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Pay People to Get Vaccinated


Given President Trump’s skepticism about scientific experts, it perhaps comes as no surprise that there is a partisan divide on the topic. While 58 percent of Democrats and those who lean Democratic said they would get the vaccine, just 36 percent of Republicans and those who lean Republican said the same.

Those numbers are troublingly low. No vaccine will be 100 percent effective, which means that getting vaccinated won’t be sufficient to protect yourself from the virus. But if enough people get vaccinated, society will develop herd immunity. With widespread, even if imperfect, vaccination, the virus won’t be able to spread. No one knows for sure, but experts believe that 70 to 90 percent of the population will need to be vaccinated.

Immunology, meet economics. One of the first principles of economics — perhaps the most important — is that people respond to incentives. Applying this principle to the case at hand, Mr. Litan recommends that the government pay $1,000 to whoever gets the vaccine. With a large enough incentive, most Americans are likely to get vaccinated.

This proposal is textbook economics. (I’ve written some of the textbooks.) As all economics students learn, when an activity has a side effect on bystanders, that effect is called an externality. In the presence of externalities, the famous theorems of economics that justify laissez-faire do not apply. Adam Smith’s vaunted invisible hand can no longer work its magic.

A classic example of a negative externality is pollution, and the simplest and least invasive policy solution is a tax on emissions. In economics-speak, such a tax internalizes the externality: It induces polluters to take the cost of pollution into account by giving them a financial incentive to cut emissions. That’s why I have written here many times that a tax on carbon emissions is the best way to deal with global climate change.

Vaccination confers a positive externality. When you get vaccinated, you benefit not only yourself but also your fellow citizens by helping society take a step toward herd immunity. In this case, internalizing the externality requires not a tax but a subsidy, as Mr. Litan suggests.

To be sure, this proposal is costly. If most Americans were to accept the payment to take the vaccine, as is intended, the program would cost the federal government about $300 billion. Presumably, this spending would add to the government debt, which is already projected to reach new highs as a percentage of G.D.P. over the next few years.



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