This op-ed was written by Professor Ajit Karnik, Professor of Economics at Middlesex University Dubai*, and originally published in Arabian Business on 29th July 2021.
In an effort to get life back to normal and their economies back on track, numerous countries have started to put stringent measures in place to nudge their citizens/residents to get themselves vaccinated. The UAE is likely to allow entry to government buildings only to those who have been fully vaccinated and have a current negative PCR test. Emirates Airlines and DHA are planning to collaborate to link travellers’ health information with Emirates reservation and check-in systems. Recently, the French President proposed tough new vaccination strategy which could potentially make things difficult for the unvaccinated. Likewise, mandatory vaccination has been proposed in Australia, Italy and Greece.
The proposals to make vaccinations mandatory has evoked protests in numerous countries and have raised important issues regarding the possible conflict between public safety and coercion. At what point does such coercion serve the public interest and when does it start infringing on the rights of individuals? Reports suggest that there has been a surge in vaccinations in France and Italy after the announcement of the new vaccination strategy. But let us not judge the strategy only by its success but look at the deeper unerlying issues.
By and large, it is reasonably well-accepted that individuals should be free to make their own choices. This works best if, say, my action affects only me but not others. While this is true in the majority of our consumption decisions, there are exceptions. Vaccinating oneself and not vaccinating oneself has consequences not only for oneself but also for others. Economics calls the beneficial effect of one’s actions on others as a positive externality (example: I maintain a beautiful garden and give pleasure to my neighbours) while harmful effects are labelled negative externality (example: my factory emits noxious fumes and makes others suffer).
Why does vaccination involve a positive externality? Not only do I get the benefit of vaccinating myself by reducing the chances of getting the Covid, but I also help stop its spread in society. The externalised benefit to society is what justifies subsidising vaccines. In extreme cases, the subsidy can be 100% (i.e. making the vaccines free to individuals) as many countries have done. On the other hand, choosing not to get vaccinated imposes a negative externality on others since one can be a spreader.
Bearing in mind the negative externality, can free choice regarding vaccines still be justified? Yes, but only if one extreme assumption is satisfied. If the vaccines provide 100% protection against Covid, then the externality element of the disease is eliminated: those who choose not to vaccinate do not any more pose a threat to those who are vaccinated. Those for whom the benefits of the vaccine outweigh the costs, will vaccinate themselves; those for whom the costs outweigh their perceived benefits, will not vaccinate themselves.
Problems begin when the vaccines do not work perfectly and that is true of all the Covid vaccines that are available to the world. There is now a probability that even a vaccinated person might get infected. The decision of those who do not get vaccinated, impacts those who have vaccinated themselves as result of the negative externality of the unvaccinated. In such a situation, an argument may be made for compulsory vaccination to protect the welfare of the vaccinated. We are now able to appreciate the possible virtue in the mandatory vaccination strategy of numerous countries.
It is also important to look at the motivations of the anti-vaxers. The reason why some individuals are reluctant to vaccinate themselves is due to the cost associated with the vaccine. This is most likely to be true for those who live on the margin of existence e.g. daily wage earners, who would face starvation if the side effects of vaccination prevent them from earning a living. It would also be true of those who are apprehensive about their underlying medical condition. And then there are the rest who, for a variety of reaons, including beliefs in consipiracy theories about vaccines, do not vaccinate themselves. How does one separate out the two kinds of anti-vaxers?
Economics believes that individuals respond to incentives and changes in such incentives elicit change in behaviour. Everyday language refers to this as the carrot and stick approach. Those who are apprehensive about vaccinations on economic/medical grounds are best incentivised using the carrot. The best option here is for the government to offer a subsidy/compensation to all such individuals to encourage them to vaccinate themselves. Noted economist Greg Mankiw states as much in one his articles recognising that this might impose a large fiscal burden on governments. But the apprehension associated with the immediate fiscal costs should be traded off with the benefits of getting economies back on track quickly. Every time there is a lockdown, the lost output imposes an even greater cost on the economies.
Having considered all the relevant issues, who are the people still likely to remain anti-vaxers? They are likely to be persons whose preferences are very different from those of the majority of the population. The question is whether such persons should be coerced into vaccinating themselves. The French government spokesperson, in a sense, spoke on behalf of all those who have voluntarily vaccinated themselves: “…we don’t want the choice of the unvaccinated to weigh upon the vaccinated”. The mandatory vaccination strategy forces those with extreme preferences to recognise that they need to bear the cost of their actions and not just pass these on to the society. As more and more benefits/privileges that society offers to citizens are withdrawn, the number of stubborn anti-vaxers is likely to diminish enough so that they will not impose a substantial negative externality on the rest of the society. The UAE and a host of other countries are showing the way to loosen the grip of the pandemic that has shackled the world for over eighteen months.
*This article represents the individual views and research of Professor Ajit Karnik.