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An agent with an infectious disease confers a negative externality on the rest of the community. If the cost of infection is sufficiently high, they are encouraged and in some cases required to quarantine themselves. Is this the efficient outcome? One might wonder if a Coasian approach would generate it instead. Define a right to walk around when infected which can be bought and sold. Alas, infection has the nature of public bad which is non-rivalrous and non-excludable. There is no efficient, incentive compatible individually rational (IR) mechanism for the allocation of such public bads (or goods). So, something has to give. The mandatory quarantine of those who might be infected can be interpreted as relaxing the IR constraint for some.

If one is going to relax the IR constraint it is far from obvious that it should be the IR constraint of the infected. What if the costs of being infected vary dramatically? Imagine a well defined subset of the population bears a huge cost for infection while the cost for everyone else is minuscule. If that subset is small, then, the mandatory quarantine (and other mitigation strategies) could be far from efficient. It might be more efficient for the subset that bears the larger cost of infection to quarantine themselves from the rest of the community.


I take it as self-evident and undisputed that when a group of eminent economists sign a letter endorsing the health care bill, the subtext of their message is that the issue is part of their scientific expertise and that they have studied the details sufficiently to deliver their professional opinion: This is the only way to interpret the fact that the undersigned are all economists, and that their academic position is mentioned in the letter. This is why their advice should carry more weight than the advice of an unknown blogger. If this advice is followed and the bill passes, then some of their professional reputation is tied with its success.

What is perhaps more disputable, but still true in my view, is that even this group of most distinguished economists don’t have individual reputations, and that they are drawing from and contributing to a collective reputation pool of the entire profession. The people of this (or any other) country, who are the audience of this letter, don’t distinguish between different scholars of the same discipline. Public trust in the entire profession is determined by the success of the predictions and policy advices of its members.

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