NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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A Theory of Voluntary Testing and Self-isolation in an Ongoing Pandemic

Thomas F. Hellmann, Veikko Thiele

NBER Working Paper No. 27941
Issued in October 2020
NBER Program(s):Health Economics

Thinking 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. People without symptoms face daily choices of either taking the risk of going out (to work and socialize), versus staying at home in self-isolation. Our theory shows that two types of people voluntary test themselves: those who otherwise would have self-isolated, and those who would have gone out indiscriminately. Our central insight is that the equilibrium infection risk falls when home-based testing becomes cheaper and easier to use, even if tests are not always accurate. Our results challenge the clinical mainstream view that diagnostic testing is a prerogative of the medical profession, and supports the notion that frequent self-testing is vital for an economy facing an ongoing pandemic.

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Document Object Identifier (DOI): 10.3386/w27941

 
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