Makris and Toxvaerd publish their working paper ‘Great Expectations: Social Distancing in Anticipation of Pharmaceutical Innovations’

Miltos Makris has published his working paper Great Expectations: Social Distancing in Anticipation of Pharmaceutical Innovations, research in collaboration with Cambridge University’s Flavio Toxvaerd.

“It sheds light on the impact of the anticipation of different forms of pharmaceutical interventions on social distancing before the arrival of medical innovations such as a vaccine.” Makris explains.

As humanity anticipates a ‘return to normal’ in the midst of the Corona pandemic, the Makris and Toxvaerd research predicts our socio-economic behaviour in the time lag between a vaccine or treatment discovery and its wide distribution.

“The paper analyzes equilibrium social distancing behavior in a model where pharmaceutical innovations, such as effective vaccines and treatments, are anticipated to arrive in the future.”

“Once such an innovation arrives, costly social distancing can be greatly reduced. We characterize how the anticipation of such innovations influences the pre-innovation path of social distancing. We show that when vaccines are anticipated, equilibrium social distancing is ramped up as the arrival date approaches to increase the probability of reaching the post- innovation phase in the susceptible state.”

In other words when we perceive the end to be in sight, society will abstain more rigorously from the more risk associated activities, voluntarily, and this will see our economies return to the downturn experienced in March and April exacerbating recovery.

“In contrast, under anticipated treatment, equilibrium social distancing is completely phased out by the time of arrival. We compare the equilibrium paths with the socially optimal counterparts and discuss policy implications.”