Discussion paper

DP15903 Contacts, Altruism and Competing Externalities

This paper considers voluntary transmissive contacts between partially altruistic individuals in the presence of asymptomatic infection. Two different types of externalities from contacts are considered, infection externalities and socioeconomic externalities. When contacts are incidental, then externalities work through disease propagation. When contacts are essential, both infection and socioeconomic externalities are present. It is shown that for incidental contacts, equilibrium involves suboptimally high exposure whereas for essential contacts, equilibrium exposure is suboptimally low. An increase in altruism may thus increase or decrease disease transmission, depending on the type of contact under consideration. The analysis implies that policy to manage the epidemic should differentiate between different types of tranmissive activities.

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Citation

Toxvaerd, F (2021), “DP15903 Contacts, Altruism and Competing Externalities”, CEPR Press Discussion Paper No. 15903. https://cepr.org/publications/dp15903