The COVID Externalities Have Changed

A new coronavirus is here. It is highly contagious, and case numbers are climbing. New York is the epicenter in the United States. This feels terribly familiar, even reminiscent of March 2020. And yet the situation is also very different because much of the population has acquired some form of immunity. Vaccination is extremely protective against severe illness and death, even for those infected with the Omicron variant. Of course, many people remain unvaccinated, including all children younger than 5, and some vaccinated people are still quite vulnerable.

All of this makes for a particularly confusing moment. How should we act—as individuals, but also as a society—in the face of these facts? Is it time to cancel the holiday trip you’ve been planning? In 2020, public-health messaging was clear: Do not gather. This year, it is less so; even President Joe Biden has indicated that he plans to see family. The answer to why this year is different from last year is that the externalities have changed.

[Ashish K. Jha: Don’t panic about Omicron. But don’t be indifferent, either.]

An externality exists when something I do affects others; a negative externality exists when something I do affects others negatively. For example, if I smoke in a restaurant, I am creating a negative externality because other diners have no choice but to inhale my secondhand smoke. If my smoking harms or simply bothers others, society would like me to do less of it than I might choose to if I were thinking totally selfishly. The presence of negative externalities is often a cause for government intervention—hence smoking bans. The government tries to enforce choices that maximize the social good.

During the holidays last year, even individuals at extremely low risk of severe illness were urged to stay at home. Family gatherings had a lot of potential negative externalities. Testing was haphazard and spotty. No one was vaccinated, so the concern was that many, many vulnerable individuals might land in overloaded hospitals. From a social standpoint, these negative externalities needed to be weighed against the benefits of gathering, such as better mental health. But the calculus suggested a lot of caution. One strong argument in 2020 was that with vaccines just on the horizon, these gatherings would soon be much safer.

This year, family or other gatherings have fewer possible negative externalities—because vaccines are broadly available. Let’s first assume a gathering composed exclusively of fully vaccinated people. Your risk of hospitalization is down a huge amount relative to last year. Your risk of contracting and passing along the coronavirus is down, too, though not as much, particularly because Omicron seems quite good at breaking through vaccine defenses against infection. In the event of a breakthrough, however, the chances are lower that the next person in the chain will end up with severe symptoms.

Now consider a mixed gathering that includes unvaccinated people. If you’re vaccinated, your personal risk remains low. The problem for society arises when an unvaccinated person contracts the virus and takes up hospital space—or passes the disease along to another person who then takes up hospital space. That’s the issue, the externality. But thinking about the puzzle this way can be clarifying. If the unvaccinated people are low-risk (because of age, or perhaps because of prior infection), the external cost is less significant. Being very explicit about these externalities will let us appropriately weigh them in our decisions.

[Read: A guide to mixed-vaccination-status holidays]

Even in the first scenario, the risk of a bad outcome is not zero; gatherings will always carry some risk. But as a society, we should weigh negative externalities for the community against the benefit to individuals. Restricting—or encouraging the restriction of—family gatherings of fully vaccinated individuals is not rational, because that would impose large costs on individuals without a commensurate benefit to others. And, indeed, the CDC has not categorically advised against holiday reunions this year.

Seeing family is valuable, and this is especially true in cases of long absence. If you’re vaccinated and your family members are vaccinated or low-risk, canceling plans because of the tiny chance that someone somewhere could end up needing hospital care is not making society better off, all in all.

As I see it, closing schools falls into the same category: The negative externalities of in-person education are not as great as those associated with remote schooling, which in many districts means no schooling at all. The cost to children’s education and to their broader families’ ability to function is simply too large. Mask mandates for public events make more sense; the potential negative externality of a single person super-spreading to a large group outweighs the minor inconvenience of wearing a face covering.  

Ultimately, the externality argument leads to an option that many people resist. The action with the most significant negative externality is not really an action at all, but an inaction: the decision not to accept a free, highly effective vaccine. By extension, the policy that most directly speaks to this externality is a vaccine mandate for adults.

This phase of the pandemic need not be about individual sacrifice. What’s required now is merely communal common sense.