Coronavirus

Harvard Economist N. Gregory Mankiw Endorses Idea of Paying People to Take a Covid Vaccine

The plan was first proposed by Robert Litan of the Brookings Institution.

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In a recent New York Times column, prominent Harvard economist (and former Bush Administration Council of Economic Advisers Chair) N. Gregory Mankiw endorses the idea of paying people to take a Coronavirus vaccine, when it becomes available. The proposal was first presented by Robert Litan of the Brookings Institution. I commented on Litan's idea  in this post (where I also suggested some modifications). Here is an excerpt from Mankiw's piece:

What's the best way to get the economy back on track after the Covid-19 recession? Simple: Achieve herd immunity. And what's the best way to achieve herd immunity? Again, simple: Once a vaccine is approved, pay people to take it.

That bold proposal comes from Robert Litan, an economist at the Brookings Institution. Congress should enact it as quickly as possible….

Recent research by the University of Chicago economists Austan Goolsbee and Chad Syverson has found that the government-mandated shutdowns account for just a small part of the decline in economic activity. The main reason people aren't spending is that they are afraid to leave their homes and contract the virus….

Even if stock prices remain near record highs, spending, employment and production won't fully recover until the fear of catching the virus dissipates.

That's why the solution to America's macroeconomic woes will have to come from microbiology. Nine vaccines are already in Phase 3 trials. It is most likely only a matter of time before at least one of them is approved….

Once a vaccine becomes available, however, another challenge arises: getting people to take it. In a recent NBC News/SurveyMonkey Weekly Tracking Poll, only 44 percent of Americans said they would get the vaccine. The rest said they wouldn't or weren't sure….

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….

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.

Perhaps because he's writing an op ed with tight word limits for a popular audience, Mankiw oversimplifies the economics of externalities here. The "invisible hand" of the private sector has in fact come up with many ways to address various types of externalities. For example, private planned communities have a range of tools for reducing externalities like crime and local pollution. Elinor Ostrom won a Nobel Prize in economics large part for demonstrating that private arrangements can overcome many more externalities than economists previously believed. That said, it is unlikely that the private sector alone can overcome an externality as large-scale as this one may turn out to be.

And Mankiw is right to point out that a subsidy is the obvious textbook economic solution to this kind of problem. He is in fact the author of one of the nation's leading economics textbooks.

Mankiw also argues that the extra debt incurred to fund this proposal would be worth it because "[d]eficit finance is appropriate in times of crisis." I would emphasize that if the idea enables us to reach herd immunity even a few month faster than would otherwise be the case, it would actually save money on net, by bolstering the economy and reducing payments for various gargantuan bailouts (to say nothing of saving lives, which will in itself increase economic activity and tax revenue).

In my earlier post on this subject, I explained why paying people to get vaccinated is preferable to the obvious alternative of a vaccination mandate, even though I do not oppose the latter as a matter of principle. Hopefully, Mankiw's endorsement will create more momentum for this valuable idea than Litan and I were able to generate earlier.

NEXT: George R.R. Martin Becomes a Victim of NIMBY Zoning Restrictions

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  1. Even FAR more desperately needed than COVID vaccine payments-incentives, we DESPERATELY need a vaccine against the stupid, and incentive payments to encourage anti-stupid vaccine-taking!!!

  2. We’re not exactly at Black Death level or even Spanish Flu level here. Its kind of weird to see how little it takes to make a so called ‘libertarian’ shrug at a mandatory vaccination program which would be quite a decrease in bodily autonomy, that we supposedly cherish so much, from the position we’ve been for the longest time as a country.

    1. How do handle stop signs, center lines, red lights, and no-parking-in-intersection restrictions without grabbing a rifle and firing indiscriminately at the godless injustice and commie tyranny, AmosArch? You must be praying on that one something fierce.

      1. One can always walk, you moron.

        1. Pedestrians must follow rules, too.

          You can whine about it as much as you wish, but you will comply.

          1. Control issues much?

          2. Your progtard friends who run my city actually just passed a pedestrian “bill of rights” which removed the J-walking fine that was hardly ever enforced.

