Last weekend, the Ohio Capital Journal reported that a state representative is considering introducing legislation to halt the “Vax-a-Million” campaign, a public outreach campaign that is famously giving $1 million to five Ohioans who have been vaccinated and registered for the program.
The Journal has also covered the consternation with the program among legislators, with some arguing the state should be doing nothing to promote vaccination and others arguing that the campaign is “untested” and a “misuse of money.”
How do we test these claims? Are there more “tried and true” ways to spend federal covid funds? How does this constitute “misuse?”
One of the most thoughtful analyses I’ve seen on the program has come from Julie Washington at Cleveland.com. She estimates that the cost of the program would equal the cost of about 40 severe hospitalizations. So if the program increases vaccination rates to the point where it prevents 40 cases of severe hospitalization, the program would “pay for itself” under this logic.
If a federal regulator were analyzing a program like Vax-a-Million, she would privilege the lives saved as a central consideration of the effectiveness of such a program. Since most valuations of the value of a statistical life place the value of risk reduction of death at around $10 million per life saved, if Vax-a-Million saves one life through spurring vaccination take-up, it pays for itself in social value under standard cost-benefit methodology.
As an additional consideration, when conducting cost-benefit analysis, an analyst also does not count the “sticker price” of a program as the cost, but rather distortion of the economy caused by the price. So, for instance, the Washington State Institute of Public Policy, the leading state institute for use of cost-benefit analysis in analyzing state programs, places the marginal excess burden of taxation at 50% of the cost of the program. This is a conservative assumption since it is on the high end of the range of estimates for how much taxes impact the economy.
For those confused, this means the economic cost of the program is probably $2.5 million (50% of $5 million) or lower. So this means that just looking at the cost of tax distortions of the program (most of them borne outside of Ohio since this is federal money), and the benefits of lives saved at a standard estimate of $10 million per lives saved, Vax-a-Million just needs to have a one in four chance of saving a single life in order for economic benefits to exceed economic costs.
These projections become even more rosy if you think taxes are less distortionary than the Washington State Institute for Public Policy’s conservative estimate or if you think the value of a statistical life is higher than the standard $10 million estimate.
So there it is. Yes, the program is new. It’s untested. But vaccinations were up by 30,000 in the week after the announcement. Can I get my calculator out and estimate if Vax-a-Million curbs Ohioans’ “freedom?” Of course I can’t. Do I think this program has greater than a one in four chance of saving a life? If this is the goal of the program, it seems like a gamble worth considering.
This commentary first appeared in the Ohio Capital Journal.