Welcome to Plugging the Gap (my email newsletter about Covid-19 and its economics). In case you don’t know me, I’m an economist and professor at the University of Toronto. I have written lots of books including, most recently, on Covid-19. You can follow me on Twitter (@joshgans) or subscribe to this email newsletter here.
Countries are releasing their vaccine distribution priority lists. With some wrinkles, those who are in healthcare, key essential jobs and are older will receive the vaccine first in most places. The sole criteria are the prevention of fatalities and more serious complications although only coarsely. For instance, it isn’t quite clear how having a greater non-age related potential for harm plays out. Anyhow, what we will see over the course of a year or more is that regions will be ordered by birthdate and that will form the queue.
Today, I am going to do the thing economists are very known for and the thing that gets them in the most trouble: ask some uncomfortable questions about this ordering. But I do this because I believe the questions are important and that I predict we will want answers to them as this process continues.
My starting point is this: we are going to vaccine pretty much everybody. Once that is done — say, early to mid-2022 — normality can ensue. Thus, when we talk about priority we are talking about what happens in the year or so interim. But here is the important bit, what bits of normality can we obtain over the next year or do we have to wait that out? Remember that the cost of non-normality is $10 billion per day in the US alone.
Region by region
The current plan is to take a country and then spread out vaccine doses across regions and vaccinate people in the region by age. If it is a little more sophisticated, you will allocate more doses to regions with older people. But the country-wide approach is common.
Here is the problem. If we only get to normality when a region is vaccinated, then the entire country pops into normality at the beginning of 2022. What is the alternative? The alternative is to go region-by-region. In Canada, for instance, we might vaccinate the Atlantic states first followed by Quebec. That way we could have half the country open and operating normally by mid-2021 with the rest to follow with additional openings until we have opened the entire country by the beginning of 2022. Either way, we are done by the same date but go region-by-region and we get some normality in some places while all waiting to do so together.
At the very least, surely we could do this after we have vaccinated the most vulnerable and are not facing a trade-off between health and the economy in the process. The reason why this isn’t done is that there are no health criteria politicians can yield to in order to take the decision out of their hands. But economics is an expert field too. Why can’t politicians defer to economists in the same way to protect themselves?
Placebo vaccine trial subjects
Suppose you participated in a vaccine trial but were given a placebo? At the moment, that does not give you any additional priority in the vaccine distribution. Should it?
I think it should. Participating in a vaccine trial is risky — at least mentally. But if you turn out not to have been vaccinated, you really have nothing to show for it. If you knew that you would be first in line, you would more likely participate in the trial and be less stressed about whether you had the vaccine or a placebo. This would both encourage participation and also be a way of sorting out for people who really have a preference to be vaccinated early. A double win in terms of economics.
The Olympics, which have been delayed by a year, are due to happen in July. There aren’t a large number of participants. But all of them are way down the list for vaccination. In other words, they won’t be vaccinated in time. Thus, there will have to be testing, quarantines and bubbles with people interacting who have come from all over the world! That doesn’t inspire confidence.
It would be very cheap in terms of opportunity cost — pushing a few tens of thousands of people down the world queue — to vaccine them. There is certainly an economic return to having the Olympics and, let’s face it, other sports and entertainment going on. They have benefits on a considerable scale. (Indeed, Richard Thaler has proposed doing this as a means of raising money efficiently.)
Do you mean to tell me that, for want of looking ‘fair,’ countries will choose to delay sports and entertainment for a year? That seems strange to me.
The only argument I can see is that it opens up a can of worms. But I am all about the can opening. After all, did you hear the joke about the economist and a can on a desert island?
Are politicians essential workers? At the moment, in the interests of fairness, they have decided to not classify themselves as such. Unless you have a government that has pre-emptively tried to have their leaders get Covid-19 and so not need vaccination, there are potential disruptions from this going forward.
There are concerns here. After all, if one country wanted to disrupt the national security of another, it would be relatively easy to slip the virus into political and other government decision-making places. Time that right and you could have a major problem. Let’s face it, it is risky not to vaccinate people in leadership positions. I feel that we are going to have to get over this one.
Just when you thought I couldn’t get more controversial … how about we vaccinate air travellers first? Before you point out the obvious that this is rewarding privilege (it is!), let me remind you of my criteria here: if we can open an industry earlier with a targetted vaccine distribution, we should seriously consider doing that.
The industry hardest hit by Covid-19 has been the airline industry. Revenues down 90% or more with planes and expenses still intact. There are jobs at risk, not to mention flow-on jobs associated with air travel. People don’t want to travel or aren’t allowed to travel. If air travellers are vaccinated, the industry’s problems pretty much go away. Air travellers are protected both when they travel and no matter where they travel to. In other words, this is an industry that could be open a year early if this were done.
How would this work? You would book an air ticket. It would have to be a month in advance. Then you get your first dose on booking and second dose just before you travel. If you don’t travel, you have to still pay for your ticket — no refunds on this one — plus a surcharge. I’m thinking at least $3,000. Once this is done since most travellers travel more than once, it is done and the industry is working again. What is more, so long as the vaccine prevents you from being a spreader, we don’t have to worry about border control issues — at least for air travel.
Apart from the benefits of having an industry hard-hit reopened sooner, we also save all of those government bailouts of the air industry that will likely continue. That helps everyone. What is more, I suspect that the air industry itself might get a boost as people pay more for airline tickets initially. Again, that only helps avoid bailouts and the like.
I floated this idea on Twitter so I know that people hate it. Nonetheless, the economic logic is very sound — unless, of course, you want to kill the industry for environmental reasons in which case I suggest that using Covid-19 is not the optimal approach to doing that nor is it likely to work anyway.
Consider this situation. You are an over 80-year-old but have a 50 something-year-old offspring with diabetes. You get the vaccine several months before your son or daughter. I can imagine that person would want to swap their place in the line with their family member. Should they be allowed to?
It is obvious to me that they should. It is the same rationale as to why we allow people to donate kidneys to other people. Why can’t you swap your place in line with someone else?
Before you think this isn’t worth the risk of abuse let me remind you all that there is almost probability one that we will hear a tragic story in 2021 of the 50-year-old contracting Covid-19 and dying after their parent was vaccinated. Politicians are not going to want to deal with that when allowing swapping could have prevented it.