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UPR researchers assess human and fiscal costs of COVID-19 pandemic

A team of researchers at the University of Puerto Rico Cayey Campus recently released the findings of a study that probes the challenges that policymakers face during a pandemic — in this case COVID-19 — regarding the fiscal and human costs associated with different mitigation measures.

The research entitled “Balancing fiscal and mortality impact of COVID-19 mitigation measurements,” developed by Mayteé Cruz-Aponte, professor at the Department of Mathematics-Physics in Cayey, and José Caraballo-Cueto, professor at the Graduate School of Business Administration at the UPR in Río Piedras, determines that in the case of COVID-19, the first-best policy to minimize human and fiscal costs would be reached by identifying, treating, and isolating incoming infected individuals.

In the long run, herd immunity has a higher death toll and implies more government expenditures than the first alternated intensity of physical distancing, the study found.

“When this opportunity is missed, second-best policies need to be searched. We conclude that, when either fiscal or human costs are relevant, the second-best policy is reached when policies to significantly reduce the transmission rate are taken,” the researchers said.

“When saving lives is the most important target, the second-best scenario is found when the transmission rate is lowered by 80% either in day two or day 20 after the pandemic, with few dead cases and as much as $1.07 trillion in net impact to the government budget,” the study concluded.

“These policies can take the form of physical distancing combined with massive testing,” it stated.

However, if the focus rests solely on budgetary issues disregarding life, “the second-best policy would be to lower the transmission rate by 90% in eight weeks: the pandemic would cost approximately $119 billion at the expense of killing 898,193 people.”

Unleashing the pandemic without taking any containment policy always maximizes the mortality associated to the pandemic. Meanwhile, a no-measures scenario increases the fiscal cost of the pandemic in many of the study’s several simulations when compared to the other scenarios, the research confirms.

“In the US mainland, a relatively strict policy would save 910,064 lives and represent a 10% higher cost to taxpayers. This, in comparison with the measures of herd immunity,” the research established.

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Author Details
Business reporter with 27 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.
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