Vaccine Take-up and Free Riding Behaviour

 

Based on evidence from other countries, which are often  ahead of the curve when it comes to COVID, a fourth wave fueled by the Delta variant in Canada is inevitable.  It has also become increasingly evident that, the simplest way to ensure the fourth wave does not exceed the third wave is to doubly vaccinate the entire population and as an added precaution retain the wearing of masks in indoor public places.  Yet, indifference, lack of compliance and outright resistance to these measures has been an increasingly troublesome feature of the pandemic. 

 

Our medical experts now maintain that for herd immunity to stamp out the pandemic, double vaccination rates need to approach 90 percent.  To date, we are still well short of that in Canada.  While much is made of the statistic that 75 percent of the population is fully vaccinated that figure only refers to the population aged 12 and older.  When it comes to the total population, we are only at 66 percent – not really much more than where we were several months ago. 

 

Even if you factor in that 14 percent of Canada’s population is under age 14 and the vaccine has not been approved yet for 12 and under, that still means that about 20 to 25 percent of Canada’s population above age 12 has still not been fully vaccinated and shows little interest in doing so.  When broken down by age, the highest vaccination rates are in those aged 60 and over and range from 87 percent (60-69) to 92 percent (80+).  They then fall dramatically by age group from 78 percent in the age 50-59 category to 67 percent by age 30-39 to 60 percent by age 18 to 29. 

 

Getting your shot is essentially a public good.  While the shot protects you it also protects others by breaking up the cycle of transmission.  This is what is known in economics as an externality.  Now in public finance theory, a pure public good is a good characterized by a consumption externality.  That is, everyone must consume the same amount of the good because once it is provided for one individual it is provided for all.  However, a problem results in terms of how this good is to then be paid for.  If there is no way to exclude individuals from consumption, then individuals can be tempted to enjoy the benefit of the public good without contributing to the cost.  This is known as free riding behaviour.

 

Free riding is the outcome of the self-interest which economists assume drives individual behaviour coupled with the characteristics of public goods.  Once a public good is produced, it is difficult to prevent others from consuming it and their consumption does not diminish the satisfaction of other consumers.  If the financing of this public good were to rely on voluntary contributions, the presence of free riding behaviour would result in no one contributing to it in the anticipation that someone else would.  The result would be zero provision of the public good.  Because of free riding behaviour, there is essentially a market failure in the provision of the public good by voluntary or private means.  The solution is for government to provide the public good.  Since government has a monopoly on coercive force, it can levy taxes to finance the public good.

 

So how does this apply to vaccinations and anti-vaxxers? Well, it is tempting to argue that anti-vaxxers are either extreme libertarians or do not understand science or that they are mainly short-sighted younger people who think they are immortal, but the problem is probably more insidious than that.  What we are seeing aside from a small minority who are more ideologically driven is more traditional free riding behaviour.  These individuals essentially cannot be bothered to take the time to go out and get their shot because they figure that if everyone else gets their shot then they will be protected anyway.  They do not really care about the externality they provide by getting the shot and view the benefits to themselves as small given the risk of severe complications from the disease relative to the inconvenience of getting a shot. 

 

Put another way, free riding is more selfish behaviour while not free riding is more cooperative behaviour.  Free riders are the same type of people who throw their coffee cups out of windows while driving or let their dogs bark incessantly outside in the middle of the night or do not contribute to charity.  They do not do anything unless there is an incentive or direct benefit to themselves to do so which is why in the end the government mandated solution of vaccine passports is the only way forward if you want to get this particular externality dealt with.  Once access to activities is curtailed in the absence of being double vaccinated, the benefits of getting a vaccine will rise providing the necessary incentive.

 

Are young people more likely to free ride?  No.  Free riding cuts across all age groups but given the lethality of the disease as you get older, older free riders are quicker to see the light and eventually get their shots.  In the case of vaccines, the benefits of free riding are simply greater for younger demographics which means they will persist in their behaviour longer in the absence of incentives to do otherwise.  Moreover, the percentage of free riders can grow over time if it becomes apparent that others are not following the rules.

