Public and private incentives for self-protection

Abstract

Governments sometimes encourage or impose individual self-protection measures, such as wearing a protective mask in public during an epidemic. However, by reducing the risk of being infected by others, more self-protection may lead each individual to go outside the house 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. However, 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.

Replaces

Nicolas Treich, and François Salanié, “Public and private incentives for self-protection”, TSE Working Paper, n. 20-1090, April 2020.

Reference

François Salanié, and Nicolas Treich, “Public and private incentives for self-protection”, The Geneva Risk and Insurance Review, vol. 45, n. 2, July 2020, pp. 104–113.