An economist is backing a provocative idea on a COVID vaccine: Anyone who gets a shot should receive $1,000 from the government. So argues Harvard's N. Gregory Mankiw in a New York Times op-ed. Mankiw is actually writing in support of a proposal first floated by fellow economist Robert Litan at the Brookings Institution. The thinking goes like this: When a vaccine finally arrives, it won't have maximum effect until enough people get a shot to achieve herd immunity. But that means 70% to 90% will need to be vaccinated, and current polls in the US suggest we won't reach that threshold. Solution: Give people a financial incentive to roll up their sleeves for a shot.
"Immunology, meet economics," writes Mankiw. "One of the first principles of economics—perhaps the most important—is that people respond to incentives." This proposal is "textbook economics," he writes, delving into the particulars of "positive externalities" and such. It would be a huge expense, somewhere around $300 billion, but that is actually a "bargain" when compared to previous and proposed relief packages, Litan asserts. Mankiw adds that Congress can worry about lowering the government debt once the pandemic subsides. He ends with a suggestion to apply the principle elsewhere: "Perhaps after seeing how a vaccine subsidy can end one crisis, Congress will pay for it by adopting a carbon tax to avert another." Read the full column. (Read more coronavirus vaccine stories.)