Testing Alone Is Insufficient

26 Pages Posted: 19 May 2020 Last revised: 1 Jul 2021

See all articles by Rahul Deb

Rahul Deb

University of Toronto

Mallesh Pai

Rice University - Department of Economics

Akhil Vohra

University of Cambridge - Department of Economics

Rakesh Vohra

University of Pennsylvania - Department of Economics

Date Written: June 30, 2021

Abstract

The fear of contracting a serious illness caused by a contagious disease limits economic activity even after reopening. Widespread testing alone will not alleviate this problem. We argue that targeted testing in concert with targeted transfers is essential. We propose a model with these features to determine where agents should be tested and how they should be incentivized. Agents with a low wage, a high risk of infection, and who bear a large cost of falling ill should be tested at work. When testing is very costly, agents with high wages and low expected costs associated with falling ill should be tested at home.

Note: Funding: This study was suppored by the Rockefeller Foundation through grant 2017PRE301.

Conflict of Interest: The authors declare that they have no relevant or material conflicts of interest that relate to the research described in the paper.

Keywords: Epidemics, Mechanism Design, COVID-19, Health Policy

JEL Classification: D04, D62, I18

Suggested Citation

Deb, Rahul and Pai, Mallesh and Vohra, Akhil and Vohra, Rakesh, Testing Alone Is Insufficient (June 30, 2021). Available at SSRN: https://ssrn.com/abstract=3593974 or http://dx.doi.org/10.2139/ssrn.3593974

Rahul Deb

University of Toronto ( email )

Toronto, Ontario M5S 3G8
Canada

HOME PAGE: http://www.economics.utoronto.ca/debrahul/

Mallesh Pai

Rice University - Department of Economics ( email )

6100 South Main Street
Houston, TX 77005
United States

Akhil Vohra (Contact Author)

University of Cambridge - Department of Economics ( email )

Austin Robinson Building
Cambridge, CB3 9DD
United Kingdom

HOME PAGE: http://https://sites.google.com/view/akhilvohra/home

Rakesh Vohra

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

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