***INSTRUCTOR RESOURCES*** In-class assignment: mru.io/0dg Practice questions: mru.io/p8a High school teacher resources: mru.io/st4 Professor resources: mru.io/h1l
With the clear positive externalities of a vaccine and a significant percent of people declining to get it, would it make sense to incentivise people by paying them to get the vaccine?
TLDR; I'd like to see more numbers. Whenever someone talks about more spending my fiscal conservative senses start tingling. Just as a lobbyist will tell me about how great the positive externalities of a tariff would be, I would expect an academic to tell me how great subsidizing innovation is. I'm very skeptical of anyone talking about positive externalities from government spending, who doesn't show me the balance sheet with empirical data, showing how the things not taken into account can be ignored, and the model works. Fortunately, we don't have a lot of examples of pandemics, making it hard to test models like this.
The costs of the virus, when you factor in lockdowns, deaths, decreased economic activity, etc. are trillions of dollars. If a $10 billion R&D investment has only a 10% chance of making things 10% better, that pays for itself. Fiscal conservatism is very appropriate in many contexts. But sometimes, and especially if you think government is inefficient at decision making, there are rare possibilities that offer huge returns on investment (in this case, when you consider the costs of vaccine production or Romer-style mass testing, it is easy to make the case these are on the order of 1000% or higher). How many opportunities will you ever have in your life to make an investment that offers a 10x return on investment?
I think it should be pretty clear at this point that part subsidizing the manufacturing costs of a vaccine on behalf of pharmaceutical firms is much cheaper as a policy tool than the cost of supporting the whole economy each month under a high infection burden. Bringing vaccine production forward just a few months might save hundreds of billions of dollars - because consumption and investment patterns can return to normal sooner than would otherwise be possible. If you're asking for dollar figures - nobody can tell you that with any reasonable certainty. The truly fiscally conservative response would be to accelerate any projects which promise to end the need for large fiscal stimulus sooner rather than later.
The covid vaccine is a pretty cut and dry case of a positive externality. On R&D though, a lot of technology today actually comes from the WW2 era, all funded by government. Planes, computers, GPS satellites and the precursor to the internet. Government spending on R&D is extremely low compared to welfare/healthcare which takes up 20x more of the budget. How would you put something like that, the internet, planes, GPS on a balance sheet when we can't see the alternate universe (control experiment) where the government didn't fund these things. Also Alex Tabarrok is very libertarian, his political incentive is to be pro market and against government excess, but even he believes in government funding of innovation at the margin
Yes, what my country Singapore did was to enter into a contract promising to buy X amount of vaccines, where X is of the millions, of 3 main types Pfizer, Moderna, and to diversify the risk of only using the new MRNA tech, she also made a contract with Sinovac, who is using the older technology. Now thru this video, I understand this strategy as "subsidizing production capacity" to encourage a rapid development of this vaccine, once its approved.
The failure to advance preventive medicine (including universal insurance and access) seems to be another great example of the failure of markets, left to their own devices, to acknowledge the positive externalities of public health.
@Ali Zafar Don't be sorry, we are all learning. Yes, I would agree a lot of it comes from politics, nevertheless, a lot of politics come from worldviews, and economic knowledge and education are very important to the formation of worldviews. Cheers.
Is there nothing to be said about the failure of markets to read the decades-long signals of experts (from medicine and public policy) regarding the risk of a coronavirus pandemic when speaking about the "economics of COVID".
It seems to me that the majority of the people correctly value the positive externalities of public health. During this pandemic, the majority have protected themselves and others, a minority has caused troubles (conspiracy theories etc.), and, in particular, a powerful minority has wreaked havoc (Trump, Bolsonaro). On the other hand, many private enterprises have displayed an anti-social disposition to profit from the suffering of others (e.g. Amazon, some meat-packing plants).
If there was no liability for an unsafe vaccine, vaccines would be readily distributed now. With basic incentives (I'm not convinced the relevant safety information is asymmetric), regulation, media scrutiny, there's plenty of risk aversion built in.
This also makes me wonder if airlines and similar firms in similar sectors fund universities to produce general scientific research. And if not, then why?
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tabarrok and cowen are the best duo since mj and pippen
drive.google.com/drive/u/0/folders/1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V
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***INSTRUCTOR RESOURCES***
In-class assignment: mru.io/0dg
Practice questions: mru.io/p8a
High school teacher resources: mru.io/st4
Professor resources: mru.io/h1l
With the clear positive externalities of a vaccine and a significant percent of people declining to get it, would it make sense to incentivise people by paying them to get the vaccine?
Awesome explanation of postive externalities Prof. Tabarrok!
Interesting idea. The effect of patents was especially thought-provoking.
I like the class assignment, too.
TLDR; I'd like to see more numbers.
Whenever someone talks about more spending my fiscal conservative senses start tingling. Just as a lobbyist will tell me about how great the positive externalities of a tariff would be, I would expect an academic to tell me how great subsidizing innovation is. I'm very skeptical of anyone talking about positive externalities from government spending, who doesn't show me the balance sheet with empirical data, showing how the things not taken into account can be ignored, and the model works. Fortunately, we don't have a lot of examples of pandemics, making it hard to test models like this.
