The case for a secondary market in Covid-19 vaccine slots
Early research on Covid-19 tells us which groups face the highest risk of developing serious complications. Public health officials around the globe have thus developed immunisation plans guided by the aim of reducing Covid-19 mortality by focussing on specific groups of individuals based on their age, profession, and health condition. The UK’s first phase of immunisation is targeted at nine priority groups. According to the UK’s Joint Committee on Vaccination and Immunisation’s report of December 30th, 2020, these groups represent around 99% of preventable mortality from Covid-19. Thus, prioritising them is deemed to drastically reduce Covid-induced mortality. Despite the challenges of supply chain management with the currently approved vaccine, the limited number of people in each of the nine prioritised groups minimises the delay and mitigates the risk of congestions. As we move toward the next stages of immunisation, the number of people eligible for immunisation will increase. Moreover, for a healthy individual not part of the nine priority groups, the reduction in the Covid-19 mortality risk is much smaller. Identifying the very high-risk groups is relatively straightforward, but once these low-hanging fruits have been picked, the prioritisation process becomes a lot trickier.
We could continue with an expert-led approach, in which medical professionals evaluate the clinical and economic benefits and costs of immunisation for different groups. However, overreliance on experts may lead to the omission of factors such as mental health benefits that can be better assessed by the individual themselves. For equity and efficiency reasons, public health authorities should be open to more democratic prioritisation methods.
A person’s position in the “queue” (i.e. the order of access to the Covid-19 vaccine) can be viewed as a good, with different individuals attaching different values to the same position. The high mortality risk faced by individuals eligible for the first phase means that they place extremely high values on their positions at the front of the queue. On the other hand, a healthy fifty-year-old plane designer, who can work from home and do many things online, may not place a large value on a front position, while a twenty-five-year-old football player could have a higher preference for a better rank. The government has been trusted by the general public to allocate the ranks in the immunisation queue. To this end, they need to propose a mechanism that will lead to the best outcome for most citizens. In economics, there are several ways to allocate scarce resources: majority rule, contests, force, quota, or sharing equally, random selection or lottery, or using personal characteristics. The UK and other governments around the world are using personal characteristics as the main allocation mechanism in the first vaccine rollout. This approach is justified and feasible for the current first phase. But for the vast majority of the population currently not included in the priority groups, we should contemplate combining it with a mix of quota and random selection in conjunction with a government-regulated free exchange market – a secondary market in vaccination slots. This can be viewed as a “fair market-based approach”.
The proposed fair market-based approach will operate to represent all the components of the society, guarantee that all individuals have the same chances, and give them the right to trade for profit or not their position in the queue. Given the vaccination capacity of the NHS, the government can allocate windows of vaccination to individuals using their NHS number. Individuals now endowed with their window for immunisation could then trade them anonymously on an NHS-regulated webpage.
It could work broadly analogously to the secondary market in take-off and landing slots at UK airports. These slots are initially allocated by a non-market process. But if Lufthansa then wants to swap a slot with British Airways, and offer them a payment for that, they can do so.
The specific legislative framework to regulate such a market can include a cap on the price for each exchange. Part of the payment for each exchange will be allocated to the NHS. As for those involve in an exchange, they will have the opportunity to get the best position in the queue depending on their preferences.
With recent events in leading democracies, faith in individual freedom seems to have fallen out of fashion. Yet the only way to maintain a free society is to have faith in free individuals and institutions that protect them. The creation of a fair marketplace for the free exchange of the priority access to the Covid-19 vaccine, for the vast majority of the population not part of this first phase, will be a good signal of trust in the responsibility of UK citizens and an opportunity to fund the NHS.
Dr Guy Tchuente is a Lecturer in Economics at the University of Kent. He is a Fellow of the Global Labor Organization, and of the UK’s National Institute of Economic and Social Research (NIESR). He is also a member of the Macroeconomics, Growth and History Centre (MaGHiC).