        2. “How do handle stop signs, center lines, red lights, and no-parking-in-intersection restrictions without grabbing a rifle and firing indiscriminately…”

          Shit-for-brains here obviously never went to a shopping center. Or he’s just abysmally stupid.

      2. Yeah, if you progressives would just stop extending the principles of compulsory vaccination to cover cutting the Fallopian tubes…

        1. It’s interesting that you had to go back almost 100 years to find that example.

          1. Virginia sterilized the “feeble minded” as recently as 1972 And the law wasn’t repealed until the 1980s

            1. All right, I shall rephrase. It’s interesting that you had to go back almost 50 years to find that example.

            2. And VA was so progressive in 1972 that Nixon got more than 2/3 of the vote, and Bircher John Schmitz managed more than 1%.

              1. Though the libertarian party did get an electoral vote from Virginia that year, which remains the only electoral vote it has ever gotten.

              2. Nixon most certainly would be considered a progressive by current standards. Sure, he was “law and order” but so too was Joe Biden until a few months ago. In fact, law and order is this essence of progressivism.

                1. Well, Nixon supported national health care and created both OSHA and the EPA, so by today’s standards he was practically a Marxist.

                  I think whether someone is “law and order” is largely in the eye of the beholder and the term is rapidly becoming meaningless. I largely support BLM, but I also think looters should go to prison, so am I law and order? I suppose it depends on whom you ask.

                2. He would, but there being no major candidate who was a modern-style conservative the choices were Nixon and McGovern.

                  Only four years earlier, in 1968, Nixon beat Humphrey in VA by 43-32. The remaining votes, nearly 25% of the total, went to George Wallace.

                  So no, VA was not what you would call a progressive state in 1972.

    2. “It’s kind of weird to see how little it takes to make a so called ‘libertarian’ shrug at a mandatory vaccination program which would be quite a decrease in bodily autonomy”

      Exactly, although, there are those here who absurdly equate bodily injection of novel mRNA vaccines with the need to obey traffic signs and laws. We are being led into complacency and compliance to take the jab, as if we were cars.

      That’s what they think of us.

    3. That is why the pay to get vaccinated is a good alternative, though I am appalled at spending government money to get people to make good choices. I disagree with vaccine mandates, even though I get them and vaccinate my kids.

      If paying a token amount, let’s say $100 gets us to herd immunity and lessens the impact on the economy, perhaps it is worth it. I am not an economist, and really don’t know how to asses the value vs the cost.

      1. $1000 per person isn’t unreasonable. That would be $310 billion, which at the rate of loss from the shut down economy, or even just additional borrowing, at over $6 trillion and counting, barely registers, so it is worth it if it can fully open the economy back up faster.

        They ran this analysis just for $1000 test kits already.

      2. Those who refuse to be vaccinated, will not do so for $100 or $1000. The cost of freedom includes stupidity. Why not let the vaccination become voluntary, and let the no-vaxers subject themselves to natural selection?

    4. If you think that’s something you should check out all the libertarians who want to ban Planned Parenthood and abortion.

  3. Let’s see.

    The fact is that a vaccine will keep the recipient from a serious illness and maybe death, and that it will be free or at a very low cost. So why in the world would you need to pay people to take it?

    Well, the answer there is simple and straightforward. The Trump administration has destroyed the public’s faith in the FDA, CDC, for the very good reason that they have politicized the agencies and everyone else involed in this area at the senior federal level. So no one who has been paying attention has any faith that when the Feds say a vaccine is safe and effective that it will be safe or effective.

    And the blame here is clear, Donald J. Trump whose ignorance and incompetance in this area is so great that in a few short years he has managed to undermine agencies that were once the gold standard in heath care. So no, include me out until all o fus can be sure the agencies are acting on science and integrity rather than the political motives of the appointees who head them up.

    1. “The Trump administration has destroyed the public’s faith in the FDA, CDC, ”

      Give me a break, they pulled that off on their own, they didn’t need any help from Trump.

      1. “Give me a break, they pulled that off on their own, they didn’t need any help from Trump.”

