Three Essays on the Decision Making under Risk and Equity Concerns

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Three Essays on the Decision Making under Risk and Equity Concerns

Le résumé en français n'a pas été communiqué par l'auteur.Le résumé en anglais n'a pas été communiqué par l'auteur

Fair Innings? The Utilitarian and Prioritarian Value of Risk Reduction over a Whole Lifetime

The social value of risk reduction (SVRR) is the marginal social value of reducing an individual’s fatality risk, as measured by some social welfare function (SWF). This Article investigates SVRR, using a lifetime utility model in which individuals are differentiated by age, lifetime income profile, and lifetime risk profile. We consider both the utilitarian SWF and a “prioritarian” SWF, which applies a strictly increasing and strictly concave transformation to individual utility. We show that the prioritarian SVRR provides a rigorous basis in economic theory for the “fair innings” concept, proposed in the public health literature: as between an older individual and a similarly situated younger individual (one with the same income and risk profile), a risk reduction for the younger individual is accorded greater social weight even if the gains to expected lifetime utility are equal. The comparative statics of prioritarian and utilitarian SVRRs with respect to age, and to (past, present, and future) income and baseline survival probability, are significantly different from the conventional value per statistical life (VSL). Our empirical simulation based upon the U.S. population survival curve and income distribution shows that prioritarian SVRRs with a moderate degree of concavity in the transformation function conform to widely held views regarding lifesaving policies: the young should take priority but income should make no difference

Lives v livelihoods, part 1: how can we measure the value of a life?

Policies that suppress or control the COVID-19 pandemic prevent illness and save lives, but exact an economic toll. How should we balance lives and livelihoods to determine which policy is best? In the first of two posts, Matthew Adler (Duke University/LSE), Richard Bradley (LSE), Maddalena Ferranna (Princeton), Marc Fleurbaey (Princeton and Paris School of Economics), James Hammitt (Harvard) and Alex Voorhoeve (LSE) compare the benefit-cost and social welfare approaches to doing so

Assessing the Wellbeing Impacts of the COVID-19 Pandemic and Three Policy Types: Suppression, Control, and Uncontrolled Spread

The COVID-19 crisis has forced a difficult trade-off between limiting the health impacts of the virus and maintaining economic activity. Welfare economics offers tools to conceptualize this trade-off so that policy-makers and the public can see clearly what is at stake. We review four such tools: the Value of Statistical Life (VSL); the Value of Statistical Life Years (VSLYs); Quality-Adjusted Life-Years (QALYs); and social welfare analysis, and argue that the latter are superior. We also discuss how to choose policies that differentially affect people’s wellbeing. We argue in favor of evaluating policies using a Social Welfare Function (SWF), which evaluates the possible distributions of wellbeing across individuals that may result from a policy. Such a function, we argue, should regard increases in the wellbeing of the less well-off as especially valuable. We then use a model to illustrate how such a framework can help evaluate two broad policy types in response to the pandemic: eradication of the virus, and more lenient control of the spread. Our model reveals how such evaluations depend on many empirical facts but also on key value judgments about the relative importance of health and on the extent of special concern for the worse off. The purpose of this brief is not to make precise recommendations, as conditions vary widely across countries and over time, but to provide a methodology

How to Balance Lives and Livelihoods in a Pandemic.

Control measures, such as “lockdowns”, have been widely used to suppress the COVID-19 pandemic. Under some conditions, they prevent illness and save lives. But they also exact an economic toll. How should we balance the impact of such policies on individual lives and livelihoods (and other dimensions of concern) to determine which is best? A widely used method of policy evaluation, benefit–cost analysis (BCA), answers these questions by converting all the effects of a policy into monetary equivalents and then summing them up. A different method, social welfare analysis, proceeds by determining the effects of a policy on individual wellbeing and then applying an aggregation formula to them to evaluate the overall effects of a policy. In this chapter, we survey these methods and argue that social welfare analysis has important advantages. One crucial advantage is that it enables ethical considerations relating to the impact of policies on individual wellbeing and its distribution to be incorporated into policy assessments in a transparent way. We illustrate this with a simple numerical model for evaluating pandemic policies that vary in terms of the stringency of the controls that they impose on individual behaviour, showing how the evaluation depends on the ethical significance accorded to their impact on the wellbeing of different age and income groups

The full health, economic, and social benefits of prospective Strep A vaccination.

Recent research has documented a wide range of health, economic, and social benefits conferred by vaccination, beyond the direct reductions in morbidity, mortality, and future healthcare costs traditionally captured in economic evaluations. In this paper, we describe the societal benefits that would likely stem from widespread administration of safe and effective vaccines against Streptococcus pyogenes (Strep A), which was estimated to be the fifth-leading cause of infectious disease deaths globally prior to the COVID-19 pandemic. We then estimate the global societal gains from prospective Strep A vaccination through a value-per-statistical-life approach. Estimated aggregate lifetime benefits for 30 global birth cohorts range from $1.7 to$5.1 trillion, depending on the age at which vaccination is administered and other factors. These results suggest that the benefits of Strep A vaccination would be large and justify substantial investment in the vaccines' development, manufacture, and delivery

Trois essais sur la prise de décision avec risque et préférence pour l'équité

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COVID-19 Vaccine Allocation: Modeling Health Outcomes and Equity Implications of Alternative Strategies

Given the scarcity of safe and effective COVID-19 vaccines, a chief policy question is how to allocate them among different sociodemographic groups. This paper evaluates COVID-19 vaccine prioritization strategies proposed to date, focusing on their stated goals; the mechanisms through which the selected allocations affect the course and burden of the pandemic; and the main epidemiological, economic, logistical, and political issues that arise when setting the prioritization strategy. The paper uses a simple, age-stratified susceptible–exposed–infectious–recovered model applied to the United States to quantitatively assess the performance of alternative prioritization strategies with respect to avoided deaths, avoided infections, and life-years gained. We demonstrate that prioritizing essential workers is a viable strategy for reducing the number of cases and years of life lost, while the largest reduction in deaths is achieved by prioritizing older adults in most scenarios, even if the vaccine is effective at blocking viral transmission. Uncertainty regarding this property and potential delays in dose delivery reinforce the call for prioritizing older adults. Additionally, we investigate the strength of the equity motive that would support an allocation strategy attaching absolute priority to essential workers for a vaccine that reduces infection-fatality risk

Optimal global spending for group A Streptococcus vaccine research and development

Abstract Group A Streptococcus (Strep A) leads to 600,000 deaths and 600 million cases of pharyngitis annually. Although long a promising target for vaccine development, how much funding should be allocated to develop a Strep A vaccine is unclear. We aim to calculate the optimal amount of global spending for Strep A vaccine development, the resulting benefits, and the social rate of return on this spending. We develop a model of optimal spending, from a global societal perspective, on research and development (R&D) for vaccines and treatments. The model takes as inputs total harm from the disease, the probability an R&D project succeeds, the cost of a project, and the fraction of total harm a success alleviates. Based on these inputs the model outputs an optimal amount of spending and a rate of return. We calibrate the model for Strep A. Optimal spending is estimated to be 2020 USD33 billion. This spending leads to 2020 USD1.63 trillion in benefits and a real return of 22.3% per year for thirty years. Sensitivity shows an optimal spending range of 15.9 billion to 58.5 billion, a benefits range of 1.6 trillion to 37.9 trillion, and a return range of 18.0–48.2%. Investment in a Strep A vaccine could create enormous benefits for comparatively little cost. It represents one of the highest return uses of public spending. Policy can promote Strep A vaccine development through direct funding of projects and by promoting financial mechanisms that allow the private sector to diversify its R&D investment