Governments around the world are experimenting with various incentives such as cash and free beer to encourage vaccinations against COVID-19. In episode 100 of my Economics Explored podcast, I chat with Melbourne-based economist and regulatory economics expert Isaac Katz about his clever proposal to incentivise vaccinations and to overcome vaccine hesitancy. You can read all about Isaac’s plan in his discussion paper Incentives for achieving COVID 19 herd immunity through vaccination.
Key features of Isaac’s plan are:
1. Rewards (incentives) could be in the form of payments to each vaccinated individual, and eligibility to win a significant lottery prize and smaller prizes.
2. The incentives would only be payable if a specified national vaccination rate is met by a specified due date. Incentives would not be paid prior to the due date. This approach creates a focus on the objective – which is to maximise the national vaccination rate. Rewarding individuals for being vaccinated without recognising the national objective will fail to promote community based actions to increase vaccination rates.
Tying the level of incentives to the overall vaccination rate and setting a cut-off date is a clever way of encouraging people to pressure their family and friends to get vaccinated as soon as possible (given the supply constraints). One of the problems with the Albanese plan was that the Government could end up spending billions of dollars but not achieve a vaccination rate that gets us close to herd immunity.
For info, Isaac is a Director of Harding Katz Pty Ltd, a small consulting practice based in Melbourne specialising in utility regulation, energy market reform, business strategy and applied economics. He has provided economic and regulatory advice to regulators, Government and regulated businesses on a wide range of strategy and policy issues. Prior to moving to Australia, Isaac worked as a senior economic assistant for the UK electricity regulator (now Ofgem); and as a pool price analyst for a regional electricity company. Isaac also worked as an economist for Railtrack plc, focusing on aspects of the regulatory framework prior to and immediately after privatisation. He has a Master of Arts, Economics, from Cambridge University and a Master of Science, Business Economics, from Strathclyde University.
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