A proposal for dealing with COVID-related negative externalities

Happy Holidays from everyone at Pea Soup! Today we are happy to give the gift of more public philosophy, this time brought to you by Daniel Story, a lecturer in philosophy at Cal Poly, San Luis Obispo. Here is Dr. Story:

The COVID-19 pandemic has created a whole host of new interpersonal challenges and conflicts, which many of us are by now all too familiar with–especially those of us who live or otherwise associate with others (e.g. in multigenerational homes or at work) who have different outlooks on the pandemic.

COVID-related interpersonal conflicts can stem from a variety of sources. One sort of conflict stems from disagreements about empirical facts, like whether a certain activity is statistically risky. While in practice these sorts of disagreements are often intractable, in principle they are resolvable, just like a disagreement about whether there are two cookies in the jar is resolvable. We just have to open the cookie jar and, in good faith, look.

A second sort of conflict stems from relatively fundamental evaluative disagreements that bear on the significance of empirical facts. Even if we both agree that, say, drinking at a bar is associated with .1% chance of dying from COVID-19, we might disagree about whether this activity is worth the risk because we have different views on how bad death is or how fun drinking at a bar is. These disagreements are probably at least sometimes in principle unresolvable, since with respect to some relevant evaluative questions (e.g. how much should I care about death?), reasonable, fully informed disagreement seems possible.

A third sort of conflict—the kind I want to focus on here—stems from conflicts of interests. COVID-19 increases the costs of many activities. One way to conceptualize these extra costs is in terms of risk. For instance, going to a bar during the pandemic not only costs you money, time, and a hangover. You also have to accept a certain amount of COVID-related risk to get the relevant benefit (tasty cocktails, or whatever). Notably, these extra costs are not typically borne exclusively by the person receiving the benefit. People who do not receive the benefit of your activities are indirectly put at risk by them because if you get sick, then as a result other people are at risk of getting sick, too. Thus, in a way, others bear some of the costs of your activities. And this can be a source of conflict, which is rooted not in disagreements about empirical facts or values but in a simple clash of interests.

For example, suppose you and I are roommates. We both know that if one of us gets COVID-19, the other will too. Thus, anytime I put myself at risk, I also put you at risk, and vice versa. Now, say I want to get a haircut. You might have a problem with this, not because you think the risk of the haircut outweighs the benefit for me, but because you have to shoulder some risk without any corresponding benefit. It is not in your interests that I get the haircut.
How might we proceed in these situations, when ordinary methods of conflict-resolution fail? One option is to simply ignore indirect COVID-related risks. In deliberating about whether to get a haircut, I could ignore the fact that you might get sick. This strategy is probably OK sometimes, but in many situations it seems wrong, especially when the indirect risk is high. Another strategy is needed.

The concept of a negative externality may help us think through this issue. Negative externalities are costs associated with actions that are borne by people who have not agreed to bear them. A classic example involves a factory which is polluting its local environment. The factory is able to produce goods at a low cost because it is not paying to clean up the pollution. This is in the interests of the factory and the consumers who buy the goods at a low price. But it is against the interests of the people around the factory who have to live with the pollution.
The indirect COVID-related risks of one’s activities can be thought of as negative externalities of one’s actions. A serious problem with externalities is that they are often unfair. It is unfair that the people who happen to live around the factory have to effectively subsidize the factory’s goods with their wellbeing. By analogy, it is arguably unfair that you have to bear the COVID-related costs of my haircut without a corresponding benefit.

For some negative externalities, the solution is for the agents who are generating the externalities to eliminate them, either by ceasing the relevant action or bearing an extra cost. Shut the factory down, or make the factory pay to clean up its own pollution. This is possible in the case of COVID-related externalities since one can eliminate the risk to others by ceasing to perform any risky activities or quarantining for a long time after doing anything risky. This is not always workable, however.

For other negative externalities, the solution is for the agents who are generating the externalities to compensate those who have to bear them. Suppose the factory for some reason cannot shut down or clean up the pollution. The next best thing would be for it to pay the locals in order to compensate them for the pollution. In principle, something similar could be done with respect to COVID-related negative externalities. I could pay you for the risk you incur as a result of my haircut.

This proposal has the potential to resolve otherwise intractable conflicts of interests, since by compensating you for the risk you incur as a result of my activities I can change the all-things-considered (dis)value of these activities for you. If I compensate you with something that is as good as the risk you face is bad, then I eliminate the conflict of interest. And if I compensate you with something that is more good than the risk is bad, then I align our interests. Thus, it is a strategy we should take seriously.

For this to work, the conflicting parties must somehow agree on a method of compensation, which involves quantifying the disvalue of COVID-related risks. While this task might seem difficult, a rough-and-ready ad hoc agreement could work in most cases. For example, as roommates you and I might agree that anyone who performs a risky activity has to pay the other $10 (or $5, or $50). Monetary compensation might not always be the best option. After all, there are good reasons to want to eschew economic solutions to conflicts with friends and family members. But we often barter with intimates to resolve conflicts of interest (e.g. “If you come to dinner with my mother, we can go see that movie you wanted to watch afterwards”), and there does not seem to be anything especially untoward about this. Conflicting parties can work out whatever sort of agreement they like. The point is that once a compensation scheme is in place, the parties will have some way to offset COVID-related negative externalities.

Although I have presented this proposal as a way of dealing with interpersonal conflicts, it might also be useful in relation to broader social problems. The pandemic, which negatively affects us all, is largely fueled by the discretionary choices of individuals, including the choice to engage in risky activities. Thus, risky activities impose negative externalities on one’s community. While it may sometimes be in my own interests to engage in these activities, it is against my community’s interests. Again, we have a conflict of interests.

Different communities have implemented different strategies for dealing with these conflicts. Some communities impose heavy restrictions on individual behavior, favoring community interests. Others impose few or no restrictions, favoring individual interests. But there is a middle way: we could force individuals who impose negative externalities on their community through discretionary activities to compensate their community by paying a special tax whose revenue goes towards ameliorating the pandemic’s effects.

Taxing people who engage in risky behaviors would discourage them from engaging in those behaviors. It would also reduce (but probably not eliminate) the conflict of interests between individuals and their communities, since risky behaviors would provide a benefit both to those who engage in them and, through the tax, to the community at large. The funds could be used to pay for hospital bills, support the unemployed, or advance whatever measures economists and politicians deem most beneficial.

A tax is not an ideal solution. And it would obviously be unpopular. Times are already tough, and the tax would impose an extra burden on certain people: those who engage in discretionary risky behaviors (e.g. restaurant patrons) and those who benefit from these activities (e.g. restaurateurs). But it would be misleading to think of the tax as a burden added on top of everything else. Rather, the tax would shift the burden of costs that already exist from those who do not consent to bear them and do not see any corresponding benefits to those who do. In other words, it would (partially) transform COVID-related negative externalities into costs that the actors generating those externalities would have to bear themselves.

To be successful, the tax would have to be cleverly implemented so that it does not increase inequalities the pandemic has exacerbated. But it has the potential to reduce such inequalities through the redistribution of resources from those with the privilege to take discretionary risks to those without it. Perhaps the best strategy would be to tax establishments associated with risky activities (bars, churches, etc.) rather than the individuals who frequent them. Policymakers, economists, and politicians would have to work out the details.
A tax would not be a panacea. Unfortunately, it does not look like a panacea is in the offing. Experts say that even a widely distributed and effective vaccine will not totally fix things. It is time to consider creative–if unpopular–solutions.