Cambridge-INET Working Papers - Abstracts | The Cambridge-INET Institute

Contacts, Altruism and Competing Externalities

WP Number: 2116

Abstract: This paper considers voluntary transmissive contacts between partially altruistic individuals in the presence of asymptomatic infection. Two different types of externalities from contacts are considered, infection externalities and socioeconomic externalities. When contacts are incidental, then externalities work through disease propagation. When contacts are essential, both infection and socioeconomic externalities are present. It is shown that for incidental contacts, equilibrium involves suboptimally high exposure whereas for essential contacts, equilibrium exposure is suboptimally low. An increase in altruism may thus increase or decrease disease transmission, depending on the type of contact under consideration. The analysis implies that policy to manage the epidemic should differentiate between different types of tranmissive activities.

Keywords: Epidemics, altruism, infection externalities, socioeconomic externalities, disease control

JEL Codes: D83 I12