Mathematical epidemiology and welfare economics

Abstract

Economics provides theories of private behavior and government policy that can be integrated with mathematical epidemiology, as illustrated in a susceptible-infected-susceptible model of infection. Confronting infections, people decide on prevention and therapy with regard to consequences for themselves but not for others, the economic concept of an externality. Public policy can optimally offset the externality by subsidizing prevention and therapy at equal rates (or less practically, taxing infection). Absent such interventions, seemingly beneficial changes such as a decreased cost of infection can perversely lower welfare by worsening the externality, the economic concept of immiserization. Other issues discussed include uniqueness and stability of the optimal steady state and its response to parameter changes.