You are currently browsing the monthly archive for August 2020.

Serious infectious diseases are a prime example of a public bad (non-exclusive and non-congestible). We limit them by restricting behavior and or getting individuals to internalize the externalities they generate. For example, one could mandate masks in public places. To be effective this requires monitoring and punishment. Unpleasant, but we know how to do this.  Or, one could hold those who don’t wear masks responsible for the costs they impose on those whom they infect. Unclear exactly how we would implement this, so impractical. However, it is still interesting to speculate about how one might do this. Coase pointed out that if one could tie the offending behavior to something that was excludable, we would be in business.

To my mind an obvious candidate is medical care. A feature of infectious diseases, is that behavior which increases the risk of infection to others also increases it for oneself. Thus, those who wish to engage in behavior that increases the risk of infection should be allowed to do so provided they waive the right to medical treatment for a defined period should they contract the infection. If this is unenforceable, perhaps something `weaker’ such as treatment will not be covered by insurance or the subject will be accorded lowest priority when treatment capacity is scarce.

How exactly could such a scheme be implemented? To begin with one needs to define which behaviors count, get the agent to explicitly waive the right when engaging in it and then making sure medical facilities are made aware of it.  We have some ready made behaviors that make it easy. Going to a  bar, gym and indoor dining. The rough principle is any activity with a $$ R_0 > 1 $$ whose access is controlled by a profit seeking entity. The profit seeking entity obtains the waiver from the interested agent as a condition of entry (this would have to be monitored by the state). The waiver releases the profit entity from liability. Waiver enters a database that is linked to health records (probably the biggest obstacle).

Kellogg faculty blogroll