Prevention externalities: private and public responses to the 1878 yellow fever epidemic

The 1878 yellow fever epidemic in the southern Mississippi Valley was one of the worst in U.S. history, causing significant mortality and prompting diverse responses from both private and public sectors. Economic theory suggests that prevention externalities, such as self-isolation and vaccination, benefit both individuals and society. However, transaction costs and state capacity can influence the effectiveness of these responses. This article delves into the specific responses to the 1878 epidemic, examining how private actors, such as individuals and civil society organizations, often faced lower costs in implementing prevention measures compared to governmental efforts. Quarantine measures, refugee camps, and flight from infected areas are among the strategies analyzed, with a focus on the transaction costs and state capacity associated with each. The case study of Memphis, TN, illustrates how private actors, including the Father Matthew Society, effectively governed refugee camps and internalized prevention externalities. The analysis concludes that recognizing the conditions under which private actors can more cheaply internalize prevention externalities offers new insights into complex disease problems and the potential for decentralized responses to epidemics.