Saturday, September 26

Life or death economics

The health authority in Hamilton has come up with a formula to determine who gets a flu vaccine and who doesn't in the event of a shortage during a pandemic.

Health care workers, police and firefighters get vaccinated first. If there's enough left, people who caught the flu at work get it. If there is still some left over, people who care for children get next dibs. Then children and "young people" themselves. Finally, if there is still some left over, people who are most likely to survive their particular flu strain get vaccinated. Otherwise, you'll be out of luck.

According to the article in the Hamilton Spectator, the formula was developed by "front-line staff, doctors, ethicists, lawyers, human rights experts and the hospital's board."

Interestingly, it appears no economists were consulted.

But isn't this a bread and butter economics problem? We're told in first-year economics classes that economics is all about studying the allocation of scarce resources, which is the exact problem the health authority in Hamilton is looking at. This type of problem is supposed to be a question that economists are equipped to answer, but I've been pondering an answer for a couple days and I don't feel well enough equipped to answer the question.

My guess is that the "textbook" economic answer to this problem would be to hold an auction for the vaccine, which would mean people who want the vaccine most (at least in terms of their willingness to pay) would get it. But it's an unappealing option because it means that rich people have an upper hand over poor people in terms of what they're able to pay, and thus on their chances of survival. There's something discomforting about that, at least to me.

What if we distributed the vaccine via a lottery, and then allowed people to trade? Everyone would have an equal chance of obtaining a vaccine, and if they could be made better off by trading the vaccine to someone in exchange for something else (presumably money), they could. Again, rich people would probably be more likely to end up with a vaccine in the end, but at least in this scenario people would be compensated for giving up their vaccine to a rich person. And nobody would be forced to give up a vaccine -- they would only do so if giving up the vaccine made themselves better off, presumably. This scenario seems a little more appealing.

I think part of the problem trying to figure out how to allocate vaccines is figuring out what our policy goal is. Is it to cut down on externalities? Giving preference for emergency workers and child care workers makes sense in that regard, because most people in society benefit from these people being healthy enough to work during a pandemic. Is it about fairness? If so, is it really fair that some people are considered more worthy of a vaccine than other people simply because of their age, how they caught the flu, or the type of work they do? Is it about using the vaccine available to cure as many people as possible? In that case, the fifth criteria -- giving the vaccine to those most likely to survive a particular strain -- seems like the best to use. Or should the criteria be economic efficiency: those who have the highest maximum willingness to pay for the vaccine get it?

It seems like the health authority struggled over what criteria they should use to determine how best to allocate vaccines, and as a result, I'm not too optimistic their decision would be efficient under almost any measure we could choose. But I'm also not too optimistic that economics gives us a tool kit to allocate scarce resources when there are serious ethical issues underlying the problem. It's one thing to allocate scarce television sets and bottles of wine, but another to allocate medically necessary flu vaccines.