Indemnifying Precaution: Economic Insights for Regulation of a Highly Infectious Disease

Journal of Law and the Biosciences, Forthcoming

Arizona Legal Studies Discussion Paper No. 20-24

16 Pages Posted: 29 May 2020

See all articles by Christopher T. Robertson

Christopher T. Robertson

University of Arizona - James E. Rogers College of Law; Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics

K. Aleks Schaefer

Michigan State University - Department of Agricultural Economics

Daniel Scheitrum

University of Arizona - College of Agriculture and Life Sciences

Sergio Puig

University of Arizona - James E. Rogers College of Law

Keith A. Joiner

University of Arizona - College of Medicine

Date Written: May 21, 2020

Abstract

Economic insights are powerful for understanding the challenge of managing a highly infectious disease, such as COVID-19, through behavioral precautions including social distancing. One problem is a form of moral hazard, which arises when some individuals face less personal risk of harm or bear greater personal costs of taking precautions. Without legal intervention, some individuals will see socially risky behaviors as personally less costly than socially beneficial behaviors, a balance which makes those beneficial behaviors unsustainable. For insights, we review health insurance moral hazard, agricultural infectious disease policy, and deterrence theory, but find that classic enforcement strategies of punishing non-compliant people are stymied. One mechanism is for policymakers to indemnify individuals for losses associated with taking those socially desirable behaviors to reduce the spread. We develop a coherent approach for doing so, based on conditional cash payments and pre-commitments by citizens, which may also be reinforced by social norms.

Keywords: Infectious Disease, Moral Hazard, Agricultural Infectious Disease Policy, Deterrence Theory, Indemnification

Suggested Citation

Robertson, Christopher T. and Schaefer, K. Aleks and Scheitrum, Daniel and Puig, Sergio and Joiner, Keith A., Indemnifying Precaution: Economic Insights for Regulation of a Highly Infectious Disease (May 21, 2020). Journal of Law and the Biosciences, Forthcoming; Arizona Legal Studies Discussion Paper No. 20-24. Available at SSRN: https://ssrn.com/abstract=3608369

Christopher T. Robertson (Contact Author)

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States

HOME PAGE: http://www.law.arizona.edu/faculty/getprofile.cfm?facultyid=714

Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics ( email )

23 Everett Street
Cambridge, MA 02155
United States

K. Aleks Schaefer

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

HOME PAGE: http://kaleksschaefer.weebly.com

Daniel Scheitrum

University of Arizona - College of Agriculture and Life Sciences ( email )

Tucson, AZ 95721-0023
United States

Sergio Puig

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States

Keith A. Joiner

University of Arizona - College of Medicine ( email )

Department of History
Tucson, AZ 85721
United States

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