Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

One Crore Vaccinations- What Next?

 

It has taken 35 days for India to reach one crore vaccination mark as it battles the pandemic induced by the Chinese virus. It indicates roughly three lakh vaccines being administered every day. The second round of vaccinations are underway. The coverage of frontline workers is expanding and hope to achieve 90%+ mark in a couple of weeks or so. It is perhaps with anticipation that the Indian population looks to expanding the vaccination drive to the next phase of the elderly and the vulnerable. There was no doubt given the frontline workers have performed over the last year or so in combating the pandemic, they needed to be administered the vaccine at first priority. The doctors and other healthcare workers are needed to combat with preparedness in case of any eventuality. There is further no doubt that there needed to be observed on the effects of the vaccine in terms of immediate side effects or so. It would need some time before the health care authorities could unearth some insights about the after-effects of the vaccine. It would be important to know how many would suffer serious or severe side effects or even death or any pattern that is emerging on those suffering from these side effects.

 

There is further would have been a need to overcome the vaccine reluctance. Many would be scared to take the vaccine for fear of its effects. They would look to others to volunteer before gathering courage. In that context, the national leaders taking vaccine first would have been good. Yet it would be important to note the criticality of the local heads taking the vaccine first. If the local doctors and other elders take the vaccine that would go long mile in cheering and encouraging the others into taking the vaccine. In the earlier days, the village heads would be administered the vaccine for small-pox or plague or cholera or tuberculosis among others so that this would ensure the other villagers or townsmen were not discouraged or turn reluctant to take the vaccine. If the village chieftain could take the vaccine, so it was argued others could take to. It is about skin in the game. The point that would emerge is if those at the lead take the vaccine, they are ready to embrace the risks. If they can so, there is certain signal that the vaccine is safe perhaps. Therefore the others would follow suit.

 

The skin in the game is without doubt the most important driver in vaccine administration and delivery and so would be the learning curve. With increasing vaccinations, there would be experience gained not just in terms of understanding side effects but in terms of injecting the vaccine itself. As time passes, the vaccinators would be able to administer more vaccines per day, thus an increase in the output. There would be insights into the demand patterns and usage of the vaccines. The demand estimation could yield insights into the number of people expected per day and the vaccine supplies thus required. It would also lead to insights how many vaccines would be used and how many might have to be destroyed since they cannot be used on that day. This insight could be of relevance if the vaccine utilization has to increase. Israel precisely adopted this insight to increase their vaccine utilization. India must follow the suit. If the vaccine utilization currently is let say around 70%, then it would follow that 30% is being wasted. Rather than waste a precious resource, there could be potential scope for walk-ins. Those who walk in in the last hour of the day or so might be administered vaccines if those in the queue do not turn up for the delivery. This insight might be available by this time, and thus the time for the health authorities to do some action on this front.

 

It’s been more than a month since the vaccination process started. Along with the data from the trials, the data from the last thirty five days would yield enough insights into the process. Yet, the process cannot go on at the speed at which it is travelling. Every other day, there is some headline talking about how India is the fastest to reach different milestones so as to speak in terms of coverage of vaccination. Israel has covered more than 50% of its population already at this time. It must be pointed out that these milestones have hardly any utility in the Indian context. India obviously will be the fastest to reach one crore vaccinations yet that would be a mere speck on a spectrum of sand that would be India. It must be remembered and reinforced at every celebratory moment, that the India’s population is around 140 crores and even to achieve 1% of the population, one needs to vaccinate around 1.4 crore people, a mark India is yet to reach despite more than a month since the commencement of the process. To achieve herd immunity, India must vaccinate roughly 80-90 crores at least. In the current pace of growth, it might take years if not decades to achieve that. The speed of the vaccination drive must pick up. it should have picked up to at least 10 lakhs per day by this time, but there seems to be no signs of the same. India might be seeing on the whole a retreat of the coronavirus, yet as reports from Maharashtra or Kerala suggest, a second wave is just around the corner. India cannot afford to have both the vaccination and testing process go simultaneously at the large volumes. India could very well reach the current state of Europe. Another lockdown would be disastrous. This is the time for the vaccination drive to pick up. the numbers must reach more than 50 lakh per day to have any sense of proportion in the Indian context.

 

Demand creates its supply and therefore, there will be a number of players which will enter the market for vaccine delivery. It is critical that the private sector is encouraged for the same. The Prime Minister talked about private sectors and its critical role in national development. While it might be celebrated for the stated preference, the revealed preference could be observed perhaps through the vaccination delivery mechanism. Therefore, the time is now to set in motion the process of private sector participation in the vaccine administration process. It is time to press the gear, time to move into a zone of increasing returns. The pandemic is showing signs of return in some parts of the country. Therefore, before it gets a chance to unleash a fresh assault, it makes sense to launch all out pre-emptive assault on the pandemic.

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