In recent years, the term social responsibility has been widely used to demand companies to take decisions that respect the environment and social interests. In recent months, we are being asked for individual responsibility to stop the epidemic of COVID-19. I here explain why economists think that claiming people’s responsibility is not the most effective way to get results. Other measures are necessary.
By the mid of July, given the situation of the epidemic in Aragon and in particular in Zaragoza, the Government asked travels to be limited, in order to avoid the dissemination of the virus. They appealed to individual responsibility. Subsequent vehicle movement statistics showed that mobility had barely decreased compared to the previous weekend. I had the opportunity to speak to several people who had travelled that weekend. They all had an explanation: they felt themselves very responsible and careful and, at the same time, traveling for vacation was very important to them.
In fact, as individual responsibility was appealed, people did exercised it. They evaluated their probabilities of being infected and considered them very low or null. They considered that they were going to act carefully in their destinations and these costs were compared to the benefit of travelling and with the alternative of staying the weekend at home. Economists, and probably any reader, have already understood the problem: The potential costs of tens of thousands of people traveling are not borne individually by each person traveling, but by others. Therefore, the individual decision (or the collective decision as the aggregation of individual decisions) does not align with the public interest.
Let us make some science fiction and imagine that it was possible to trace in a reliable way the trail of all infections and that a civil or even criminal liability could be claimed from a person for causing a chain of infections. I do not need to extend too much the conclusion that individual behaviour in that scenario would align with collective interests.
Do all people act this way? For me, the answer is yes. What differences some people from others are their personal preferences. There are altruists, who find a certain satisfaction in providing welfare to others. Some others are interested in money, others in art or in health or in their family... Given these complex preferences, which are unique to each person, consider them all smart and capable of evaluating their alternatives for action and choosing the one that best suits their own interests.
Fortunately, we have politicians who can make decisions with the common welfare in mind. Wait! They are persons too. We are lost.
In the case of politicians, I will simplify. Given they chose their profession, I will assume that the desire for power is very high on their personal scale of preferences. Let us assume that politicians that do not have the power want to reach it and those who hold it want to maintain or improve it.
To politicians (of all colours) and to most of the media, we must acknowledge an enormous merit. They have convinced us all that, if the epidemic spreads, it is because there are many irresponsible individual behaviours. The result for the political class is exceptional, since we have exonerated them. They would not assume any consequences for their actions or inactions in subsequent elections. They will not assume them because most of the population has accepted that it is their fault (collectively, because we individually feel that we are acting properly).
Let us make some more science fiction and imagine that all people when voting had in mind who should prohibit or penalize individual activities that clearly harm the common welfare. I do not need to extend too much the conclusion that public decisions in that scenario would align with the collective interests.
In a provocative way, I am picking up an idea that is beginning to spread. Parliament must write legislative changes, if needed and the governments must take thoughtful but effective measures to control the epidemic. This is more laborious and demanding than publicly appearing to ask for individual responsibility. However, if properly done, it will take effect. The pandemic was declared in March 2020 and forecasts as of today (July 2020) suggest that the problem will continue for another year at least.
I have almost consumed the space and still did not write about the social responsibility that people demands from the companies’ executives, especially in relation to the environmental problem. This problem has, in the best of cases, a much longer history than that of the pandemic. If the environment is to be protected, this should not be confided to the self-declared responsibility of companies. It must be implemented with measures such as prohibitions, taxes on certain products and limitations on some activities. These, and others, are known tools that Public Economics has refined for decades and that lately are avoided to implement in favour of corporate social responsibility. May the corporations be the most interested in this reorientation? This needs a deeper treatment in future articles.
The reader may feel that in these lines I have drawn that any person acts in a self-interested way and may think that this vision is unreal. You may think that politicians are persons who care of the public interest and that any person acts responsibly towards their fellows. If this were the case, we would surely need far fewer politicians. I, as an individual, prefer not to be prohibited from mobility or relations with other people and my individual responsibility to be trusted. Nevertheless, that would not be collectively intelligent.
When we think of every person in this way, we see them in their personal decisions, in their work within the public sector or in a company, as an organization manager, as an entrepreneur, as a governor, as a politician, ... Suddenly, maximalisms like 'only the private sector works' or 'only the public sector works' become empty and even absurd expressions. Perhaps those slogans only serve political interests.
Anyone interested in extending these ideas may read the article Jensen, M. C., & Meckling, W. H. (1994). The Nature of Man. Journal of Applied Corporate Finance, 7(2), 4 - 19.
Author: Jorge Rosell Martínez
(The opinions expressed in this article are the sole responsibility of the author)