The costs of the virus, when you factor in lockdowns, deaths, decreased economic activity, etc. are trillions of dollars. If a $10 billion R&D investment has only a 10% chance of making things 10% better, that pays for itself.
Fiscal conservatism is very appropriate in many contexts. But sometimes, and especially if you think government is inefficient at decision making, there are rare possibilities that offer huge returns on investment (in this case, when you consider the costs of vaccine production or Romer-style mass testing, it is easy to make the case these are on the order of 1000% or higher). How many opportunities will you ever have in your life to make an investment that offers a 10x return on investment?
I think it should be pretty clear at this point that part subsidizing the manufacturing costs of a vaccine on behalf of pharmaceutical firms is much cheaper as a policy tool than the cost of supporting the whole economy each month under a high infection burden. Bringing vaccine production forward just a few months might save hundreds of billions of dollars - because consumption and investment patterns can return to normal sooner than would otherwise be possible.
If you're asking for dollar figures - nobody can tell you that with any reasonable certainty. The truly fiscally conservative response would be to accelerate any projects which promise to end the need for large fiscal stimulus sooner rather than later.
The covid vaccine is a pretty cut and dry case of a positive externality. On R&D though, a lot of technology today actually comes from the WW2 era, all funded by government. Planes, computers, GPS satellites and the precursor to the internet. Government spending on R&D is extremely low compared to welfare/healthcare which takes up 20x more of the budget.
How would you put something like that, the internet, planes, GPS on a balance sheet when we can't see the alternate universe (control experiment) where the government didn't fund these things.
Also Alex Tabarrok is very libertarian, his political incentive is to be pro market and against government excess, but even he believes in government funding of innovation at the margin
Yes, what my country Singapore did was to enter into a contract promising to buy X amount of vaccines, where X is of the millions, of 3 main types Pfizer, Moderna, and to diversify the risk of only using the new MRNA tech, she also made a contract with Sinovac, who is using the older technology.
Now thru this video, I understand this strategy as "subsidizing production capacity" to encourage a rapid development of this vaccine, once its approved.
Is there no other way to invest in capacity building for public health and risk-sharing than giving away money to corporations?
Who is willing to take the risk IS the question. Corporations by itself is already a form of risk-polling.
God I love this channel..More videos like this please!
Great videos! Thank you professor.
The failure to advance preventive medicine (including universal insurance and access) seems to be another great example of the failure of markets, left to their own devices, to acknowledge the positive externalities of public health.
and then, the Singaporean healthcare system appears...
@Ali Zafar Don't be sorry, we are all learning. Yes, I would agree a lot of it comes from politics, nevertheless, a lot of politics come from worldviews, and economic knowledge and education are very important to the formation of worldviews. Cheers.
@@raulmaximo5810 , it would be great if you could elaborate in detail. Thank you.
Is there nothing to be said about the failure of markets to read the decades-long signals of experts (from medicine and public policy) regarding the risk of a coronavirus pandemic when speaking about the "economics of COVID".
Thank You so much you guys are best teachers in this world 🙌🙌
Sir a vidoe on
Law of proportionality
Internal amd external economies
Production and factors of production
I love this channel! thanks for the amazing study materials!
drive.google.com/drive/u/0/folders/1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V
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Thanks for vaccine economics explain.
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It seems to me that the majority of the people correctly value the positive externalities of public health. During this pandemic, the majority have protected themselves and others, a minority has caused troubles (conspiracy theories etc.), and, in particular, a powerful minority has wreaked havoc (Trump, Bolsonaro). On the other hand, many private enterprises have displayed an anti-social disposition to profit from the suffering of others (e.g. Amazon, some meat-packing plants).
drive.google.com/drive/u/0/folders/1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V
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Unfortunately there is no 'incentive' for vaccine producers to make them safe as they have 0 liability
If there was no liability for an unsafe vaccine, vaccines would be readily distributed now. With basic incentives (I'm not convinced the relevant safety information is asymmetric), regulation, media scrutiny, there's plenty of risk aversion built in.
Vaccines save lives
here comes the GOATS ......thanx alex
This was brilliant
The connection between the externalities of vaccination and airlines was super cool to learn about!
This also makes me wonder if airlines and similar firms in similar sectors fund universities to produce general scientific research. And if not, then why?
@@d0themath284 I think they do, but I think they don't do it the socially optimally amount - only as long as MC
Amazing
Superb
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Creative video
1:06 The choice of the shirt could have been made more wisely ;)
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hi, stetson economics students!
Wow
We have serum institute world's largest vaccine manufacturer
Oof... this video is aging like warm milk.
Vaccines save lives.
If you want the vaccine, fine, but I'll take a pass.
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Stay in your basement
Great commercial. I use a lot of your videos in my courses, but this soapbox speech undermines your overall credibility.
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