The Economic Approach to Public Health and Epidemics
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The Economic Approach to Public Health and Epidemics

In the public goods approach, citizens are considered adults, each of whom is capable of determining what is good for himself.

The economic approach to epidemics and public health crucially depends on the concept of public goods.

Technically, a public good (sometimes called a “collective good”) is defined as a good or service that has two properties: non-rivalry and non-excludability. Non-rivalry means that its consumption by one individual does not remove anything from the consumption possibilities of other individuals. Non-excludability means that it is difficult—that is, very costly—to exclude anybody from taking advantage of these consumption possibilities without contributing his own share of the cost.

One standard example of a public good is national defense. The fact that your neighbor benefits from it does not reduce your own benefits: it is a non-rival good. And it is impossible to exclude you from its benefits once national defense has been financed by your neighbors and produced.

Standard economic theory maintains that contrary to the case of a private good, which is produced for, and only for, paying customers, everybody will be tempted to free-ride on a public good by enjoying the benefits and trying to avoid helping to pay for it. Therefore, no private producer will offer the public good in “optimal” quantity. At best, it will be undersupplied. At worst, it will not be produced at all. 

Traditionally, public health deals with a general class of public goods related to the prevention and control of health events that are in everybody’s interest to prevent or control but that no private producer will organize because of the free-rider problem. An epidemic—the rapid spread of a contagious disease—is the paradigmatic case. Everyone wants the epidemic to stop, but everyone’s own interest is to let others pay the cost of doing so in terms of getting vaccinated or being quarantined or isolated. If others do it, you will be automatically protected. Therefore, the government must intervene to accomplish what all individuals themselves want: everybody prefers that everybody contributes and that the epidemic stops.

Note that the government can produce a public good itself, but it will generally be more efficient to produce it indirectly through subsidies to individuals and private entities because of better incentives in the private sector.

A public good can also be viewed as something that transmits “positive externalities” to all individuals in a group. There is a difference between the two concepts, though. A public good exists when its production generates positive externalities for all individuals. Public goods are unanimously desired.

The public good of controlling epidemics can be divided into lower-level public goods. “Herd-immunity” through the vaccination of a certain proportion of the public can be seen as a public good (although it is not a pure public good). Once an epidemic has started, the public good consists in controlling it with measures to treat infected individuals and perhaps isolate them (with quarantines and cordons sanitaires) so that they don’t infect others and spread the epidemic.

Some public health activities designed to control an epidemic can be viewed as public goods, which government may help produce, ideally with subsidies instead of direct interventions. But note a crucial feature of viewing epidemics in this (economic) way: the idea is not to negate the preferences of some individuals in order to support the preferences other individuals or for some reason of state, but to satisfy the preferences of all individuals. The experience of COVID-19 certainly helps us understand this.

The public health movement, however, is generally suspicious of individual preferences and individual choices. It is openly opposed to the primacy of individual choices. Its ideology favors collective choices, that is, decisions made by the apparatus of government—majority voting, politicians and bureaucrats, including the public-health experts themselves as government employees or consultants or recipients of its research grants.

Thinking about public health as the production of public goods is rare among public health experts. They often, if not generally, ignore economics. For example, the public-good aspect of public health is not discussed in a popular textbook of public health by Bernard Turnock (Public Health: What It Is and How It Works, 6th edition, 2016). In their extensive textbook of public health law (Public Health Law: Power, Duty, Restraint, 3rd edition,  2016), Lawrence Gostin and Lindsey Wiley have no entry for “public good,” although they often refer to the undefined concepts of “public interest” or, sometimes, “common good.” When they do mention “public goods” in a sense that looks close to the economic concept, they ignore the unanimity feature of the concept and revert to a vague concept of externality.

Gostin and Wiley suggest that an individual must somehow consent to any use of somebody else’s liberty that affects him in any way. “There is no meaningful individual consent to the overrepresentation of fast food outlets,” they complain. “Social epidemiology suggests that these harms are indivisible in much the same way that the pollution emitted from a factory affects an entire community.” This implies than an individual has virtually no power over his own life, for he may only consent or not on matters related to other individuals’ lives. The collective has the first claim. Under this philosophy, every aspect of life is potentially subject to collective choices.

The same authors explain and defend a legal doctrine that goes back to the 19th century in America (some European influence is likely): parens patriae, which means “parent of the country” or, more exactly, “parent of the fatherland.” The doctrine claims that, in some matters (which have expanded with time), the government is to the citizens or subjects what parents are to their children.

Parens patriae can serve to justify, and has historically justified, public-health interventions that can be viewed as falling in the public-good category, such as quarantines and isolation of infectious persons. But it justifies much more given the current expansive doctrine of public health, which defines health as more or less covering all individual activities. In its 1946 constitution, the World Health Organization (WHO) defines health as “a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.”

In the public goods approach, citizens are considered adults, each of whom is capable of determining what is good for himself. Government can only intervene to support individual preferences. Under the parens patriae and other theories privileged by the public health movement, government overrules individual preferences in the name of collective choices.