Due to public health concerns about coronavirus transmission, this event will be held remotely. Participants who RSVP will receive a link before the webinar begins.

This briefing was previously listed as a core lesson, “Economic Models and Tools for Policy Development, Analysis, and Evaluation.” The subject of the briefing has been changed given current events and will count as an elective lesson.

2019-nCoV demonstrates that viral risk poses a unique challenge in terms of optimal ex-ante risk reduction and ex-post public policy response. This class has two main objectives. First, we will present recent PWBM analysis of potential fiscal policy responses in the context of the current 2019-nCoV crisis. Second, we will discuss options for longer-term planning. More specifically, the biosafety of infectious agents and toxins are technically graded into four risk groups in a very narrow sense. Unlike terror risk, however, non-terror viral risk lacks a standard and widely accepted national risk advisory classification system. To be sure, the lack of standardization can lead to inefficiently small ex-ante risk mitigation relative to economic costs. But, the lack of standardization can also generate inefficiently large ex-post safety interventions by private and nonprofit firms, especially in the presence of peer effects, which are then magnified by supply-chain effects. Besides a general loss in economic activity, inefficient ex-post losses may also fall disproportionally on low income households (e.g., hospitality workers) which are then hard to correct ex-post with fiscal policy due to natural (“informational”) limits in fiscal policy targeting (“tagging”). We will outline a standard, textbook framework for how to optimally weigh risk mitigation and safety response relative to their economic costs as well as present options for constructing a longer-term policy framework.

This briefing is an elective lesson in PWBM’s new Certificate for Policy Professionals, which is geared toward congressional staffers and other public policy professionals who work in the Washington, DC area. The program will train students in the economics of public policies and the process of how policies are made. After completing the program, certificate earners will be better prepared to understand and articulate the economic trade-offs of legislation. Please visit our certificate page to learn more and apply.

Instructor: Professor Kent Smetters is the Boettner Chair Professor in the Wharton School’s Business Economics and Public Policy Department, a professor of insurance and risk management, and research associate at the NBER.

Please contact us at budgetmodel@wharton.upenn.edu if you have any questions about the event.