The Case for Subsidizing COVID-19 Self-Tests

As the world grapples with recurring waves of COVID-19 infections, policymakers are struggling to balance public health considerations with reopening the economy. While their tools are limited until a vaccine is widely available, testing can be an effective method to slow the spread of the virus. Nevertheless, tests may not be accurate, and patients may face delays both in waiting rooms and afterward while waiting for results. While the rich can afford to take time off from work while waiting to get tested, the poor often cannot sacrifice lost earnings for long wait times.

These problems associated with testing have a simple fix: allow voluntary self-testing at home. However, self-testing is not without its critiques. Test accuracy may be too low to be useful in identifying cases, particularly for asymptomatic people who take the test as a precaution following a potential transmission incident. Another important consideration is the cost of self-tests, which, in the backdrop of an unprecedented global recession, can be a non-negligible expense. In fact, in some cases, self-tests can be more expensive than being tested at a public health facility. Overall, costs are increasingly higher as income decreases, and self-tests become more of a luxury to be weighed against the time and risk of going out to be tested.

Despite these challenges, a recent working paper by Thomas F. Hellmann of Oxford University and Veikko Thiele of Queen’s University demonstrates why self-testing would ultimately be effective in containing the virus. The authors construct two theoretical models, one in which they assume no testing occurs (as a benchmark) and another in which they introduce self-testing. In the benchmark model, there are two types of individuals: those who self-isolate and those who choose to go out. In the self-testing model, preferences remain the same, while an additional dimension of choice is introduced. Namely, while rationality is assumed vis-à-vis behavior after testing—individuals will weigh the likelihood that their test is accurate against their decision to stay in or go out—a certain proportion will be naïve and incorrectly believe that the tests are entirely accurate and will always choose to stay in after a positive test and go out after a negative one. Such influences on behavior after testing translate to more pronounced effects of false positives and false negatives.

The authors find that the risk of infection decreases when self-tests are accessible and easy to administer. Interestingly, those who would self-isolate if there was no testing and those who would go out regardless of testing availability are both more likely to self-test. Even with naïveté, the effect of false positives outweighs the effect of false negatives, resulting in a decreased risk of infection. Notably, the alternate hypothesis to imperfect testing used by the paper is no testing at all, instead of the typical hypothesis of a perfectly accurate test. In other words, the authors show that imperfect tests are better than a lack of tests.

While self-tests are in general not as accurate as tests performed in designated facilities, the paper finds that regardless of test accuracy, and compared to no testing at all, lower test prices decrease the risk of infection. They also produce economic benefits, such as allowing people to go out with more certainty. Improving test accuracy helps combat the spread of COVID-19, but not to the same extent as increased testing due to cheaper tests.

In the absence of testing, carriers, especially asymptomatic ones, risk transmitting the disease to other people. In some cases, they become super-spreaders, who have been a driving force in the recent increase of cases. Each newly infected individual may develop symptoms and choose to self-isolate, which decreases their economic activities. According to Hellman and Thiele, there are two critical benefits to increased tests via self-testing: (1) decreased rates of COVID-19 transmission and (2) the economy will improve as those with positive results will self-isolate and those with negative results will go out. Such benefits are promising for policymakers who can further subsidize the production and distribution of self-tests and renew optimism in the fight to limit the spread of COVID-19.

---

Hellmann, Thomas F. and Veikko Thiele. 2020. “A Theory of Voluntary Testing and Self-Isolation in an Ongoing Pandemic.” National Bureau of Economic Research. https://doi.org/10.3386/w27941.