A couple of weeks ago, I posted about incentives for coronavirus vaccination, noting that:
...the government could find some other way to incentivise more production and consumption. Right now, we're in a situation where governments want to roll out coronavirus vaccines in the face of a substantial amount of vaccine hesitancy. Some governments have started to incentivise vaccines through more than just subsidising them and making them available for free.
Continuing the theme, the New Zealand Herald reported last week:
A Florida music event promoted will charge a premium to those who have not had the Covid-19 vaccine.
The concert promoter has come up with a discounted ticket at $18 for those who have been vaccinated, and will charge $999.99 to those who haven't.
The idea is to encourage people to get the coronavirus vaccine, especially before attending a large gathering such as a music gig...
[Leadfood Promotions' Paul Williams] said feedback for his idea has been "overwhelmingly positive" and, so far, no one has bought any of the $1000 tickets.
A general point about incentives is that, when the benefits of doing something increase, we are more likely to do it. If the benefits of vaccination now include cheaper concert tickets, that may encourage a few additional people to get vaccinated.
My earlier post about incentivising vaccinations drew on behavioural economics (specifically, prospect theory). On a related note, Alex Tabarrok also raised a good behavioural economics point recently:
A vaccination is all about immediate costs and future benefits and it’s more difficult to act on future benefits than immediate costs, ala hyperbolic discounting. A free beer, donut, or lottery ticket provides an immediate benefit to offset the immediate cost and so may encourage vaccination, especially for those who are very present oriented. Note, however, that a lottery ticket might be expected to be less beneficial than an equivalent-cost donut because the donut is truly immediate while the lottery ticket is not. On the other hand, if vaccine hesitancy is driven by over-estimated fear of rare side-effects then perhaps a lottery ticket balances with an over-estimated hope of rare-benefits.
And then this point on funding public goods through lotteries (an excellent point that I had not considered before):
Even within a risk-neutral, rational model, however, there are good reasons to tie public goods to lotteries (ungated). Charities, for example, often use lotteries or raffles to fund public goods. Why? The reason is that a lottery is a natural counter to free-riding. Imagine that there is a public good but no one contributes because they each hope to free ride off other people’s contributions. As a result, the public good is not provided. Now introduce a fixed prize lottery. If no one else contributes then a contributor wins the lottery for certain so it can’t be an equilibrium for everyone to free ride (reminiscent of my dominant assurance contract mechanism for producing public goods). Note that the lottery in this model can’t just be a regular lottery ticket where you have to match X numbers to win. It has to be a raffle where the probability of winning is 1/N where N is the number of contributors. Thus, the Maryland and Ohio vaccine lotteries, which draw winners from the vaccinated, are much better than New York version which just hands out free lottery tickets. Thus, I expect the Ohio and Maryland versions to be more successful than the New York version.
So, let me reiterate: New Zealand should be considering what incentives to put in place to encourage vaccination now. The last thing we need is to fall short of herd immunity targets, and have to continue an isolationist stance on migration, while the rest of the world is opening up.
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