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The State of American Vaccine Incentives

By: Zach Halberstam

On November 9th, 2020, the nature of the fight against COVID-19 changed dramatically, when Pfizer and BioNTech announced their vaccine for the disease was effective in preventing infection. But, after a frantic vaccine rollout, in which the U.S. government and pharmaceutical companies sought to quickly and fairly make shots available for as many Americans as possible, we are now confronted with a new problem: refusal to take the vaccine. In recent weeks, vaccination rates have stagnated. Recently, 80,000 doses of vaccine expired in Arkansas due to lack of demand.

In light of the desire to get more Americans vaccinated, many programs of very distinct natures have been utilized. The federal government is making sure vaccines are free, so that cost can never be a barrier to vaccination. The Milwaukee Brewers offered free tickets for those who got vaccinated at sites near the stadium. Washington state offered adults getting vaccinated free marijuana in its “Joints for Jabs” program. Ohio instituted a statewide lottery, offering million-dollar jackpots to lucky residents who had received at least one dose of the vaccine. President Biden recently came out in favor of $100 payments for adults receiving a COVID-19 vaccine. Though these ideas are quite different in nature, they all function in the same way. They are incentives, which work to encourage Americans to get the shot by providing desirable rewards to doing so. In this article, I discuss why incentives are being proposed, as well as why they alone are unlikely to bring about herd immunity in the U.S.

In an ideal free-market system, where goods are freely exchanged with perfect information and no one’s decision affects the welfare of anyone else, incentives are unnecessary. Sellers price their goods at the price determined by demand, and buyers buy the goods if they think the price is favorable. The government can not intervene to make this interaction more efficient. However, for vaccines, where one person’s decision to receive a vaccine affects the safety of everyone around them, the market will not find an efficient solution. In the absence of incentives, vaccines would be priced and sold based only on the benefit they confer to the buyer. This would lead to far too few vaccines being administered. Such a situation, where a free market fails to create an efficient outcome, is known as a market failure (and, indeed, vaccines are one of the standard examples of market failures).

Incentives show some promise in getting people who otherwise might be ambivalent about the vaccine to take the shot. One of the Brewers fans who took the vaccine in response to the ticket incentive, Mike Huntsman, said that he had “missed appointments and opportunities” to get the vaccine and that the free ticket offer had put him over the top. Those designing vaccine incentives hope there are many people out there like Huntsman, who are not enthusiastic enough about the vaccine to have gotten it on their own but may be moved by bonuses that come with the vaccines. Katy Milkman, a behavioral economist at the University of Pennsylvania, has asserted that the proportion of the unvaccinated who might be moved to become vaccinated is quite large.

However, there are many reasons to believe vaccine incentives are not a perfect solution to the problem of getting people vaccinated. Though the Ohio vaccine lottery was widely praised, one study failed to find evidence that the lottery was associated with any significant increase in vaccination at all. There are criticisms of fairness, too: Biden has acknowledged that paying people for getting vaccinated now rewards people who have neglected their civic duty and not those who took the vaccine as soon as it was available to them.

But the biggest problem with vaccine incentives is the intense opposition to vaccines. Over half of the unvaccinated, in a mid-July 2021 survey, agreed with the statement “the U.S. government is using the COVID-19 vaccine to microchip the population.” People who buy into such extreme conspiracy theories about vaccination are unlikely to be persuaded by comparatively small amounts of cash! According to the Kaiser Family Foundation, more unvaccinated adults say they are firmly opposed to getting the vaccine than say they may get it eventually. Incentives can persuade people who are on the fence to get vaccinations, but the reality is that too many people are firmly opposed to getting vaccinated for incentives to be of much more use. Incentives nudge consumers in the right direction, but they cannot compel them to go against their deeply-held beliefs, no matter how misguided. It may take more forceful measures, like the mandates now being imposed by some corporations and jurisdictions, to increase the vaccination rate much further.


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