How do we move from white-knuckle braking (Part I) during a pandemic onset to calm forward progress as it matures? Whether COVID-19, the flu, RSV, or mpox (monkeypox), good systems to track infection information help shift our (economic) energies from treating active infections to more efficient work of prevention. However, the key to this transition is a bit of an economic paradox…
Is Good Information a Bad Business?
We harness initial success in controlling outbreaks by monitoring ongoing infections. This is true for coronavirus, the U.S.’s recent success in mpox, or this winter’s long-awaited tapering of a double whammy of flu and RSV. However, information on these infections is a strange type of “good” in the economy. How do we define information as a good?
First, unlike many common consumer products, information can be consumed simultaneously by many people at once. An apple is gone once you’ve eaten it, and shampoo is literally down the drain once you’ve lathered up, but information’s opposite quality of being everything, everywhere, all at once is called nonrival1 Second, information is also hard to take back from people once they’ve got hold of it. That shampoo only comes home with you if you pay, or the store security guard will be summoned. Even if we could charge for infection information, check Part I for why making it free may improve individual behavior. In either case, economists call information nonexcludable if people cannot be excluded from consuming it. Hard to charge money for AND everyone can use it at once- not the best profit-making pitch.
On the other hand, the viral tests to generate infection information are usually the exact opposite- used up after only one person with a production cost each and every time, but easy to ring up at the drugstore. The core economic problem here is that gathering information through tests is expensive, but, once gathered, information is hard to charge for. What are some solutions to such a bad business model?
Turning Waste into Wonderful
If a good is hard to charge for and can be consumed simultaneously by many people at once, there may be a case for improved economic efficiency through government production. Consider national defense- everyone in the country is protected simultaneously by a state-of-the art military. However, the protection of a strong Air Force can’t be selectively applied block by block if your neighbor decides to free-ride. Taxes make payment for the service inescapable.
One increasingly popular method for monitoring infectious disease which harnesses these efficiencies of a centralized, governmental producer is wastewater surveillance. This approach monitors community infection levels through wastewater testing for diseases such as COVID-19, polio, norovirus, hepatitis A, or other foodborne viral diseases. Centralizing the testing to community wastewater, rather than individuals, slashes testing costs while still generating community-level early warnings on infection to simultaneously broadcast to all individuals in affected communities.
3. If You Can’t Beat It, Slash Its Costs
On the other hand, private markets have their own solutions to the tricky “good” of information. One of the biggest contributions from private markets has been reducing the costs of viral testing, making information production less expensive. Cheaper tests are more available and more attractive, reducing hurdles to comprehensive infection tracking. Since the first coronavirus “brain tickler” tests, we now have a variety of inexpensive options. (A quick search at CVS.com produces *seven* different at-home options, all less than $30.)
Over time, private markets have also reduced the hurdles of logistical coordination costs. Early examples of reduced coordination costs were mass testing sites which centralized equipment, staff, and PPE needs. The advent of at-home testing sidesteps other coordination costs by removing the transportation systems required for collection and processing and communication back to the patient of test results.
These improvements are also important for opportunity costs. Reducing testing costs on many dimensions frees resources for medical staff and supply chains to focus on fighting infectious disease, rather than documenting it.
This series is part of a larger discussion called Pandemic Problem Solvers with Grace Lyons (WFU alumnae). Check it out!
As always, keep me updated on what you’re up to or reach out to chat with me about these issues!
Best,
TMD
Crush your #PandemicGoals of stopping infection (Part I) and helping those in economic distress (Part II).