Rational social distancing policy during epidemics with limited healthcare capacity

TL;DR

This paper develops a nested optimization model to design social distancing policies that align individual behavior with government health capacity goals during epidemics, highlighting critical intervention costs for controlling peak infections.

Contribution

It introduces a novel nested optimization algorithm to determine optimal interventions that influence individual decisions, considering healthcare capacity constraints.

Findings

Sharp reduction in peak infections at a critical intervention cost

Gradual infection reduction without government intervention

Interventions vary less over time when costly to implement

Abstract

Epidemics of infectious diseases posing a serious risk to human health have occurred throughout history. During recent epidemics there has been much debate about policy, including how and when to impose restrictions on behaviour. Policymakers must balance a complex spectrum of objectives, suggesting a need for quantitative tools. Whether health services might be `overwhelmed' has emerged as a key consideration. Here we show how costly interventions, such as taxes or subsidies on behaviour, can be used to exactly align individuals' decision making with government preferences even when these are not aligned. In order to achieve this, we develop a nested optimisation algorithm of both the government intervention strategy and the resulting equilibrium behaviour of individuals. We focus on a situation in which the capacity of the healthcare system to treat patients is limited and identify conditions under which the disease dynamics respect the capacity limit. We find an extremely sharp drop in peak infections at a critical maximum infection cost in the government's objective function. This is in marked contrast to the gradual reduction of infections if individuals make decisions without government intervention. We find optimal interventions vary less strongly in time when interventions are costly to the government and that the critical cost of the policy switch depends on how costly interventions are.