        Reminds me of the journalists who blame Trump for the low perception of their credibility, as if people are saying, gee, here I thought journalists were very reliable, but Trump says they’re full of it, so I guess they must be…

        1. Those are the same people who believe that the Marxists who have been rioting/burning/looting in Dem-controlled strongholds are taking their marching orders from Trump as well.

        2. “Reminds me of the journalists who blame Trump for the low perception of their credibility, as if people are saying, gee, here I thought journalists were very reliable, but Trump says they’re full of it, so I guess they must be…”

          During roughly overlapping periods between 2015 and 2017 Republican trust in the media plummeted 18 points while their affection for Putin spiked by a similar amount. Can you say with a straight face you believe those are unrelated to what they were hearing from Trump?

          1. No idea about Putin. I strongly suspect that the former is related to what they are hearing from the media.

            1. I strongly suspect that the former is related to what they are hearing from the media.

              What Republicans are hearing from the non-RW media is facts about Trump, which they prefer not to believe, hence distrust is the only option.

      2. Well there is this news but I am sure Trump had nothing to do with it cause he just wants science and facts.

        WASHINGTON — Political appointees at the Department of Health and Human Services have repeatedly asked the Centers for Disease Control and Prevention to revise, delay and even scuttle weekly reports on the coronavirus that they believed were unflattering to President Donald Trump.

        1. That was supposed to reference the CDC destroying it’s reputation om its own…

    2. Can’t really say its a fact until we have a bit more information. Vaccines can have ‘bugs’ just like any other new product that render them ineffective or even harmful even with extensive testing. There is no law of nature that prevents this. A bunch of people actually became narcoleptic after taking a European flu vaccine. Not a really good tradeoff imo.

      IMO we should focus more efforts on seniors and vulnerable populations rather than cater to the megalomanical fantasies of politicians to use covid as an excuse to flaunt power over everyone.

    3. You’re asserting “facts” about something which doesn’t yet exist and may never exist.

      Any vaccine for this will almost certainly be rushed. It will have zero studies done on long-term health impacts. And any studies on its effectiveness will necessarily be limited. No, I probably won’t believe the government agencies when they say it’s safe and effective, but that has nothing to do with Trump. (I make take it anyway, depending, but I’ll wait until there are a few actual facts before making that decision.)

  4. As usual, Ilya writes with blinkers on.

    I want to get a vaccine for SARS-CoV-2. But I am absolutely going to wait to see and decide on a case-by-case basis, so that I make an informed trade-off based on what information we have about vaccine effectiveness, duration, side effects, and other risks.

    If those factors are clearly in favor of a vaccine, I think most people will go for any vaccine that has a reasonably low cost. If those factors weigh against a vaccine, it is wasteful to subsidize its cost.

  5. I’m not going to roll the vaxx dice and become another vaxx-victim heaped up on the pile of vaxx victims.

    Hard pass.

  6. It’s largely the same thing if we fine people who don’t take it or pay people who do. But paying people would be easier to administer, and probably would generate less resentment.

  7. Paying people will only attract poor people, who will tend to have more underlying health problems.

    Does this affect the studies validity? [IDK, I’m no scientist]

    $1000 might seem like a lot but most people are not going to think it enough to risk death.

  8. I’m not sure it’s going to be that difficult to get people vaccinated– though that may depend on other laws. These are real questions:
    1) Would it be legal for an employer to require employees to be vaccinated? (Or failing that, subject those who report to a work place to take a fairly inexpensive antigen testing every 3 days, and require those who fail to take 14 days unpaid leave?)

    2) Would it be legal for airlines to require passengers to provide proof of vaccination, or, lacking proof, require then to take antigen test, and refuse boarding if they fail?

    If law permits, life could be made somewhat inconvenient for the un-vaccinated. If the vacinne is paid for, I imagine that would flip some people from refusing to accepting. Even if they don’t get the vaccine, the would tend to be put somewhat out of circulation when it’s likely they are contagious.

    1. lucia_I, your questions are those with which libertarians should be wrestling and which needn’t bother about contagion.

