The vaccine passport paradox: its design will determine its success or failure

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Opinion

The vaccine passport paradox: its design will determine its success or failure

By Steven Hamilton and Richard Holden

Australia now has a plan for how to live (rather than die) with COVID-19. A central plank of the national cabinet plan announced by the Prime Minister is to relax restrictions as the national vaccination rate rises.

The first relaxations would kick in when 70 per cent of Australians are vaccinated. At 80 per cent, lockdowns would become rare and targeted, and vaccinated Australians could be exempt from all restrictions on movement – including international travel.

The new NY state “Excelsior Pass” app allows people to show proof of vaccination or negative COVID-19 test.

The new NY state “Excelsior Pass” app allows people to show proof of vaccination or negative COVID-19 test. Credit: AP

Two things underpin this plan. First, when a large proportion of the population is vaccinated the numbers of infections and deaths are reduced because it is harder for the virus to spread or seriously damage the health of those inoculated.

Second, there is an incentive component to vaccine passports. The idea, of course, is that by making it more attractive – by conferring greater freedoms on the vaccinated – people will be more likely to get the jab. Makes sense.

But as Joshua Gans, an Australian economist at the University of Toronto, has pointed out, there can be a countervailing effect. If vaccine passports work, then more people get vaccinated, which reduces the prevalence of COVID-19, which in turn diminishes the benefits of a vaccine passport. Paradoxically, the more of us who become vaccinated, the safer it becomes for those who aren’t.

This raises the important question of how vaccine passports should be designed. There are multiple incentives at play and it is crucial to understand them.

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To get a sense of this, imagine NSW Premier Gladys Berejiklian announced tomorrow there would be no lockdown for the vaccinated. Plenty of people who’ve had enough of the lockdown and who could get a vaccine would get the jab. That boosts vaccination rates. Good news! And soon enough cases would start to drop because vaccines would be doing what vaccines do. More good news!

But with cases coming under control, the Premier might be inclined to lift the lockdown for everyone – vaccinated or not. Why are we still locking down when there are so few cases, many would ask.

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Lifting the lockdown would render the incentive effects of vaccine passports moot. And you can bet vaccination rates would plateau, almost surely well below the 80 per cent target. Indeed, we saw exactly that effect each time Melbourne’s lockdown lifted this year.

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We would then still face a collective action problem to get to 80 per cent. And Australian borders will remain closed until we all do our bit to get to 80 per cent vaccinated.

It’s the public health equivalent of the whole class getting detention if a few students misbehave. As any teacher will tell you, that’s rarely a winning stratagem.

What we will need is ongoing vaccine passports that apply to individuals. We will need those to get us to the 80 per cent threshold, and we will need them to encourage people to get annual booster shots to keep their immunity up and keep variants at bay.

Here’s what that might look like and why. A variety of venues would only be accessible to the fully vaccinated or to people who test negative immediately before entry. This would include supermarkets, shopping centres and most other public indoor venues. It would include mass gatherings such as sporting and cultural events. Show your proof of vaccination, or line up for a rapid antigen test. And pay for it.

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This would do two things. One, it would ensure these public venues were as safe as they could reasonably be (neither vaccines nor antigen tests are perfect but they’re all we have). Two, it would provide a benefit to being vaccinated irrespective of infection rates, and thus an ongoing incentive to remain so. If you want to avoid going through the equivalent of an airport security line every time you go to the shops, get the jab.

One could imagine tweaks on this design. Polymerase chain reaction ((PCR) tests instead of antigen tests, for instance. They are more accurate but there’s a time lag. There would and should be discussion about which venues are included or exempt. There is an important democratic aspect to these policies.

However, fundamentally, vaccine passports are all about information and incentives. Information that when you’re in a supermarket or at the footy, it’s safe. And incentives for people to get vaccinated.

A big part of economics is about how information and incentives affect human behaviour. It turns out that covers a lot of territory, including how we should structure rules around vaccine passports and testing.

People respond to incentives. But we need to design them properly. Vaccination incentives will be among the most important public policies to design correctly in the coming years.

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