Coronavirus is dangerous and its spread must be slowed (Check this analysis out first if you disagree). Quarantine has been effective at slowing the spread of Coronavirus in China and South Korea, but has not been effective in the West.

Daily New Cases In China (log scale, source)

Daily new Cases in South Korea (source)

Western countries are struggling to contain the virus.

note: this is a log chart (source)

We have been slow to react, but can play to our strengths and build a market solution to this problem.

The solution: Pay people to quarantine

This presents two questions:

How can you be sure that an individual is maintaining quarantine? How expensive would it be? And how do you finance a quarantine?

Tracking the location of a phone is easy. Tracking the location of the associated individual is much more difficult. In order to ensure the individual is with their phone frequent tests like faceID, authentication questions via text, verification pictures, and more can be used. Additionally, accelerometer data, wifi, and other signals can inform timing of these requests. While challenging, this works in most cases.

The second challenge is financing the payments to those who have opted to quarantine. There are several sources of potential financing. Private citizens, companies, state & local government are the most obvious. Additionally, foreign governments and health insurers who are looking to limit their exposure might be interested in limiting the pace of spread. Structures like catastrophe bonds could also find some applicability here.

Once a pool of money has been allocated to a city or region, the people who are paid to quarantine would be determined by auction. There are many options around how to design pricing mechanisms to incentivize consecutive days of quarantine and other types of health improving behaviors. Based on the committed payments for a city, the price of remaining quarantined would be set on a daily basis.

Consider what the cost might be to pay to place 10% of a city’s population into quarantine. I believe that it costs significantly less than minimum wage for those people. The population that would be quarantining would be the young, elderly, the sick, and those for whom working at home is possible. Quarantining a sizable portion of a population dramatically slows the progression of a virus. Even at 30% of the population, I expect the price would remain well below minimum wage. This would have a dramatic impact on the pace of spreading.

Finally, paying people to self quarantine will also have several positive effects. First, the total cost incurred by society in the quarantine is minimized. A full quarantine will have large scale negative effects on production. This will disrupt supply chains, local businesses, and more. If however, the people who incur the lowest cost to remain at home are in quarantine, the productive capacity of a city can be maximized while also achieving the dual goal of slowing the spread of the virus. Second, this is a direct stimulus paid to people who are most likely to turn around and spend money in the economy. Third, South Korea and China are currently grappling with how to ramp productivity back up without accelerating the spread of the virus. If who is quarantined is driven by market forces, this process will be self balancing.

Implementation

Either create or use an existing two sided marketplace to match payers, with individuals who will quarantine. Pick a city, make a purchase, and buy that much quarantine time.

Governments and private citizens around the world wish we could pay the Italians to quarantine right now. With a model like this, we could.