Testing Alone Is Insufficient
26 Pages Posted: 19 May 2020 Last revised: 1 Jul 2021
Date Written: June 30, 2021
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: Suggested Citation