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Health Externalities and Policy: The Role of Social Preferences

Author

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  • Laura Alfaro

    (Harvard Business School, Boston, Massachusetts 02163; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Ester Faia

    (Goethe University Frankfurt, 60323 Frankfurt, Germany; Centre for Economic Policy Research, London EC1V 0DX, United Kingdom)

  • Nora Lamersdorf

    (Goethe University Frankfurt, 60323 Frankfurt, Germany)

  • Farzad Saidi

    (Centre for Economic Policy Research, London EC1V 0DX, United Kingdom; University of Bonn, 53113 Bonn, Germany)

Abstract

Social preferences facilitate the internalization of health externalities, for example, by reducing mobility during a pandemic. We test this hypothesis using mobility data from 258 cities worldwide alongside experimentally validated measures of social preferences. Controlling for time-varying heterogeneity that could arise at the level at which mitigation policies are implemented, we find that they matter less in regions that are more altruistic, patient, or exhibit less negative reciprocity. In those regions, mobility falls ahead of lockdowns, and remains low after the lifting thereof. Our results elucidate the importance, independent of the cultural context, of social preferences in fostering cooperative behavior.

Suggested Citation

  • Laura Alfaro & Ester Faia & Nora Lamersdorf & Farzad Saidi, 2022. "Health Externalities and Policy: The Role of Social Preferences," Management Science, INFORMS, vol. 68(9), pages 6751-6761, September.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:9:p:6751-6761
    DOI: 10.1287/mnsc.2022.4461
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    Cited by:

    1. Fang, Ximeng & Freyer, Timo & Ho, Chui-Yee & Chen, Zihua & Goette, Lorenz, 2022. "Prosociality predicts individual behavior and collective outcomes in the COVID-19 pandemic," Social Science & Medicine, Elsevier, vol. 308(C).
    2. Elisa F. Long & Gilberto Montibeller & Jun Zhuang, 2022. "Health Decision Analysis: Evolution, Trends, and Emerging Topics," Decision Analysis, INFORMS, vol. 19(4), pages 255-264, December.
    3. Randrianarisoa, Laingo M. & Gillen, David, 2023. "Policy responses and travellers’ preferences in pandemics: Evidence from Europe," Transport Policy, Elsevier, vol. 141(C), pages 305-316.

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    More about this item

    Keywords

    social preferences; pandemics; mobility; health externalities; mitigation policies;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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