 

Indeed, some of the economics literature I’ve seen suggests that the percentage of chronic free riders in any human population can range from 20 to 30 percent.  Most of the time, society manages to function well just the same because the vast majority engage in more cooperative behaviour.  At the same time, 20 to 30 percent free riders pretty much matches the current statistics of vaccination non-take up rates in Canada.  It also suggests that the proportion of free riders in a population is not set in stone and can vary based on local conditions.  After all, the United States which traditionally has had a more individualistic society than Canada has even lower vaccine take up rates. 

 

 

An Economic Region Approach to COVID-19 in Ontario

 

Today’s numbers show 722 COVID-19 cases for Ontario and marks five consecutive days of increases that have practically doubled the case count from 348.  Given a third wave peak of just under 5,000 daily cases in mid-April at a time when vaccination rates were quite low, the fourth wave currently underway should be relatively minor barring any unforeseen variant change.  Given that approximately two-thirds of the total population are fully vaccinated, that leaves one-third of the population more susceptible to the Delta variant.  To me, a back of the envelope calculation suggests that this fourth wave should therefore peak at about one-third of the previous third wave peak which results in about 1,600 daily cases.  However, it might be more given the economy has opened up whereas restrictions were greater during the prior waves.  However, it would be surprising to see more than 2,000 cases daily but who knows.

 

The impact of COVID-19 has affected every corner of Ontario but some parts of the province have been hit harder than others.  The typical way of looking at the numbers is by public health unit and Figure 1 presents the total cases per 100,000 population ranked by public health unit as of August 18^th, 2021.  The numbers range from highs of 7,310 per 100,000 for Peel and 5,812 for Toronto to lows of 510 for North Bay-Parry Sound and 350 for Algoma.  These are large differences and suggest there are major regional differences in COVID-19 incidence and impacts across the province.  Indeed, the health units in northern Ontario appear to be mainly in the bottom half of the rankings.

 

 

 

Another way of looking at the data is regionally, and Figure 2 presents the incidence of COVID-19 per 100,000 population by Ontario economic region while Figure 3 does it for deaths per 100,000.  The ranking shows the Toronto/GTA region at the top at 5,482 cases per 100,000 and also at the top for deaths at 89 deaths per 100,000.  The next highest regions in terms of incidence are Hamilton-Niagara (3,533 cases per 100,000) followed by Windsor-Sarnia (3,438 cases per 100,000) and then Kitchener-Waterloo-Barrie (2899 cases per 100,000).  At the bottom in terms of incidence are Stratford-Bruce (1,317 cases per 100,000), Kingston-Pembroke (1281 cases per 100,000) and the northeast (992 cases per 100,000).  This pattern largely replicates itself for deaths per 100,000 also.

 

 

 

 

 

These results suggest that more densely populated economic regions in Ontario that are also major border entry points with the USA or have a major international airport appear to have had the highest impact from COVID-19 in terms of either cases or deaths per 100,000.  One of course might wonder then if regions with higher incidence of COVID-19 or more deaths also suffered a greater economic impact.  Figure 4 ranks these economic regions in terms of the percent gain in employment from June 2020 to June 2021 as well as provides the percent employment loss from February 2020 to June 2020 alongside.  The results are interesting in that employment rebounds have been the lowest in some of the economic regions most lightly impacted by COVID-19 – namely, Stratford-Bruce, Kingston-Pembroke and the Northeast.  The northeast of course had some separate issues given the layoffs at Laurentian and the Vale strike. Hamilton-Niagara and Kitchener-Waterloo Barrie are about in the middle while Toronto is closer to the bottom third.

 

 

 

There does not appear to be a direct correlation between the severity of COVID-19’s impact in terms of incidence and mortality and the size of the economic impact as measured by either employment loss or rebound.  Why?  The economic impacts unlike pandemics of the distant past were not in terms of mortality and morbidity hitting the labour force but the direct result of lockdowns and other restrictions that were applied on a one size fits all basis province-wide.  One could make the case that based on the impact of the pandemic, the strongest lockdowns and restrictions should probably have been applied in Windsor-Sarnia, Hamilton-Niagara, Kitchener-Waterloo-Barrie and Toronto and Ottawa, while regions such as the Northwest and the Northeast – and to a lesser extent Muskoka-Kawartha, London, Kingston-Pembroke  and Stratford-Bruce(given their closer location to more affected areas) could have been less restrictive in terms of restrictions that shut down their economies.  Applying differential restrictions over larger regions as opposed to by public health unit areas could have also mitigated some of the fears of regional travel to evade restrictions.

