There is perhaps no greater goal than promoting safe behavior during a pandemic. Policy makers need to know the correct proscriptive policy to encourage, or perhaps force, citizens to act in safer ways. For citizens themselves, the calculus is different. Safe behavior can fall on a continuum of greater or lesser risk, but that typically corresponds with costs. Some behavior that is very safe can be costly. Gordon Tullock famously explored this trade off with his thought experiment “Tullock’s Spike”.
Automobiles have become a lot safer over the past 30 years, and much of that is the result of innovation in safety technology. One of the biggest advances has been anti-lock brakes. These prevent cars from skidding during braking and allow for more mistakes by drivers. In theory, they should make us safer.
But researchers found something odd – a lot of these innovations did not seem to be promoting safer driving. Instead, empowered by a feeling of safety, individuals decided to drive less safely assured that the advances in auto safety would allow them to travel more quickly (lowering their costs) while not incurring the risks. Anti-lock brakes, airbags, seat-belt laws, crumple zones, all lower the costs of accidents to individuals.
How then to “encourage” safety? Tullock said, let’s put a sharp metal spike in the middle of the steering wheel. That would have the practical effect of keeping the costs directed, literally, at the driver who would adopt safer practices.
Why is this relevant today other than to remember Tullock’s unconventional way of thinking? Public health officials face the exact same dilemma. COVID-19 cases are rising, particularly among the young. Despite shaming, nagging, and pleading, the young are not heeding the pleas of our public officials to act “safely,” and are going to bars, having meals, and otherwise leading relatively normal lives. They are doing this because there is no spike on the steering wheel. The young and healthy are largely unaffected by COVID and understand this. After having been deprived of many things over the past six months, they are, understandably, reluctant to continue to live in semi-isolation.
It seems to me policy makers have a stark choice. Closing bars and forcing public mask wearing won’t solve the problem. Young people will move to private homes and parties. They will continue to meet and talk and flirt and do what young people do. The only way to change their actions is to force them to pay the costs for the COVID increase. I would suggest we need to think more in terms of a tax. Anyone under the age of 30 who tests positive for COVID and through contact tracing can be shown to have engaged in risky behavior should pay a tax or penalty. It may not be perfect, but it will change the calculus for those who right now are driving very safe Ferraris and putting other members of society in direct risk of infection.
READER COMMENTS
Amy Willis
Jul 28 2020 at 2:01pm
Russ Roberts mentions this indirectly in this week’s EconTalk with Nassim Nicholas Taleb. Here’s the clip.
Kevin Dick
Jul 28 2020 at 3:04pm
Why is it always the stick rather than the carrot in these situations?
Certainly, it does not seem like uniformed people with guns enforcing regulations universally produce desirable outcomes.
How about we pay young people for the desired behavior? Or at least split the difference.
Steve
Jul 28 2020 at 4:09pm
It comes down to what is easier to track and/or verify. Do you have young people download an app that logs their location and gives them a daily bonus for not leaving the house? Do they get a smaller bonus for every cell phone they came within 6 feet of (outside of household occupants)? If money is on the line, it can’t just be an honor-system “yes I verify I didn’t contact anyone today”.
On the flip side, if a tax is enacted for every positive test, just how many young people do you think will voluntarily submit to a COVID test? You’ll only pick up the cases of people in the hospital who need medical attention, which seems to be a vanishingly low percentage of those under ~40. Thus hiding the problem, not really solving it.
Kevin Dick
Jul 28 2020 at 6:46pm
I was thinking of something precisely along the lines of your first suggestion.
It’s not just a matter of what’s easiest. Remember that externalities are symmetric. There’s no inherent moral valence to young people imposing on the old vs old imposing on the young. So simply spinning up the enforcement machinery is not automatically morally justified.
Moreover, it’s not clear that you would get a better result with the stick as enforcement avoidance is also a problem.
Perhaps we could actually weigh some data and evidence, maybe even do some experiments, before bringing in the badges.
Jon Murphy
Jul 28 2020 at 3:08pm
Interesting post. I interpret Tullock’s thought experiment a little differently, though. I read it as the spike, while directing all the costs at the driver, is also a sign of overkill. In other words, safety is not paramount; we trade off safety for speed (or other conveniences).
So, ignoring possible constitutional and public choice issues, a tax (or otherwise cost-shifting) onto young people may not be desirable. Sure, such a tax would reduce the risky behavior of young people. But would such a measure be desirable? More information is needed. We might want to encourage such behavior as a way to build herd immunity.
In the interest of full disclosure, I would be one of the young people likely to bear the tax 🙂
Michael Wood
Jul 28 2020 at 4:26pm
The author makes many wrong assumptions, 1) cases=active infections, just because the number of “cases” increase doesn’t mean there are more active cases, in means there is more testing. The testing is questionable at worst and unusable at best. The doctor that created the swab test openly stated that his test should not and does not give accurate results to make a diagnoses. 2) There is no accurate test for Covid -19, none. At best, a lab might be able to visual identify potential strains under a microscope in a petri dish with a high error factor 3) Taxing a disease process, how could that not go wrong? 4) Contact tracing of a Covid-19 is the same as contact tracing the common cold, ever try to catch a fart in a skillet. There are many more false and fallacious assertions in the article, so I stop there for brevity.
Mark Brophy
Jul 28 2020 at 9:35pm
It’s immoral to expect young people to sacrifice their lives for the benefit of old people. It would be better for old people to act like responsible adults and take care of themselves.
