The Grattan Institute is on a similar theme. It has proposed a $10 million per week lottery, paying out ten $1 million prizes per week from Melbourne Cup day. One vaccination gets you get one ticket. Two gets you two tickets.
The costs are tiny compared to what’s at stake. Treasury modelling released on Tuesday puts the cost of Australia-wide lockdown at $3.2 billion per week.
And the published research on small payments shows they are extraordinarily effective, often more effective than big ones.
A few years back, Ulrike Malmendier and Klaus Schmidt of US National Bureau of Economic Research discovered that a small gift persuaded the subject of an experiment to award contracts to one of two fictional companies 68% of the time instead of the expected 50%.
Small payments can be more effective than big ones
A gift three times as big cut that response to 50%, which was no better than if there had been no gift at all.
The effect of small payments to pregnant British smokers has been dramatic.
Offered £50 in vouchers for setting a quit date, plus £50 if carbon monoxide tests confirmed cessation after four weeks, £100 after 12 weeks and £200 in late pregnancy in addition to the counselling and free nicotine replacement therapy given to the other pregnant smokers, those offered the payment were more than twice as likely to quit — 22.5% compared with 8.6%.
Never mind that these small sums ought to have made no financial sense.
The gifts were minuscule compared with the money the recipients would have saved anyway by not smoking, yet they worked so well that the researchers estimated the cost of the lives saved at just £482 per quality-adjusted year.
Around 5,000 British miscarriages each year are attributable to smoking during pregnancy. The participants randomly assigned the offer of a payment not to smoke gave birth to babies that were on average 20 grams heavier.
The incentives can be even smaller.
Mai Frandsen at the University of Tasmania has trialled offering smokers half as much — a A$10 voucher on signing up, then $50 per checkup in addition to support from a pharmacist. The results are encouraging.
Lotteries are cheaper still. The Grattan Institute’s suggestion of a $10 million per week payout sounds like a lot, but it isn’t when divided by Australia’s population.
Beer, doughnuts, dope
They needn’t work for everyone. A survey conducted by the Melbourne Institute in June found that of those who were willing to get vaccinated but hadn’t got around to it, 54% would respond to a cash incentive.
If you were paid a cash incentive, would you get vaccinated as soon as possible?
- ^ A$300 (anthonyalbanese.com.au)
- ^ Grattan Institute (grattan.edu.au)
- ^ temporary, targeted and proportionate (ministers.treasury.gov.au)
- ^ 68% (www.nber.org)
- ^ 22.5% (www.thelancet.com)
- ^ Albanese calls for $300 vaccination incentive, as rollout extended to vulnerable children (theconversation.com)
- ^ 20 grams heavier (www.bmj.com)
- ^ Mai Frandsen (www.abc.net.au)
- ^ encouraging (onlinelibrary.wiley.com)
- ^ Vax-a-Million (papers.ssrn.com)
- ^ free cannabis (www.scientificamerican.com)
- ^ 10% (melbourneinstitute.unimelb.edu.au)
- ^ Melbourne Institute Pulse of the Nation survey (melbourneinstitute.unimelb.edu.au)
- ^ 80% (theconversation.com)
- ^ 80% of Australians over 16 (cdn.theconversation.com)
- ^ 65% (theconversation.com)
- ^ Julie Leask (www.abc.net.au)
- ^ When will we reach herd immunity? Here are 3 reasons that's a hard question to answer (theconversation.com)
- ^ coming round to (www.smh.com.au)
- ^ Over 18 and considering AstraZeneca? This may help you decide (theconversation.com)
- ^ red tape (www.themandarin.com.au)
- ^ incentives (treasury.gov.au)
Authors: Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University