People respond rationally to Covid-19

See Drink Your Coffee, Be Considerate, and Fight Covid-19 By Byron B. Carson, III. He has a Ph.D. in Economics from George Mason University. Excerpt:

"People even respond rationally as Covid-19 cases and deaths rise. Studies are still emerging (here, here, and here) that suggest people are responsive, but we can also observe Google Mobility Reports that show changes in mobility—from time spent at home to transit stations and one’s workplace—that correspond with changes in the extent and severity of Covid-19. That is, presented with information indicating higher rates of Covid-19 cases and deaths, people became more cautious in their interactions with other people—especially during the first couple months of 2020. 

Elsewhere, I detail some of these responses in the form of individual behaviors like social distancing and mask-wearing, to altering production processes and innovative means of prevention, to the creation and adoption of public health rules. Aside from the NBA bubble, another fascinating story that indicates how individuals behave marginally comes from South Korea. Because of an intrusive testing and reporting program, which many consider to be a violation of privacy, people acquired more information about where potentially infected people had recently been. With such information others were able to make their own choices regarding whether they wanted to visit those places. 

To some extent, these responses to infectious diseases are not surprising as they show individuals act on the margin—just like when they have their morning coffee. However, much of our commentary and policies regarding Covid-19 seem to completely ignore such logic regarding the rationality of individuals. 

Covid-19 Lockdowns and Absolute Thinking

There are legitimate reasons to think lockdowns, stay-at-home orders, banning large gatherings, school closures, etc., lower transmission and mortality rates (here, here, and here), but the effect of those policies are overstated because they do not consider the marginal behaviors people engage in, let alone the innovative solutions they can devise.

Furthermore, it is not clear that the policies seen over the last year across the United States are a net benefit even if they lower transmission and mortality rates of Covid-19. That is, we might lower Covid-19 transmission, but we also impose additional burdens on individuals. 

What if there was a way to achieve the same amount of Covid-19 transmission and to lower the economic and psychological burden of lockdowns? That policy would be superior to lockdowns. Unfortunately, our standard policies do not allow for the discovery of such solutions.

A New Marginalist Revolution?

Our old friend marginalism, however, can offer some solutions. Just as the advent of marginalism heralded a new age for economic science in the late 19th century—you’d know that marginalism solved the diamond-water paradox if you read your history of economic thought—so too can it help resolve our current policy troubles with Covid-19. 

Instead of enacting blunt policies that merely forbid some predefined behaviors, let people innovate. 

The kind of innovations we want right now—solutions that encourage preventative behavior and normal activity—are not going to come from the halls of public health departments. Those officials—as experienced and informed as they are—cannot access the knowledge of what people value or how they perceive the world around them. This is a knowledge problem issue, not a they are out-of-touch issue. While the out-of-touch aspect is troubling in our age of equality, especially when politicians break Covid-19 protocols, the former issue poses a serious limitation about what we think is possible and relevant. As much as we might like them to be a source of knowledge, expertise, and guidance, public health officials cannot be considerate of the values we hold when we make choices.

Instead of banning indoor dining, for example, allow the owners and managers of restaurants the opportunity to find relevant solutions. Facing the prospect of the loss of a majority of their customers and net revenue—granted, this has already happened—surely restaurateurs would be willing to consider ways to keep customers safe and keep them dining and follow through with those plans.

Yes, this too is marginal thinking: the marginal benefit of constructing an outdoor space outweighs the marginal cost. See how useful it is!

Indeed, restaurateurs could expand their space, construct temporary rooms, build outdoor dining areas, develop novel social distancing techniques, expand hours, etc. People who actually face the threat of closure or are losing their livelihoods are in a much better position to devise appropriate responses.

Banning indoor dining is utterly uncreative in light of these potential solutions. The public health policy pertaining to restaurants and recurring large groups should be to require a response plan and report it. I bet restaurateurs and others would oblige. By the way, many colleges and universities already did this earlier in the summer (here is one set of public health guidelines in Virginia)."