Microeconomists define a lulling effect to take place when an intervention (such as taking a dose of a vaccine) or a safety regulation (such as child proof bottle caps or vehicle airbags)  convinces an individual that she is less exposed to risk.  Such individuals, who now believe that they face less risk per unit of activity, are implicitly being encouraged to take more risk.  Given that demand curves slope down, a reduction in the price of risk taking encourages people to take on more risk. If the demand curve is highly price sensitive, an unintended consequence of a safety measure could be to put more of the population at risk.

Thus, could an unintended consequence of the COVID19 vaccine be an increase in COVID cases as people who are vaccinated now feel that they are safe and they sharply increase their social interactions?  Given that we socialize in groups, this lulling effect could create a sharp increase in the infection rate.

Suppose that people who like to party are friends with other people who also like to party in groups.  Before the vaccine, they engaged in some self protection but if they are confident that the vaccine works and after months of lockdown; they will really want to party with each other and this is how a super-contagion cluster forms because of the vaccine.   

How does this "rebound effect" parameter affect who should get the early doses of the vaccine?

 In the midst of this recession, I think it is time that I engage in some job creation.  I have created a webpage for my new consulting firm called Climate Economics.   I won't take on too many clients but my goal is to help businesses use ideas from environmental and urban economics to both shrink their carbon footprints and to prepare for the climate change risk.  

The novel feature of my efforts will be to build a connection between the leading climate economists and firms that both want to mitigate their emissions and adapt to climate risk.   Here I want to point out some my relevant work.

Some of my research on reducing greenhouse gas emissions from the urban sector.

Glaeser, Edward L. & Kahn, Matthew E., 2010. "The greenness of cities: Carbon dioxide emissions and urban development," Journal of Urban Economics, Elsevier, vol. 67(3), pages 404-418, May

Kahn, Matthew E. & Kok, Nils & Quigley, John M., 2014. "Carbon emissions from the commercial building sector: The role of climate, quality, and incentives," Journal of Public Economics, Elsevier, vol. 113(C), pages 1-12.

Kahn, Matthew E. & Kok, Nils, 2014. "The capitalization of green labels in the California housing market," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 25-34

Qiu, Yueming & Kahn, Matthew E. & Xing, Bo, 2019. "Quantifying the rebound effects of residential solar panel adoption," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 310-341.

Eyer, Jonathan & Kahn, Matthew E., 2020. "Prolonging coal’s sunset: Local demand for local supply," Regional Science and Urban Economics, Elsevier, vol. 81(C).

Qiu, Yueming & Kahn, Matthew E., 2019. "Impact of voluntary green certification on building energy performance," Energy Economics, Elsevier, vol. 80(C), pages 461-475.

Matthew E. Kahn & Nils Kok, 2014. "Big-Box Retailers and Urban Carbon Emissions: The Case of Wal-Mart," NBER Working Papers 19912, National Bureau of Economic Research, Inc.

Magali A. Delmas & Matthew E. Kahn & Stephen Locke, 2014. "Accidental Environmentalists? Californian Demand for Teslas and Solar Panels," NBER Working Papers 20754, National Bureau of Economic Research, Inc.

Dora L. Costa & Matthew E. Kahn, 2013. "Energy Conservation “Nudges” And Environmentalist Ideology: Evidence From A Randomized Residential Electricity Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 680-702, June.

Kahn and Wolak 2013.   

Some of my work on the climate change adaptation challenge.  My 2021 Yale University Press Book.

My well known 2010 book.

As a Miami Heat fan who lives in Los Angeles right now, I marvel at the success of the NBA Bubble.  I am a fan of Jimmy Butler's grit.   The league has created a "safe space" featuring no infection for months.  The private sector (the NBA) achieved this.  Yes, the bubble is an island and yes plenty of $ has been spent to contain contagion risk but in this blog post, I would like to point out some relevant lessons.

In early March 2020, I started to sketch out an economics of liability study where I wanted to partner with a lawyer to explore the way liability law could be used to nudge firms who employ essential workers to raise their efforts in protecting their workers and their stores and physical places. I wanted to argue that large liability penalties would nudge entities to invest more in costly self protection and this would reduce contagion risk.    The introduction of COVID liability shields ended my project and disappointed me because the private sector isn't being harnessed to end this plague.  

Consider the following "report cards" strategy.  Suppose that every non-household entity such as Nursing Homes, restaurants, supermarkets, barbershops, had to post a record ever two weeks of their structure's two week % of COVID cases.  Ideally, this would indicate the % of recent COVID diagnosis among workers and people who visited the place.

Such percentages would be reported on a public website and data scientists could access the data.  Public health authorities could then rank these entities and people armed with this information could vote with their wallet and boycott and substitute away from risky places.

YELP reports rankings for firms and restaurants.  Couldn't YELP play a role protecting us by posting these data as well?  Do we believe that informed consumers reoptimize?  Do economists believe in competition?

The fear of liability lawsuits for places who did not lower their COVID infections rates would nudge forward self protection investment.  Such places would better screen their workers.

While many economists have written COVID papers, I know of no papers trying to harness competition and "cleanliness" to reduce contagion risk.  The NBA bubble shows that it can be done. What is the marginal cost of reducing risk?  Are there any strategies that are cheaper than what the NBA did but achieve part of these gains?