      Soon, there will be a world in which the unvaccinated dissenters will either be considered Jewish tamey or Muslim najis and all unclean. In the end, this scourge will be about state bio-genetic documentation and individual compliance.

  9. I never get a flu shot since my risk factors are very low. Given my risk factors, as a healthy adult, I am far more likely to get sick/get sicker with the flu than with Covid. So why would should I be an early bird with getting the Covid vaccine?

    Its worth noting that the regions that got hit hard with covid now have very low death rates, even those regions that are experiencing re-spikes in cases.

    1. Get sun each day for vitamin D.

  10. Why the dependence on FDA approval? If it’s a good idea, wouldn’t it be equally beneficial to pay reluctant FDA people to approve it? The parallel to the assumption that the people making the vaccine know more than the people deciding whether to take it is the idea that the people making the vaccine know more than their representatives. If one is true, why not the other? And if cash is an appropriate way to influence people’s individual decisions about their health, why isn’t it an equally appropriate way to influence people’s public collective decisions?

    This is separate from measures like public subsidies to make it more easily available. Or, for that matter, compelled vaccination.

  11. So, since each proposed vaccine is, at best, marginally protective for at most 150 days, would the payment be repeated each time a participant is inoculated?

    The idea of paying for vaccination makes sense only when the vaccination actually produces _meaningful_ immunity: a flu shot simply cannot and does not provide such meaningful immunity and experts worldwide are trying to reinforce that fact. The premise of Mankiw’s argument is faulty, so the argument must be ignored: shame on those pseudo-scholars who now try to foist the fallacy onto a public eager for both a quick fix and an effortless paycheck.

  12. I wouldn’t be surprised if a subsidy might result in net fewer people getting the vaccine, at least in America. Subsidies play into the conspiracy that the pandemic is being used to push tracking chips, mind control, homosexuality, or whatever dumb theories are out there that people think a vaccine could do.

  13. As many posters have noted, Ilya is underweighing the risk-reward benefit at “$1,000 to take this vaccine” for most people.

    Most people are broadly in favor of vaccines. They’re less willing be injected themselves with something considered experimental however, especially as the first cohorts. Instead most people will take a “wait and see” approach, and see if there are negative side effects. And for these people, it tough to say a mere thousand dollars would persuade them otherwise.

    1. Wouldn’t the poor and lesser informed be more likely to take the little tested and novel mRNA jabs for government money? Just which libertarain progressives here are really advocating for the dispossessed soon to be guinea pigs?

      1. Well, kinda.
        The entire point to the usual rigorous testing process for new drugs (different phases, multiple double-blind studies, etc) is so that THOSE people are the guinea pigs.

        Is Trump 100% responsible for the lack of trust in any upcoming vaccine? I doubt it . . . I think the idiot wing of the liberals own a lot of the moronic anti-vaxx movement. But Trump has pushed the idea of non trusting government (and governmental agencies) for 3+ years. And the idiot wing of the conservatives tends to believe anything Trump says. So, I have no problem concluding that Trump is responsible for a great deal of the resistance being expressed to this future vaccine(s). Especially when people in his own administration say that they have been pressured to withhold facts that might be harmful to Trump’s political future. Given that; it would be a bit dumb to accept a new vaccine at face value…even if we would have done so for a vaccine during the times of Pres. Obama, Reagan, Bush, Bush, Clinton, et al.

        1. Right! We can trust the CDC and FDA to do a truly professional, thorough, high-quality job of COVID vaccine approval. Just like they did for COVID tests and facemask advice. Trump is the only thing standing in the way of Americans accepting the top-notch work of those institutions.

          1. Lol, Michael P. Exactly right.

            You’re probably too young to remember when the mantra of 60s and 70s liberals and leftists was to never trust The Establishment, anyone over 30, BS bureaucracy and BS rules, or the media (except for The Rolling Stone and a few others).

            Now, they are running the clown show and demanding we unquestioningly trust them and their corporations, the Government and its apparatchiks, and the propaganda press. It would be simply ironic but for all of the harmful mandates being imposed, with more to come. Hippydom’s gone statist and fascist with a puzzling degree of inepitude thrown into the works.

