Socially vs. Privately Optimal Control of Livestock Diseases: A Case for Integration of Epidemiology and Economics

Abstract

This paper aims to illustrate the interdependencies between key epidemiological and economic factors that influence the control of many livestock infectious diseases. The factors considered here are (i) farmer heterogeneity (i.e., differences in how farmers respond to a perceived disease risk), (ii) off-farm effects of farmers' actions to control a disease (i.e., costs and benefits borne by agents that are external to the farm), and (iii) misalignment between privately and socially optimal control efforts (i.e., privately optimal behavior not conducive to a socially optimal outcome). Endemic chronic diseases cause a wide range of adverse social and economic impacts, particularly in low-income countries. The actions taken by farmers to control livestock diseases minimize some of these impacts, and heterogeneity in those actions leads to variation in prevalence at the farm level. While some farmers respond to perceived disease risks, others free-ride on the actions of these individuals, thereby compromising the potential benefits of collective, coordinated behavior. When evaluating a plausible range of disease cost to price of control ratios and assuming that farmers choose their privately optimal control effort, we demonstrate that achievement of a socially optimal disease control target is unlikely, occurring in <25% of all price-cost combinations. To achieve a socially optimal disease control outcome (reliant on farmers' voluntary actions), control policies must consider farmer heterogeneity, off-farm effects, and the predicted uptake of control measures under the assumption of optimized behavior.