Now consider a more complex pandemic example. Before the vaccines came along, it made great sense to enforce masking norms. If infections could be shifted into the future, an eventually vaccinated citizenry would be much better protected.
There is a less obvious corollary: Those same mask norms make less sense when large numbers of people are vaccinated. Masking still will push infections further into the future, but if the vaccines become marginally less effective over time, as some data suggest, people may be slightly worse off later on (they’ll also be a bit older). The upshot is that the case for masking is less strong, even if you still think it is a good idea overall.
Still, many people prefer to abide by fixed rules and principles. Once they learn them and lecture others about them, they are unlikely to change their minds. “Masking is good!” is a simple precept. “Exactly how good masking is depends on how much safer the near future will be!” is not. Yet the latter statement is how the economist is trained to think.
Another approach is to keep masking for a very long time — until there are much better treatments once again, the virus has evolved to become less dangerous, or some other set of safety-improving changes has set in. But what if there is no proverbial cavalry coming over the hill? People will instead need to institute and adapt to whatever long-term living conditions they prefer, along with the concomitant risks. Denmark, one of the better governed and better-vaccinated nations during the pandemic, has decided exactly that and has announced a return to normalcy.
According to intertemporal substitution, lockdowns make the most sense right before major safety improvements, such as vaccines or extra hospital capacity. In practice, however, that is precisely when an impatient citizenry might demand an end to them.
Intertemporal substitution also helps explain why some people were relatively happy during the pandemic and others weren’t. If you didn’t go to the theater for two years, are you willing or able to go twice as much for two years? If you do not have that kind of flexibility, you probably suffered more than average.
Citizens take intertemporal substitution into account more than public health authorities like to admit. Say it has been a few weeks since your third dose (which hasn’t diminished in potency yet), and you feel relatively protected against the delta variant. But you worry that more dangerous variants are coming next year. You might go out and take some “disproportionate” risks. For you, it’s probably not going to be much safer anytime soon, and you don’t wish to spend the rest of your life in a closet. Behavior that might appear foolhardy isn’t, necessarily.
This way of thinking goes against the approach of public health authorities, who tend to emphasize clear-cut restrictions for broad classes of people (fully vaccinated, not vaccinated, immunocompromised, etc.). But the reality is that people will take their pleasures when they can, especially if they expect the risk of those pleasures to be rising.
Some of the consequences of intertemporal substitution are a bit ghastly, and you won’t find many people willing to even talk about them.
For example: Say you are immunocompromised, and you either can’t or won’t get vaccinated. You might be justly mad about all the unvaccinated knuckleheads running around, getting Covid, and possibly infecting you. At the same time, you wish to minimize your required degree of intertemporal substitution.
So if you are (perhaps correctly) afraid to go out very much, you are better off if those same knuckleheads acquire natural immunity more quickly. Yes, it would be better if they got vaccinated. But barring that, a quick pandemic may be easier for you to manage than a long, drawn-out pandemic, which would require heroic amounts of intertemporal substitution.
Speaking of which: As I write this I am in Northern Ireland, and it is early in the morning, when the shops and museums are closed. Did I mention it is raining?
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “Big Business: A Love Letter to an American Anti-Hero.”
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