# Introduction

As the price of a good falls, the quantity demanded rises. This basic economic principle is called the ‘law of demand’ as it is rarely violated. Though there are some well-known exceptions – such as Giffen and Veblen goods – they are rare and represent a tiny minority of all transactions. Policy designs often use the predictable relationship between price and quantity demanded to encourage consumption of goods and services that produce positive externalities, for instance, reducing the price of health care and education below market prices to induce greater demand. To focus on the topic of this paper, many governments subsidize vaccination against communicable diseases assuming that this will increase vaccination rates. In some cases, public policy takes this logic even further, providing subsidies that are so large that the price becomes negative, such as in many health-focused conditional cash transfer (CCT) programs (Souza et. al 2022; Barham and Maluccio 2009). These approaches have been used in many counties during the COVID19 pandemic, as authorities introduced CCTs, in-kind benefits such as food or services, lotteries, and other incentives to increase vaccination rates and address hesitancy.

The effectiveness of incentive payments to increase vaccination has been demonstrated in many settings. In a randomized controlled trial in rural India, Banerjee et. al. (2010) showed that small incentives had large positive impacts on the uptake of immunization services in resource poor areas and were more cost effective than purely improving vaccine supply. Dudley et. al. (2021) found financial incentives increased vaccination uptake in the social networks of pregnant women in the United States. In another randomized controlled trial, Chandir et. al. (2010) found that food and medicine voucher incentives doubled completion of routine diphtheria, tetanus, and pertussis vaccination in a low-income area of Pakistan. Barham and Maluccio (2009) found similar effects in rural Nicaragua, and as did Kusuma et al. (2017) in Indonesia. Barber and West (2021) and Brehm, Brehm, and Saavedra (2021) both showed that a conditional cash lottery program successfully increased COVID-19 vaccine uptake in Ohio. Using a nearly identical survey-based randomized controlled trial design to the present study, Fishman et. al. (2022) found that financial incentives increased COVID-19 vaccination intentions in the United States.

Policy experiments offering individual rewards conditional on completing vaccination have been widespread during the COVID-19 pandemic. One of the first jurisdictions to make use of incentive payments was West Virginia in the Unites States through a program paying $100 to young people who were vaccinated. Over the following months more than 20 other US states began offering lotteries or other prizes to motivate people to be vaccinated against COVID-19.<sup>4</sup> The practice of using lotteries was also common elsewhere in the world, including for instance the Canadian province of Alberta, the Gumma Prefecture of Japan,<sup>5</sup> alongside many others. In May 2021, Serbia became the first country to use cash transfers at the national level, offering the equivalent of $25 cash rewards to those who received their first vaccination dose (Holt, 2021).

But the universality of incentive payment effectiveness for vaccination uptake is not a settled question, and several studies raise concerns that in practice the relationship is more complex. Kamenica (2012)

> 4 National Governor’s Association website: https://www.nga.org/center/publications/covid-19-vaccine-incentives/ retrieved 8/8/2022

> 5 <u>https://mainichi.jp/english/articles/20210821/p2a/00m/0na/025000c</u>

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