would have give accurate information daily to the people and take steps for the whole country to grow from the situation and move forward.