    2. Best way to ensure low rates of target group acceptance of the vaccine (those with the highest risk from infection and the most to gain from re-opening of the economy) is to offer, or even politely insist, that they go first.

  14. There needs to be a bounty program, whereby the recalcitrant are injected by surprise 🙂

    1. librarian: “There needs to be a bounty program, whereby the recalcitrant are injected by surprise”

      Might this cute thinking be illibertarianism supported by Reason.com or illibrarianism dot volokh?

      Certainly, recalcitrants are always a problem for fascists.

  15. What would Ilya say about legalizing date rape?

    If a woman chooses to go out with a rich man who has the means to show her a good time, what right does she have to complain when he seeks a return on his investment?

    OR — and this is the point Ilya is missing — in *this* culture, the individual has an intrinsic human value which can not be purchased, at any price. This is not true of all cultures, but it is true of ours.

  16. Yes, “wait and see,” thirty years in the case of Influenza, from vaccination on enlistment to recognition of HPAI beyond A(H1N1).

    Pay for eugenics effectively and population control. Conspiratorial doublethink thoughtcrime.

  17. Presumably such payment comes with liability waivers?

    Anyway, leaving aside the seemingly intractable issue of the anti-vax lunatics, a good number of people who would normally be among the first in line, myself included, will be hesitant to take any vaccine pressed by this administration. Particularly one that has been rushed so Trump can declare he invented a vaccine. Giving me $250 — random, mildly experienced guess — to take it isn’t going to work either.

    If a vaccine is ready at the turn of the year, I’ll probably be less reluctant. But anything coming out in the next two months is probably going to get a big “nope” from me for a few months at least.

  18. “I hear the whole time: ‘the vaccine is going to be the end of the pandemic’. Of course not! We don’t even know if the vaccine is going to help all population groups. We are getting some signs now that it will help for one group and not for the other[s].”

    WHO Europe director Hans Kluge
    interview with the AFP news agency
    Monday 14-Sep-2020

  19. I have no problem with the idea of someone paying someone else to take a vaccine generally.

    Of course, every dollar the government spends is a dollar that it takes from somebody at gunpoint. So the government taking your money and then making you do things to get it back is a little different from a truly voluntary transaction.

  20. Even if stock prices remain near record highs, spending, employment and production won’t fully recover until the fear of catching the virus dissipates.
    … and the government allows it

    1. We should stop dehumanizing the institution of government.

      It isn’t that the government won’t allow it, it’s the people in government are not allowing it.

      Just like it isn’t the IRS oppressing us, it’s the people at the IRS choosing to oppress us.

      It isn’t the FBI or NSA illegally spying on us. It’s the people a the FBI and NSA choosing to illegally spy on us.

      It isn’t the DOJ who won’t prosecute DC establishment. It’s the people at the DOJ who won’t prosecute their D.C. peers but will throw the book at the rest of us.

      People are doing this horrific things to us, not faceless entities.

      We can fight against people.

  21. Before paying people we should first see how many will take it without being paid. Many people who say “no” now may change their minds when activities start up again and they are excluded. Then, what reason do people give for being reluctant to take it? If it is because they think it will be ineffective then paying them to take it will not get them out of the house spending their money. Finally, what percentage of those who remain reluctant are in a group that is not responsible for that much of the type of economic activity that requires leaving the house, such as, perhaps, the very elderly?

  22. It is unethical to incite poor people into a global experiment through the use cash bribes.

  23. Same amount for everyone? That seems regressive.

    A more progressive scale would have larger sums going to folks of greater wealth/income. The poor would not need so large a sum as $1000 in order to entice them to receive something that is of substantial value to them even at zero dollars.

  24. This idea could very easily backfire because of the number of people who would take the monetary offer as a negative signal, which could be amplified by opinion writers and social media.

    Suppose someone makes this argument: most vaccines are made easily available, but people aren’t paid to take them. So what’s so dangerous about this vaccine that the government has to pay people $1,000 to take it?

  25. Your idea is fine. Great Post for me

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