To try and encourage vaccination during the on-going COVID pandemic, there have been many public and private incentives offered. For example, free doughnuts. Or offering $200 to state employees in Arkansas (taxable income, of course!).
But when the governor of Ohio announced on May 12, 2021 that they would be offering a $1 million lottery prize, with 5 winners, it took the incentive game to a new level (college scholarships were also a prize for 5 winners under 18).
So do the lotteries “work”? Do they get more people vaccinated? And even if they do “work,” does it pass a cost benefit test? Many expressed concern that, even if more people get vaccinated, that this is a lot of money to spend in uncertain budget times.
A new working paper by Andrew Barber and Jeremy West attempts to answer these questions. And they do so using synthetic control, one of the better methods social scientists have for attempting to identify causal relationships (which can be tricky).
What do they find? First, vaccine lotteries do work! They estimate that vaccination rates increased by 1.5% in Ohio because of the lottery. This amount is above and beyond the increase that would have been expected without the lottery (by comparing Ohio to other states that didn’t use a lottery — this is what the synthetic control method does).
But does it pass a cost-benefit test?
Yes! The authors find that the cost of the lottery is about $68 per additional person vaccinated (that’s just simple division). And $68 is a very low cost. For example, they estimate that about 5,000 ICU patient-days were prevented by this increase in vaccination, which costs about $66 million. Even if you think that 5,000 is too high, it still passes a cost-benefit test even if the number is as low as 500 ICU patient-days were saved ($6.6 million saved versus the $5.6 million lottery cost). And of course, there are many other benefits of the vaccine other than just ICU visits prevented, but this is fairly straightforward to measure and large.
Now to be clear, vaccine lotteries are not a silver bullet to immediately get everyone immunized. In Ohio even today (over a month after the lottery ended), just 57% of the adult population is fully vaccinated (61% have at least one dose). And there are still 8 counties in Ohio where 30% of less of the population is fully vaccinated (for the entire state, it’s 47%). They still need more people to get vaccinated.
But economics does not search for silver bullets. We search for improvements on the margin. We search for policies that pass a cost-benefit test. Based on the early evidence, vaccine lotteries seem like a fine idea for more states to try!