In 2020, most countries in the world have combatted Covid-19 with varying degrees of social distancing measures, restrictions on activities, quarantines and lockdowns, all designed to reduce the infection rate for Covid-19. In New Zealand, the ‘elimination’ strategy was applied, which is designed to reduce the rate of community transmission of Covid-19 to zero [1].
Contagious diseases, such as Covid-19, are a public health issue because the actions of each member of the public can impact on the health of other members of the public. As the economists in one article (Links to an external site.) describe it: “In public health, the population is the patient. This means everyone needs to play their part. In economics, public health is called a public good because the benefits are shared by everyone and no-one can be denied that benefit.”
All economists agree that Covid-19’s impact will be recessionary. However, several commentators have pointed out that the economic impact of measures designed to flatten the curve of infection will disproportionately hit those on low incomes. As one commentator notes (Links to an external site.): “the worst effects of social distancing will undoubtedly be felt by the young, the poor and the socially disadvantaged”.
Explain why eliminating a contagious disease can be considered a public good, and why efforts to achieve this elimination, such as social distancing and going under lockdown, can be considered as “contributions” to the public good.
For voluntary “contributions”, (such as following social distancing guidelines, working from home where possible, staying home when sick, choosing to limit/avoid gatherings, etc.), describe the reasons that individuals may under-contribute towards this public good and why the outcome may be less efficient accordingly. Provide an example from one (or more) countries’ experience(s), either in New Zealand or abroad, to illustrate this.
For compulsory “contributions”, (such as government mandated lockdowns), explain how and why the required “contribution” towards the public good could be considered higher on average for lower income individuals, despite that the required actions (staying at home) are the same.
Describe how the New Zealand government’s Covid-19 Wage Subsidy affects the equity implications of the required “contributions” to the public good, and assess whether you think this policy adequately addresses these equity implications or not.