 

Still, that is something for the political and economic powers that be to mull over. 

A Tale of Two Library Systems

 

As is occasionally my practice, I like to compare the two Ontario Lakeheads – Thunder Bay/The Lakehead at the head of Superior and Hamilton/Head of the Lake at the head of Ontario.  While Hamilton is about five times the population of Thunder Bay, it has a similar industrial and labour past albeit rooted in steel, has transitioned to a knowledge economy over the last two decades given the decline of its traditional manufacturing base, and has issues with poverty and homeless populations who have been setting up camps in local parks.

 

COVID-19 has of course affected both cities with Thunder Bay and its District to date seeing 3,348 cases and 64 deaths and the City of Hamilton itself seeing 21,866 cases and 404 deaths.  In per capita terms, Hamilton has been hit a bit harder than Thunder Bay and its District.  At present, Thunder Bay and its District has 5 active cases while Hamilton has 187.  Thus, the pandemic in Hamilton is seeing an upsurge that to date has not yet reached Thunder Bay.

 

Nevertheless, what is interesting is the different approaches of the two municipally funded public library systems to reopening and reengaging with the rate-paying public. The Hamilton system with its 22 branches beginning July 30 was open for browsing, holds pickup, computer access and use of printers, scanner, fax and Makerspace equipment. New branch hours were Tuesday-Thursday 11AM-7PM and Friday- Saturday 11AM-5PM. The library web site has additional details about services and safety protocols including capacity constraints.  And a stroll outside the main central library entrance in Jackson Square today revealed that patrons were indeed entering the facility.  While things are not normal, there is a semblance of normality back.

 

Which brings me to the Thunder Bay Public library system.  Thunder Bay released its reopening plans on July 27^th and will resume in-person services at two of its branches from 10am to 4pm daily – the two smaller ones – Mary JL Black and County Fair – on September 7th.  The two larger downtown branches are set to reopen with in-person services on September 27^th.  Part of the reason for the later reopening of the two downtown branches according to a statement from the Chief Librarian is because the pandemic has been used as an opportunity to “reset and reimagine” and there are renovations underway at the Waverly and Brodie Branches. 

 

Nevertheless, the slow pace of municipal service resumption in general in Thunder Bay is disappointing.  And in the case of the public library, it is even more disappointing given the importance of the library to the young and old and especially those unable to afford buying books.  Even if renovations are underway, there has been over a year to do them.  One can only imagine why everything in Thunder Bay generally takes longer ranging from reopening services in the wake of COVID to dealing with issues like traffic light synchronization which has been debated for twenty years and will now take four years to implement.    Is everyone off at camp enjoying the summer?  Is the City of Thunder Bay happier keeping its staff at home collecting the federal payments and saving the labour costs so it can add to its “positive variance?” Rather than making sure that services are up and running, the City of Thunder Bay is happiest planning for new initiatives and sending them off for study or hiring lawyers to make sure it does not have to bear any responsibility for the ongoing leaky pipe fiasco which continues to provide unique landscaping and ornament to lawns across the city.

 

Of course, in the case of public libraries, one could always make the case that the public has been well served during the pandemic by libraries going online and providing e-books and other resources.  In this regards, Hamilton is well served with e-resources of 91,864 books, 16,299 audiobooks and 3,444 magazines.  Moreover, through the Hamilton ebook system you can also apparently access ebooks at the Burlington Library and even Ottawa’s. Thunder Bay? Well, there seem to be a lot of magazines available but repeated searches for assorted book titles did not yield as much at least for me.  The stats for Thunder Bay show the same number of magazines but only 43 books and 5 audiobooks.  However this is on the Libby App and Thunder Bay Public Library apparently has another app for e-books.  So, my first foray into e-books found the Thunder Bay approach less streamlined.  Again, Thunder Bay lives up to its motto – Superior by Nature, Inferior in Practice.

 

Naturally, the immediate reaction of the more extreme Thunder Bay Patriot will be to blurt out that if you don’t like it here, you should move to Hamilton.  I would respond, in the age of remote work, that you should be careful what you wish for.

 

 

Is Ontario's COVID Drama Starting Anew?

