The COVID-19 crisis has demonstrated the importance of health policies for our economies. In fact, as declared by the IMF’s managing director during the 2021 Spring Meetings, “vaccine policy is economic policy.” Economists have responded by integrating epidemiological insights to shed light on macroeconomic dynamics. Yet little is known about the deeper and long-lasting impact of COVID-19 on populations: what will be the long-term effects on mortality and on socioeconomic inequality?
There are no easy answers to these questions, which are nonetheless crucial inputs to many economic models. In order to make progress, a recent IMF working paper proposes a simple health model that tracks lifetime cohort mortality rates. This model allows exploration of a variety of phenomena studied in the empirical literature and shows how shocks affect population health at various ages.
We start with a simple observation: mortality has a strikingly regular shape like a check mark—high at birth, low during youth, and high and rising almost linearly with age in late adulthood. Figure 1 shows this pattern for selected cohorts of women born between 1860 and 1940 for various European countries—Belgium, Denmark, France, The Netherlands, Norway, and Sweden—(panel 1) and for France alone (panel 2). Although the level of mortality has changed substantially over time, the evolution of mortality rates by age is very similar across many countries and over time (these patterns are similar though not identical for men). Mortality curves also display an “adolescent hump,” especially visible in cohorts born in the 19th century. Maternal mortality, as well as hormonal and other changes associated with the transition to adulthood are thought to explain this adolescent hump.
A simple model of the health distribution of a population accounts for these stylized facts on mortality. In the model, people are born with an initial health level that evolves not only as a result of natural aging but also in response to environmental shocks and investments. People die when their health level falls below a certain threshold.