Prepared for the DELVE Initiative by Tim Besley

Citation

Tim Besley (2020), The Potential Role of Firms in Test, Trace, Isolate. DELVE Addendum TTI-TD1. Published 27 May 2020. Available from https://rs-delve.github.io/addenda/2020/05/27/the-potential-role-of-firms-in-tti.html.

BibTeX
@Misc{addenda/2020/05/27/the-potential-role-of-firms-in-tti, title = {The Potential Role of Firms in Test, Trace, Isolate}, author = {Besley, Tim}, year = {2020}, publisher = {The Royal Society}, url = {https://rs-delve.github.io/addenda/2020/05/27/the-potential-role-of-firms-in-tti.html} }
Endnote
%0 Generic %T The Potential Role of Firms in Test, Trace, Isolate %A Tim Besley %D 2020 %F addenda/2020/05/27/the-potential-role-of-firms-in-tti %I The Royal Society %U https://rs-delve.github.io/addenda/2020/05/27/the-potential-role-of-firms-in-tti.html
RIS
TY - GEN TI - The Potential Role of Firms in Test, Trace, Isolate AU - Tim Besley DA - 2020/05/27 ID - addenda/2020/05/27/the-potential-role-of-firms-in-tti PB - The Royal Society UR - https://rs-delve.github.io/addenda/2020/05/27/the-potential-role-of-firms-in-tti.html ER -
APA
Besley, T.. (2020). The Potential Role of Firms in Test, Trace, Isolate. Available from https://rs-delve.github.io/addenda/2020/05/27/the-potential-role-of-firms-in-tti.html.

An effective system of TTI has to align with the incentives of firms, individuals and households. Such a system must look carefully at incentives and tie the logistics of the TTI system to economic incentives. For example, a system that demands isolation from work and family without recognizing the economic costs and trying to compensate those who lose will make many individuals reluctant to submit to testing, let alone isolation.1 That is why it is essential to have a system which is integrated into the system of measures which are already in place for supporting firms and workers. This is particularly important as the furlough system is rolled back. Even as it ceases to be a core means of income support, it can play a crucial role in creating incentives for an effective TTI system. Social incentives, responses to messaging and a sense of pro-sociality matter too. But should be based on robust evidence that compliance can be achieved.

Effective delivery of TTI has to combine household delivery and firm-level delivery. As the economy opens up, this will mean extending the system beyond the health and social care centres encompassing workers in all parts of the economy. The structure of the UK economy gives a clue to the scale of the challenge. There are around 28 million employed workers in the UK scattered across around 5.9 million firms with about 40% of all employment in the 7700 businesses that have more than 250 employees. About 5.8 million firms have fewer than 50 employees and around 4.9 million have no employees.2 On top of this, there are just under 5 million registered self-employed.

Since many businesses are keen to open up, it is not unreasonable to enlist their assistance in delivering public health measures. And establishing this for TTI will be useful if a vaccine is discovered and needs to be rolled out. Giving firms a role in administering key public programs is not unprecedented and has been key to the government’s furlough program. Firms already administer sickness pay schemes and maternity pay schemes which require delegated compliance. And the whole of the tax system (at least VAT, national insurance and income taxes) require firms to be the main agent acting on behalf of the government. This would be a new way of regulating the economy but possibly the only way to get a balance between economic cost and public health.

To make a TTI system work, the first step would be to provide a risk assessment of each type of business based on the way that it deals with customers and employees. This must include an assessment based in part on transportation usage. Some of this could be done on a self-reported basis with a monitoring and auditing system to ensure compliance. It could begin with large employers and then be rolled out to smaller businesses. Based on this, the system could assess a frequency for testing for employees and apply for this through an official testing scheme with employers being responsible for compliance by workers. Positive test results could be tied to employer-administered furlough grants for a period of isolation but only an employee could not be assigned to home work (this would be an extension of current sickness pay arrangements which would, in any case, be operative for employees showing symptoms). Employers could also be incentivized to ensure that their employees using tracing apps where appropriate. A scheme such as this would have a useful bi-product of creating usable data on the spread of infection by location and age group. Over time, the scheme could be rolled out to smaller firms, particularly those where risks are particularly high by location or nature of business. Self-employed workers could also be given access to testing facilities in due course.

