(Bloomberg Opinion) -- In announcing the two-week suspension of in-person teaching at Notre Dame University, as well as the closure of public spaces and other restrictions, President John Jenkins made a strong plea to the Fighting Irish community: “Join together” and counter a “formidable foe” that “has been winning.”
Jenkins’s call to action highlighted one of the main dilemmas facing not just universities, but also countries as we all strive for a return to some sense of operational normalcy during this period of living with Covid-19. And that is, how to better align individuals’ assessments of their own risks and acceptable behaviors with the collective wellbeing.
Notre Dame is among three headline-grabbing U.S. universities that switched abruptly in recent days from in-person to virtual teaching. The other two — Michigan State and the University of North Carolina — went further and sent their students home, in some cases before they even had the chance to fully unpack. At all three schools, the catalyst was a worrisome spike in Covid-19 cases, which appeared to originate mostly from off-campus activities.
The problem is neither the information provided to students nor the guidelines put in place. Rather, it is about compliance — that is, the lack of sufficient behavior modifications consistent with what this Covid-19 moment requires in order to strike a better balance between public health and social interactions.
Given the strong mean-reversion conditioning we all have been subject to during our lives, it should come as no surprise that students — especially once they are off campus — are inclined to go back to what was deemed normal behavior not so long ago. But the resulting parties and other large social gatherings carry a high risk of damaging spillovers.
This isn’t a case of not understanding the risks involved or what needs to be done to help contain the spread of the virus. Nor is it some complicated optimization process subject to massive uncertainty. Instead, it‘s simply about a misalignment of risk assessments – or, to use the language of economics, the inability of individuals to internalize their potential negative externalities.
For any one particular student, the risk of falling seriously ill with the virus is rather low; but, if infected, their ability to transfer the virus to many people, including higher risk individuals with greater morbidity and mortality rates, is considerable. As such, it can quickly become only a matter of time before university health facilities are overwhelmed. This is notwithstanding an enormous effort at initial testing when students first come back to campus, reinforced by regular health checks.
How to keep this from happening? Over the years, and starting with Ronald Coase’s influential work, economists have explored different ways to deal with such negative externalities. In simple terms, think of it as some combination of regulation, moral suasion and taxes/subsidies. The question is, how well do these solutions work when it comes to Covid-19?
First, let’s look at regulation. Universities have pressed hard on the regulatory approach, specifying clear social distancing and mask measures. They have supported this with greater monitoring and heavy penalties, including throwing offending students off campus. While proving necessary, this approach has also unfortunately proved insufficient.
Reliance on strict regulation and monitoring can work rather well on campus, albeit not perfectly. The problem is, most universities find it hard to run a highly “contained” community, let alone a truly “closed” one. Some students reside off campus. Others wander beyond school grounds for meals, shopping and social events. Day visitors come and go, as do some faculty members, administrators and staff. So there are limits to what rules alone can do.
How about moral suasion? Let’s look at Notre Dame, where Father Jenkins asked students to help the university identify those not complying with health measures. This type of self-policing by the community makes total sense. After all, the risk is being borne by all, whether it’s exposure to the virus or disruption to the in-person teaching that many students desire. Yet the moral suasion approach tends to fail in the type of group dynamics that are often found on campus – from not wishing to be the snitch to collusion among non-obeying segments of the population.
The third approach is that of taxing the producers of the negative externalities and transferring the funds as compensation to those on the receiving end. It has not been (and is unlikely to be) tried on campuses for many reasons, including the obvious fact that it is totally unworkable given the current health conditions.
All of which is leading universities to reluctantly go to one extreme on what I call the informing-influencing-imposing spectrum for changing behaviors: needing to press much harder in imposing outcomes, including some that they themselves would rather avoid. At the extreme, this may result in a situation that the vast majority of students also detest: closing the campus altogether.
This is the very situation that governments wish to avoid as they consider how to deal with recurrent spikes in infections. It is also an outcome that pandemic-weary citizens dread.
No one I know wants to go back to lockdowns that devastate the economy and impose tremendous pain and suffering on the most vulnerable segments of society. But for this to be avoided, the least risk-averse among us must better align our assessment of individual risks with those facing the larger community. It is both desirable and feasible. The longer this takes to materialize, and the more time needed for effective vaccination and herd immunity, the more we will be subject to the unsettling uncertainty of a pendulum swinging between the promise of resuming more of our normal lives and the dismay of being subjected to stricter stay-at-home rules.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide."
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