Jon Murphy
Jul 29 2020 at 7:37am
There’s no sacrificing of life going on here
Mark Brophy
Jul 29 2020 at 8:43pm
House arrest is immoral even though it’s not as bad as murder. People should be able to live freely rather than under government tyranny.
Jon Murphy
Jul 29 2020 at 10:19pm
Ok. I don’t see what that has to do with anything in your original post.
Patrick Tehan
Jul 28 2020 at 10:06pm
Taxes will deter testing which is the opposite of what we want
Jon Murphy
Jul 29 2020 at 9:05am
That’s a good point
Thomas Hutcheson
Jul 28 2020 at 10:07pm
This assumes that people continue to be told to mitigate risks to themselves. The message needs to be to mitigate risks to others.
Jon Murphy
Jul 29 2020 at 10:34am
Given the reciprocity of externalities, doesn’t this come to the same thing?
Mactoul
Jul 29 2020 at 12:22am
I am surprised at reading a post that is frankly statist in tone and content here at EconLog. What David Friedman would have said?
Jon Murphy
Jul 29 2020 at 8:44am
This is probably the single least statist suggestion regarding COVID out there. Not everything that involves the state is statist.
Toby
Jul 29 2020 at 6:13am
You could also just deny the young medical care in case of Covid19. This would be the equivalent of strict liability and we know that this can induce the same level of care as a rule of negligence. The latter seems similar to what you’re proposing.
Pat Lynch
Jul 29 2020 at 7:53am
Toby that is another option that would place most of the costs directly on the young, but most of the young do not get hospitalized – there older relatives, co-workers and neighbors do. I agree that we need to think more creatively about ways to internalized the externalities here.
Jon Murphy
Jul 29 2020 at 9:02am
It’s not obvious the equivalency between denying medical care and strict liability.
Not necessarily. Strict liability can, and often does, involve too much care relative to the optimal level or rule of negligence. In a world of no transaction costs and perfect compensation, strict liability and no liability can possibly produce the same optimal outcome of precaution. However, if one party or the other can incur precautions at different levels of cost (which, given the subjectivity of costs, is almost certainly the case), then strict liability could lead to inefficient levels of precaution relative to negligence. Ideally, you’d want to have a negligence rule with perfect compensation and a legal standard equal to the efficient level of care that gives the injurer incentives for efficient levels of precaution.
Take, for example, an icy sidewalk. If there is a rule of strict liability, then the owner of the sidewalk is always responsible for the injury and compensation. The person walking on the sidewalk bears no incentive to be safe. They may wear less-safe footwear or walk at too fast a pace knowing they would be compensated justly. The owner may take too much precaution: using too much salt, installing handrails, etc. Strict liability may lead to too much being spent on precaution.
A rule of negligence, where any level of precaution taken below legal a legal standard results in compensation but where anything at or above does not, creates incentives for both parties to optimize. The owner of the sidewalk will put down salt, but not spend money installing handrails. The walker may invest in better shoes or walk slower. We get an optimal level of reduction given the two parties.
(for a detailed discussion of this point, see Law & Economics by Robert Cooter and Thomas Ulen, Chapter 6).
PeterReed
Jul 29 2020 at 6:26am
Can we tax public officials for their failures in COVID? If not then why is taxing the young acceptable?
James
Jul 29 2020 at 9:33am
Why stop at behavior that risks transmitting one ailment? That seems arbitrary and particular when there could also be penalties for behaviors that might increase the risk to others of colds, influenza, staph infection, HIV, hepatitis, etc.
Thomas Lee
Jul 29 2020 at 11:25am
Given that there is still uncertainty about exactly how Covid-19 spreads, do we even know enough to point the finger at someone? The gold standard of protection nowadays seems to mask wearing, yet studies provide very little evidence that most cloth mask wearing is effective.
“Anyone under the age of 30 who tests positive for COVID and through contact tracing can be shown to have engaged in risky behavior should pay a tax or penalty.”
Why under the age of 30? What’s risky? The desire to live a “normal life”? Do they get due process, or just slapped with a penalty?
JdL
Jul 29 2020 at 11:59am
The author offers no evidence that slowing the spread of COVID is desirable in any way whatsoever. Since, as far as I can see, the spread can’t be stopped by any humanly possible means (even in China, where they’re spending huge amounts of resources trying to do so), there is no logical reason to punish or reward people. Only herd immunity will stop the spread, and dragging that process out only results in more agony.
Matthias Görgens
Jul 30 2020 at 4:35am
I have no idea whether the policy suggested here is a good idea.
It is an interesting idea.
However, if you were to implement the idea, I would suggest to make it not a binary either/or tax, but graduated depending on how risky the behaviour was.
Even in a perfect implementation, there would always be some arbitrary judgement calls. With a gradual scheme at least people with very similar behaviour would pay a similar tax.
In addition, you could even suggest just taxing people outright for falling sick. Private insurance markets could sort out the judgement-by-riskiness part.
Just to repeat, I have no opinion on whether the policy itself would be a good idea in the first place.
Pierre Lemieux
Jul 31 2020 at 11:09pm
The problem is that externalities are symmetric or reciprocal. The old preventing the young to have fun transmits externalities to the latter just as the young spreading the virus and preventing the old from having fun transmits externalities to the old (assuming the young don’t thereby contribute to generating herd immunity). There is a priori no more reason for taxing the young to benefit the old (giving the old a property right to roaming around) than to taxing the old (by inciting them to shelter at home) to benefit the young (which amounts to give the old a property right in roaming around). The challenge was formulated by Coase and Buchanan and Stubblebine. The real challenge comes from Anthony de Jasay (his italics):
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