SARS-CoV-2, more commonly known as covid-19 or ‘the pandemic’ has frozen economic growth, shutdown travel and overburdened healthcare institutions worldwide. Unquestionably, this is all secondary to the devastating and ever-growing toll of lives lost.
While Australia has navigated the damaging impact of covid-19 more proficiently relative to other nations, it has not been spared. The Australian Bureau of Statistics estimated a 7.0 percent fall in GDP in the June 2020 quarter .
However, as Australia becomes nearly covid-free, and businesses start to re-open, economic recovery seems to be on the horizon . Yet, there are obstacles which can delay and, in fact, dampen the economic rebound, so to speak. These range from macroeconomic factors such as elevated levels of sovereign debt and global political tensions exacerbated by worsening economies to micro-level, household issues such as low consumer confidence and vaccine hesitancy or resistance . On the surface it may seem that vaccine resistance is not a key culprit in slowing down the economic recovery compared to macroeconomic issues. Nevertheless, higher vaccine coverage is strongly related to population health and, not surprisingly, being healthy today has a spill over effect on people having a positive future outlook. Consequently, high vaccine coverage would be key in improving consumer confidence which is vital for regaining pre-pandemic levels of household expenditure. Of course, this household consumer spending is a major driver of economic growth and accounted for 56% of Australian GDP in March 2020 .
Vaccination as a cost-benefit analysis.
Accepting vaccination is a decision and just as we know from basic economic principles, decisions depend upon the utility derived – or lost – from said decision by a person. Hence, to frame the choice into a cost-benefit analysis, we can say that an individual would choose to vaccinate if the cost – financial, health and social – is less than the benefits – immunity, healthcare savings and the freedom to socialise. These are, of course, personal costs and benefits attached to immunisation and appear to be straightforward. Indeed, if that were the case it would not be as much of a challenge to convince the public to get the jab.
But, as seen in mainstream news, social media and popular discourse, there are more complex advantages and disadvantages of vaccination. For example, a key concern for people is that vaccinations themselves have exhibited side-effects with varying levels of severity in negative health outcomes. Conversely, a vaccinated population also yields a substantial positive social benefit – herd immunity – which is possibly the only lasting solution towards avoiding future covid-19 outbreaks. Due to these added social benefits and costs the decision of an individual becomes more complicated and perhaps increases hesitancy towards vaccination as shown in the mass media. In fact, a recent report published by the Melbourne Institute based on the Taking the Pulse of the Nation (TTPN) survey indicates that Australians’ willingness to be vaccinated has fallen over the last six months by 8.2 percentage points to 66.8% . Furthermore, the report also mentions that 7.4% of Australians are hesitant or refuse vaccination because they believe they are at low-risk of contracting covid-19 or of serious symptoms. These statistics highlight the challenges faced in achieving vaccine coverage levels which support herd immunity. This lack of public cooperation is a hurdle that governments around the world, not only in Australia, are striving to overcome.
So why are our decision-making processes so complex?
The answer to this question is perhaps just as complicated due the behavioural biases and logical fallacies we encounter when deciding. Nobel prize in economics winner, Daniel Kahneman describes these factors quite interestingly in his book Thinking Fast and Slow which discusses some biases that influence our decision-making . For example, availability heuristics have been shown to lead to misconceptions about failure rates of flu vaccines . These availability heuristics refer to the cognitive bias where people recall negative events more clearly versus positive events. Case in point, individuals would recall instances of vaccine side-effects clearly rather than the more common no side-effects condition. This coupled with extensive media coverage of adverse news on social platforms creates a feedback loop influencing peoples’ judgement and increasing their hesitancy to be vaccinated.
In order to sum up these factors and their impact, consider a thought experiment. Say, there are five tenants in a household where only three out of five are required to do their chores for upkeep and two of them are nice enough to always do their chores. Naturally, all five will benefit from a clean house, but given that only three people can get the job done, it creates the incentive for a single individual out of the remaining three to avoid the work. Consequently, if all the remaining three members consider this to be their best strategy and act accordingly, even the efforts of the altruistic two will fail. Consider this a simplified analogy for achieving the herd immunity levels in a society.Thus, we can somewhat begin to explain the reasons behind vaccine hesitancy and refusals which appear to be increasing as vaccinations are administered across the globe. The impact of these decisions on the wider community are, of course, a reason for concern for the authorities as they work to overcome the pandemic. Perhaps, highlighting the social benefits of vaccination to offset the concerns could aid in promoting acceptance
 Australian National Accounts: National Income, Expenditure and Product, URL: https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/jun-2020 , accessed 14 April 2021
 Business Conditions and Sentiments, URL: https://www.abs.gov.au/statistics/economy/business-indicators/business-conditions-and-sentiments , accessed 14 April 2021
 Edwards, B., Biddle, N., Gray, M., & Sollis, K. (2021). COVID-19 vaccine hesitancy and resistance: Correlates in a nationally representative longitudinal survey of the Australian population. PloS one, 16(3), e0248892.
 Frederick Chen, Ryan Stevens. (2017). Applying lessons from behavioral economics to increase flu vaccination rates. Health Promotion International, Volume 32, Issue 6, December 2017, Pages 1067–1073, https://doi.org/10.1093/heapro/daw031
 Kohli, M., Maschio, M., Becker, D., & Weinstein, M. C. (2021). The potential public health and economic value of a hypothetical COVID-19 vaccine in the United States: Use of cost-effectiveness modeling to inform vaccination prioritization. Vaccine, 39(7), 1157-1164.
 Kahneman, D. (2011). Thinking, fast and slow. Macmillan.
 Scott, Anthony. (2021). Why is Australians’ willingness to be vaccinated falling, and what can we do to increase it? Melbourne Institute of Applied Economic & Social Research