A theory of voluntary testing and self‐isolation in an ongoing pandemic

Abstract

Beyond Covid‐19, there is a growing interest in what economic structures will be needed to face ongoing pandemics. In this paper, we focus on the diagnostic problem and examine a new paradigm of voluntary self‐testing by private individuals. We develop a dynamic model where individuals without symptoms face daily choices of either taking the risk of going out (to work and socialize), staying at home in self‐isolation, or using a test to verify whether they are infected before going out. Our central insight is that the equilibrium public infection risk falls when home‐based testing becomes cheaper and easier to use, even if they generate both false‐positive (type I error) and false‐negative (type II error) test outcomes. We also show that the presence of naïve individuals actually reduces the equilibrium infection risk in the economy. Overall our model shows that, even if inaccurate, home‐based tests are vital for an economy facing an ongoing pandemic.

Introduction to the special issue on new insights into economic epidemiology: Theory and policy

“…Among many interesting results, the authors highlight the relatively larger efficiency of Testing, Tracing, and Isolating (TTI) if massively and continuously applied. This is not inconsistent with the lessons extracted by Hellmann and Thiele (2022) in their study, though in a very distinct context.…”

“…The rest of the section studies the efficiency of the NPIs specifically implemented for COVID control. The paper by Hellmann and Thiele (2022) provides a theoretical framework for assessing the economic role of voluntary self‐testing by private individuals in the context of an ongoing pandemic. The authors develop a dynamic model where individuals without symptoms face daily choices of either taking the risk of going out (to work and to socialize), staying at home in self‐isolation, or using a test to verify whether they are infected before going out.…”

“…Gallic et al (2021) offer a theoretically founded empirical analysis of sanitary policies implemented in 10 European countries in the early phases of the COVID diffusion in the continent, leading to neat policy recommendations. Hellmann and Thiele (2022) and Gori, Manfredi, et al (2021) provide two different theoretical approaches to the efficiency analysis of the principal NPIs used to stop the spread of COVID‐19, namely, testing and lockdown (also see the recent study by Gollier, 2020).…”

The role of vaccine effectiveness on individual vaccination decisions and welfare

“…Brito et al (1991) compare “free choice” to “compulsory vaccination” and find free choice to dominate compulsory though the optimum is somewhere in between and can be achieved through taxes and subsidies. Hellmann and Thiele (2022) develop a model in which individuals without symptoms face daily choices of either taking the risk of going out, staying at home in self‐isolation, or using a test before going out. The authors find that equilibrium public infection risk falls when home‐based testing is cheaper and easier.…”

Test sensitivity for infection versus infectiousness of SARS‐CoV‐2

“…Bergstrom et al (2020) examine the optimal frequency of testing to reduce contagion. Finally, there is a literature on the impact widespread testing might have for behavioural choices of economic agents (Acemoglu et al, 2020; Deb et al, 2020; Eichenbaum et al, 2020; Gans, 2020a; Hellmann & Thiele, 2020; Taylor, 2020). This present paper is the first that examines the particular issues that arise from testing for infectiousness in an information‐theoretic way and analyses the optimal degree of information required for test and then isolate decisions.…”