To mask or not to mask: an economist’s perspective

By Farrokh Langdana, Director, Executive MBA Program & Professor of Finance and Economics  

All views expressed here are those of Prof. Farrokh Langdana’s and not those of the Rutgers Executive MBA Program or Rutgers Business School. 

For more of Prof. Langdana’s blogs please visit his Faculty Blog: business.rutgers.edu/Langdanamacro.

Was the CDC right or wrong in their "masks off" decision? Here is a microeconomic analysis based on two concepts in microeconomic theory: 

(i) The Opportunity Cost Theory

(ii) The Free Rider Problem

(i) What the CDC/Biden Team wants is "opportunity cost" analysis.  The opportunity cost of anything is the value of the forgone choice. For example, the opportunity cost of you reading this blog is what you sacrificed to make time for this.

So, what the CDC (the Biden Team) wants is the following thought process from all non-vaxxers, “Hey, look!  I need to get my vaccines fast – maybe then I can roam around in Walmart and Costco and go party and hug people too!”

The CDC’s hope is that the opportunity cost of not being vaccinated – that is, giving up the freedom to be mask-free – will be "too high" and will thus induce all non-believers of Covid/vaccines to get vaccinated.  Thus, the CDC hopes to get more of America vaccinated.

But this thinking is in sharp contrast with that of the “Free Rider Problem (FRP).”

(ii) The FRP is defined as:  The burden on a shared resource that is created by its use or overuse by people who aren't paying their fair share for it or aren't paying anything at all [see Investopedia definition].

The thinking here from the non-vaxxers is VERY different, “Hey!  Check it out! We managed to outlast the mask thing! Now we can KEEP NOT WEARING our masks and this time, we won't get those glares and all those condescending, disapproving looks from all those mask-wearing scaredy cats! We made it! Now we can act like we are all vaccinated and go mask less with impunity!"

Two very different scenarios. Two very different expected outcomes from our fellow Americans. I wonder which one will prove correct…I suspect that I know the answer. The CDC/Biden Team’s decision, however well intentioned, may not have the desired outcome.

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