 

The last few days of daily Covid-19 case counts for Ontario show a small spike.  As Figure 1 illustrates, from daily case counts just over 1,000 in early June, the numbers declined and bottomed out in mid-July where they hit a low of 114  and have since begun to move up again.  Today’s count was 325 which was down from 423 yesterday.  Whether this marks a new wave is still be seen.  There have been similar spikes from time to time over the last three months and the current one is probably a function of reopening as well as circulation of the Delta variant.  However as Figure 2 shows, the trend as depicted by a LOWESS smooth so far suggests that an upsurge is not underway.

 

 

 

 

 

 

That is not to say that we might not be in for a fourth wave but given the current rate of vaccination in Ontario and the maintenance of public masking requirements, it should not be as pronounced as the previous two waves and hospitalization rates should definitely be less.  In the end, it was always about hospital capacity being overwhelmed and Ontario’s low per capita hospital bed numbers was one of the key reasons for protracted lockdowns and social restrictions.

 

Vaccination rates are currently very good. For people aged 50 and over, the two-dose vaccination rates range from 75 percent (50-59)  to 93 percent (80+).  Seventy percent of 40-49 year-olds have received two doses and 64 percent of 30-39 year-olds.  Meanwhile, those 18-29 are at 58 percent and ages 12-17 are at 52 percent.  There is still room for improvement.  Moreover, daily vaccination rates appear to have fallen which is where the Achilles Heel of the current situation lies. In early July nearly 160,000 people a day were receiving second doses but that has fallen to below 30,000 in recent days. 

 

So, whether or not there is a pronounced 4^th wave will largely depend on the speed and severity with which the more transmissible Delta variant goes through the unvaccinated population.  Even with full vaccination status, one can still get and transmit the virus but the severity of the disease is greatly reduced. As of today, 9.343 million Ontarians are fully vaccinated – out of a total population of 14.790 million – that works out to 63 percent of the total population.  That is still a long way from needed herd immunity estimates that have ranged from 75 to 90 percent.  So, it is not over yet.

 

Employment Growth Snapshot: The Niagara Region

 

Ontario’s economy over the last decade has seen the GTA-Waterloo-Barrie triangle as the province's employment growth engine with the Ottawa region thrown in for good measure.  The rest of the province has seen more differential and often slower employment growth.  While many in northern Ontario might feel that all of southern Ontario is a cornucopia of economic growth it remains that even this  region is not homogeneous.  One interesting region a stone’s throw from the GTA is of course the Niagara region which can be subdivided into the Hamilton area at the head of the lake and St. Catharines-Niagara along the remainder of the Niagara peninsula.

 

Figures 1 and 2 show employment in these two sub regions of Niagara for the period 2006 to 2021.  After almost a decade of stability, Hamilton saw an employment boom after 2016 which saw about 30,000 jobs – an 8 percent increase – added literally overnight.  While there was a drop during the pandemic, the rebound has returned employment to almost where it was during the boom suggesting that this is a permanent expansion in its employment base.  Between 2006 and 2019, St. Catharines-Niagara added about 12,000 jobs – an expansion of 6 percent over a much longer term.  However, the pandemic rebound does not seem to have taken hold in the region and employment now is back where it was over a decade ago.

 

 

 

 

 

This differential performance between two sub-regions adjacent to the GTA is largely a function of Hamilton’s closer proximity to Toronto which is fueling a construction boom in residential development both detached and multi-unit.  The downtown area is seeing numerous high density condominium units and even the rest of the city particularly on the mountain fringe demarked by beyond Rymal Road is seeing residential development.  Of course the continued expansion of residential sub-divisions is causing concern as adjacent farmland is being taken out of service and urban sprawl proceeds.  This of course raises an interesting dilemma as on the one hand, housing has become extremely unaffordable in Hamilton over the last couple of years in part because of supply constraints in the face of increasing demand.

 

However, it is not just all residential construction.  There have been quite a few non-residential projects over the last few years including a new Amazon distribution center currently underway near the airport area, and expanding transport, retail and research facilities. The result is employment growth as Hamilton becomes increasingly integrated into the Mississauga Conurbation stretching from Oshawa-Whitby in the east to Hamilton with feelers stretching down to St. Catharines.  The launch of hourly GO-Train service into Hamilton this month is the final linchpin that will make the city a home to more Toronto based employees.  However, without an expansion in housing supply whether high density infill or new greenfield, housing prices will likely continue to rise.  This risks pricing local residents out of their own city - something that is already happening.