Treich, Nicolas and Salanié, François (2020) Public and private incentives for self-protection. TSE Working Paper, n. 20-1090, Toulouse

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Abstract

Governments sometimes encourage or impose individual self-protection measures, such as wearing a protective mask when going outside during an epidemic. However, by reducing the risk of being infected by others, more self-protection may lead each individual to go outside more often. In the absence of lockdown, this creates a “collective
offsetting effect”, since more people outside means that the risk of infection is increased for all. Yet, wearing masks also creates a positive externality on others, by reducing the risk of infecting them. We show how to integrate these different effects in a simple model, and we discuss when self-protection efforts should be encouraged (or deterred) by a social planner.

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  • Public and private incentives for self-protection. (deposited 09 Jul 2020 10:13)