Trade-offs and Policy Options — Using Insights from Economics to Inform Public Health Policy

In May 2020, Mr. B., a 45-year-old Black American man with a history of insulin-dependent type 2 diabetes, was hospitalized for SARS-CoV-2 pneumonia. He was a home health care worker who traveled to his clients’ homes using public transportation. Mr. B. lived with his wife and two children. His children were attending school remotely because of the Covid-19 pandemic. Prior to his hospitalization, Mr. B. had been having difficulty breathing and had a mild fever, but he continued to work because he was the sole source of support for his family and needed money to pay for his insulin. Eventually, his symptoms worsened, necessitating admission to the hospital.

Mr. B’s case reflects the difficulties many people have faced during the global pandemic, which have starkly illuminated the importance of public health interventions. Despite the development of effective SARS-CoV-2 vaccines, many experts have argued that preventive behaviors such as masking, frequent testing, and physical distancing continue to be critical for reducing disease spread. But adoption of these behaviors has been far from universal, and the burden of disease has fallen disproportionately on marginalized populations such as racial and ethnic minorities, low-income adults, and disabled persons.

We believe that economics can critically inform public health efforts to address such challenges. Alfred Marshall, writing in 1890, defined economics as “a study of mankind in the ordinary business of life…[that] examines that part of individual and social action which is most closely connected with the attainment and with the use of material requisites of well-being.” Put simply, economics is the study of trade-offs that individuals, institutions, or countries face when making decisions under resource and time constraints. Although public health practitioners and researchers understandably focus primarily on improving health, economists view health as but one, albeit an important, component of what people may value.1 This insight is a key aspect of economics’ utility for informing public health policy.

Key Components of Economic Models in Public Health.

Economic modeling can be complex, but the key concepts that can guide decision making are intuitive and accessible to noneconomists. Mr. B.’s case provides a useful starting point for understanding how we can use economic insights to increase population-level adoption of preventive behaviors and reduce inequalities in health outcomes (see table).

The first step in building an economic model is to identify the relevant actors (i.e., the parties whose health, and adoption of health behaviors, we wish to maximize). In this case, Mr. B. is the main actor. Next, we must identify the benefits these actors accrue from adopting a health-related behavior. Is adopting this behavior a priority? If so, how does it rank relative to competing priorities? People may overlook the benefits of a particular behavior, including how it improves their health. Conversely, they may not fully account for the true costs of their behavior to others or society (especially when that behavior increases the risk of making others ill) or the costs to public health departments (i.e., negative externalities). Mr. B., for his part, believed that physical distancing was important for avoiding infection for himself and his family, neighbors, and clients.

In addition, we need to understand the individual and structural costs and constraints that make adopting health-related behaviors more difficult for some people than for others. For Mr. B., practicing physical distancing came with a significant opportunity cost: his job could not be done from home. Thus, physical distancing would mean losing much-needed wages. Structural constraints also played a large role in Mr. B.’s decisions. People of color are disproportionately employed in low-wage industries in which occupational exposures to SARS-CoV-2 have been elevated, yet which provide relatively few worker protections such as health insurance and sick leave.2 For example, the home health care industry successfully argued that their workers should be exempt from the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, lest its provisions for paid family and sick leave result in worker shortages. In addition, Black men like Mr. B. are often compelled to weigh the competing risks of going mask-free and being more likely to contract SARS-CoV-2 or wearing a mask and potentially being subject to racial profiling. Economic analyses must also consider cognitive or psychological costs.3 Changing recommendations and politicized messaging regarding preventive behaviors (e.g., the benefits of masking, what kinds of masks provide sufficient protection, and when masks can be removed) put the burden on individuals to analyze competing messaging. Such analysis may be difficult for people who face numerous cognitive burdens imposed by challenges such as precarious employment.

Applying economic analysis to Mr. B.’s case clarifies the benefits and costs of adopting preventive health behaviors in populations facing high morbidity and mortality from Covid-19. It thereby offers some useful insights that public health policymakers can apply to many different diseases.

First, information campaigns may be only minimally effective, since, alone, they would do little to alleviate the fundamental trade-offs people face when adopting physical distancing or masking. Moreover, one-size-fits-all messaging and implicit or explicit blaming of individuals for not engaging in preventive health behaviors may undermine trust, since this type of messaging may lead people to question whether policymakers empathize with them as they grapple with complex decision making during the current pandemic. This disconnect could further undermine other disease-prevention efforts, such as contact tracing and vaccination campaigns.

Second, though the presence of externalities can motivate the use of policies such as physical distancing mandates (as well as incentives and penalties), economic analyses suggest that the burden of such policies may affect groups unequally. Mandatory business closures, for example, may have some infection-control benefits, but the resultant loss of income may harm some populations (e.g., low-income workers such as Mr. B.) more than others.

Third, an economic analysis of Mr. B.’s case illuminates the importance of social and economic policies that can alleviate financial hardship. Policies such as paid sick leave, eviction moratoria, cash transfers, and enhanced unemployment benefits can help reduce the costs of practicing physical distancing, while also bolstering overall well-being during times of crisis. These policies need to be implemented in a way that is mindful of cognitive and opportunity costs, since burdensome processes for applying for public benefits may make it difficult for people with challenging life circumstances to access them.

Fourth, an economic analysis highlights the importance of intervening to reduce structural constraints. Policies aimed at improving access to personal protective equipment for home health care workers, providing them with their own health care, and including them in federal relief packages can help reduce disease transmission among essential workers like Mr. B. who would not otherwise be able to take time away from work.

Fifth, viewing Mr. B.’s case through an economic lens illuminates the variability of the personal and community circumstances that shape the trade-offs involved in engaging in preventive behaviors. Though national studies and data are helpful guides, public health approaches informed by economic models that account for local context are essential for creating effective policies for a given area or group.

The insights gained from applying economics to Mr. B.’s case can also be applied to the broader, macrolevel trade-offs in public health investments. At a national level, public health spending in 2018 was $93 billion, as compared with health care spending of $3.6 trillion (in 2018 dollars) — or 2.5 cents for every health care dollar. Public health spending remained flat or declined between 2008 and 2018, with the most dramatic reductions in state spending occurring in the areas of maternal, child, and family health and environmental health. Mean per capita state spending decreased from $80.40 to $75.83 during that period.4

Meanwhile, local health care systems are increasingly intervening to influence social determinants of health, such as housing. The increasing centrality of health care systems in the provision of health care and social services may come with trade-offs. For example, whereas health care organizations have more financial resources than public health and social service agencies, they may be less effective or less efficient in addressing social determinants of health than those agencies, which may have more knowledge and practical expertise in upstream drivers of health.5 Understanding how these trade-offs inform optimal allocation of scarce societal resources will be critical to improving population health, particularly in marginalized populations. Discussions of trade-offs must recognize the fact that policymakers may assign widely varying weights to specific benefits and harms in their decision making (e.g., ongoing debates over school closures during the pandemic). Many economists would argue that the people who stand to be most affected by a given policy or health condition should be the ones to determine how to weigh various benefits and harms.

Public health practitioners come from a wide range of disciplines that reflects the multifaceted range of problems they must tackle. Economics meaningfully adds to these perspectives by clarifying key trade-offs and illuminating new policy options — including those that go beyond the delivery of public health services. A key contribution of economics to public health is the elucidation of complex trade-offs that may affect health-related behaviors, which include nonmonetary costs and benefits that are often ignored by policymakers. Economic models can help public health policymakers craft more equitable policies that more fully account for the lived experiences and realities of various populations.

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