skip to content

Faculty of Economics

Journal Cover

Toxvaerd, F.M.O.

Rational Disinhibition and Externalities in Prevention

International Economic Review

Vol. 60 no. 4 pp. 1737-1755 (2019)

Abstract: This paper studies a model of disease propagation in which rational and forward-looking individuals can control their exposure to infection by engaging in costly preventive behavior. Equilibrium outcomes under decentralized decision making are characterized and contrasted to the outcomes chosen by a social planner. In general, individuals over-expose themselves to infection, leading to suboptimally high disease prevalence. The model is applied to study the welfare effects of pre-exposure prophylaxis, which reduces transmission between serodiscordant couples and causes disinhibition. It is shown that a decrease in the induced infection risks increases disease prevalence and can lead to decreases in overall welfare.

Keywords: Economic epidemiology, preventive behavior, disinhibition, immiserization, second-best policies

JEL Codes: C73, I18

Author links: Flavio Toxvaerd  

Publisher's Link:

Papers and Publications

Recent Publications

Fruehwirth, J., Iyer, S. and Zhang, A. Religion and Depression in Adolescence Journal of Political Economy [2019]

Onatski, A. and Wang, C. Spurious Factor Analysis Econometrica, forthcoming [2020]

Brendon, C., Paustian, M. and Yates, T. Self-Fulfilling Recessions at the Zero Lower Bound Journal of Monetary Economics [2019]

Li, Z. M., Laeven, R. J. A. and Vellekoop, M. H. Dependent Microstructure Noise and Integrated Volatility: Estimation from High-Frequency Data Journal of Econometrics [2020]