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Epidemics, Economics, and Externalities

The COVID-19 pandemic has highlighted the high costs that unchecked externalities – such as those resulting from people not wearing face masks – can impose on an economy and society. Economists must begin to examine how these costs can be reconciled with ordinary consumption.

NEW HAVEN – COVID-19 and its collateral damage continue to leave a trail of devastation around the world. Millions of businesses have closed, with many having no realistic prospect of reopening. Millions of people have lost their jobs. Millions are without health care. Some families are suffering from food insecurity for the first time. While the well-to-do can manage by using their savings, those who live from paycheck to paycheck, or hand to mouth, are suffering unfathomable hardships.