If costs are linear in P(COVID) then the marginal cost is in some sense strictly easier (since the way you figure out levels is by combining marginal costs with the marginal cost of prevention) which is why you’d expect a Pigouvian tax to be better.
Yeah, that.
here is no way to honestly elicit costs from individuals when they have very different exposures to COVID, and the game theory of finding a good compromise is super complicated and who knows what’s easier
I’m definitely relying on some level of goodwill / cooperation / trying to find the best joint group decision, or something like that. (Though I think all systems rely on that at least somewhat.)
I think the object-level arguments for implementing a Pigouvian tax here are much weaker than in typical cases where I complain about related civilization inadequacy because the random frictions are bigger.
I guess you mean the random frictions in figuring out what system to use? One of the big reasons I prefer the Pigouvian tax over cap-and-trade is that you don’t have to trade to get the efficient outcome, which means after an initial one-time cost to set the price (and occasional checks to reset the price) everyone can just do their own thing without having to coordinate with others.
(Also, did most people who set a cap / budget then also trade? Seems pretty far from efficient if you neglect the “trade” part)
I am curious about how different our cap ended up being from total levels of exposure under a Pigouvian tax.
I just checked, and it looks like we had ~0.3% of (estimated) exposure over the course of roughly a year. I think it’s plausible though that we overestimated the risk initially and then failed to check later (in particular I think we used a too-high IFR, based on this comment).
Yeah, that.
I’m definitely relying on some level of goodwill / cooperation / trying to find the best joint group decision, or something like that. (Though I think all systems rely on that at least somewhat.)
I guess you mean the random frictions in figuring out what system to use? One of the big reasons I prefer the Pigouvian tax over cap-and-trade is that you don’t have to trade to get the efficient outcome, which means after an initial one-time cost to set the price (and occasional checks to reset the price) everyone can just do their own thing without having to coordinate with others.
(Also, did most people who set a cap / budget then also trade? Seems pretty far from efficient if you neglect the “trade” part)
I just checked, and it looks like we had ~0.3% of (estimated) exposure over the course of roughly a year. I think it’s plausible though that we overestimated the risk initially and then failed to check later (in particular I think we used a too-high IFR, based on this comment).