Targeting is essential to make best use of scarce testing capacity. This means categorizing businesses according to risk and offering testing on this basis. The criterion should not be the transmission rate associated with the business, but the marginal benefit associated with testing a business which would depend on how bringing it into the testing system reduces the spread of the infection and creates economic value. Lines of business where the transmission rate cannot be controlled by TTI and are high will have to remain closed. But if the transmission rate is low, for example, due to the location of the business or the effectiveness of other measures to reduce transmission, there is also a need to cover it with TTI. How much TTI can increase economic value by getting people back to work should also be a factor in deciding where to target resources. Developing systematic criteria will make the system more effective. This process can, and should be, evidence-based. It can be enhanced by using standard economic data which is available in existing surveys and particularly in HMRC given that it is administering the furlough program.

As with the furlough program, reaching the self-employed creates a particular challenge given the informality of much of the work that they do. They are a heterogenous group, not only in the type of work that they do, but also in terms of the extent to which they engage in high risk activities in terms of transmission. Many are in sectors which will remain closed for the foreseeable future. Some are sub-contractors to larger firms and hence could fall under any workplace schemes. But it would be necessary to assess what kind of special provision is needed for them. They are less well covered by the furlough scheme and are therefore particularly keen to return to work. Even if they can be reached by a testing program, isolation without compensation would create poor incentives to be tested so some kind of bespoke program would have to be built which recognizes this challenge. But it could also encompass very small businesses which have zero employees. As with larger employers, building TTI together with the follow-on arrangements under the furlough program is essential recognizing that economic incentives have to be compatible with any TTI scheme.

This employee based system would also leave out key groups for whom alternative testing arrangements would have to be found, most notably home carers, vulnerable groups (who are already self-isolating), those who are not active in labour markets (there are around 12 million retirees) and children (around 12 million are currently under age 16). Harnessing existing social networks can aid information diffusion and trust.3 Even small individual incentives for testing can also be important.4

  1. Attitudinal data from a study in Israel is consistent with the idea that compensation is important. The authors of the study asked respondents about their hypothetical willingness to comply with self-isolation with and without compensation for lost wages. If compensation was offered, then 94% said that they would comply but this dropped to 57% without compensation; see Bodas, M. and Peleg, K. (2020) Self-Isolation Compliance In The COVID-19 Era Influenced By Compensation: Findings From A Recent Survey In Israel, Health Affairs (doi: 10.1377/hlthaff.2020.00382). The wider literature surveyed in Webster et al. (2020) is more equivocal identifying a range of factors in shaping compliance including knowledge about the disease, the procedures used, social norms, perceived risk of the disease and financial considerations due to loss of earnings. See: Webster, R., Brooks, S., Smith, L., Woodland, L., Wessely, S., and Rubin, G. (2020) How to improve adherence with quarantine: rapid review of the evidence, 182, 163-169 (doi: 10.1016/j.puhe.2020.03.007). A small-scale study of the SARS epidemic in Toronto also mentions financial compensation as a factor but cannot isolate its importance given the approach taken. DiGiovanni, C., Conley, J., Chiu, D. and Zaborski, J. (2004) Factors influencing compliance with quarantine in Toronto during the 2003 SARS Outbreak, Biosecurity and Bioterrorism: Biodefense Strategy, Practice and Science, 2, 4, 265-72 (doi: 10.1089/bsp.2004.2.265). ↩

  2. UK Government (2019) Business population estimates for the UK and the regions 2019, available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/852919/Business_Population_Estimates_for_the_UK_and_regions_-_2019_Statistical_Release.pdf ↩

  3. There is an emerging body of evidence from RCTs in developing countries that this is important. For example: Tarozzi, A., Maertens, R., Ahmend, K. and van Geen, A. (2017) Water Testing Delivery Strategies to Reduce Arsenic Exposure through Safe Well Selection in Bangladesh, see: https://www.povertyactionlab.org/evaluation/water-testing-delivery-strategies-reduce-arsenic-exposure-through-safe-well-selection ↩

  4. Thornton, R., Godlonton, S., Angotti, N., Bula, A., Gaydosh, L., Yeatman, S., Kimchi, E. (2006) The Demand for and Impact of Learning HIV Status in Malawi. See: https://www.povertyactionlab.org/evaluation/demand-and-impact-learning-hiv-status-malawi ↩