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

Indian Vaccination: What Next?

 

The second wave of the Chinese virus seem to be abating. India has recorded a daily positivity rate of under five percent over the last two weeks. The World Health Organization (WHO) points to this rate as the minimum eligibility for the economy to be unlocked. The unlocking process has begun in varying degrees. In the lockdown of 2020, the posts had repeatedly suggested of adopting a calibrated unlocking district by district based on the positivity rate. The idea had generally found low receptivity. There were arguments that the economy cannot function in an isolated environment and it had to be either opened fully or locked fully. Yet those same people who were so vociferously opposing it last year are now in the forefront of welcoming especially the strategy being adopted in Uttar Pradesh. Conceding the Rusi Karanjia theory of consistency being the virtue of donkeys, it might be seen as vindication of those critics of district wise unlocking are now slowly moving away from being donkeys metaphorically speaking.

 

A number of districts still continue to have a positivity rate in excess of five percent especially when measured through the seven day moving average method. This implies that the pandemic is still active. There are figures which do indicate a spike in active cases in states like Maharashtra or Kerala on some of the days. Some other states like Karnataka or Assam have plateaued in terms of daily cases dropping down or in terms of positivity rate. There is a day or two every week where positivity rate does increase in states like Karnataka. The obvious implication is there are no grounds for complacency to set in something that happened last time. In fact, a good number of cases were essentially driven by the complacency that set in and made people shed masks and social distancing. In a heavily populated country like India, it is difficult to maintain social distancing throughout and hence it must be emphasized more on masking. There are grounds to suggest double masking as one way to counter the effects of lack of social distancing in workplaces, markets or public transport.

 

On the vaccine front, India has finally picked up the pace. On June 21, India recorded the vaccinations in excess of eighty lakhs. This was the highest single day vaccination across the world if one were to ignore China or at least take the Chinese with some pinch of salt. Yet, as has been mentioned before too, the vaccine policy is akin to maintaining a very high run rate over long period of time. To reiterate, it is easier to score at ten an over in T20 but almost impossible to do the same even for single day in test cricket. The challenge before India is to score at T20 rates in a test match that might not just end in five days but might extended to even twenty days. It is about the vaccines keeping pace with the virus and its mutants. In this context, there is no doubt, that the vaccination of eighty lakh people on a single day is commendable. There has been a coordinated effort across all agencies. They deserve accolades but the journey is just beginning.

 

The question that arises would be the obvious course of the government action in the coming months. The prescription would remain the same as it was earlier. There has to be sustained momentum in carrying out the vaccinations. Moreover, it has to be ensuring the vaccine hesitancy is overcome. Those who are desirous of getting vaccinated are already vaccinated or in the queue are likely to be vaccinated in the next month or so. The numbers are likely to be in the range of around fifty crores. But this would be less than half of India’s population. If one looks at eligible population it would be around two thirds. The importance would be to drive the vaccine programme into the remote areas and bring into the vaccination fold those under eighteen years of age. Trials must be expedited on this.

 

Secondly, there has to be no change on increasing the vaccine availability. India still is betting on the two vaccines it has in its possession currently. The other vaccines are in the pipeline and there would be no doubt uncertainty on them. There was a sort of marked rush in securing vaccines from abroad at the height of the second wave but not the urgency does not seem to exist. It would be mistake to ignore the possibility of the third wave. The vaccination must sustain at a very high pace and therefore there needs to be expanded the basket of vaccines. The government cannot be complacent of securing those supplies and the supply chain. Betting on future vaccines might sound lucrative but would be the same a bird in a bush. While there is no doubt, a quantum of geopolitics is involved, yet the market is skewed in favor of the vaccine manufacturers at this moment. Therefore the government has to get them on board and create conditions where vaccines are available on demand. India’s problem is its high population in this context. Therefore, the amount of vaccines needed and the basket of vaccines needed is both high. The government seems to be again making a mistake of feeling that vaccinating some percentage of population would make the virus go away. As evidence is demonstrating, the virus is likely to persist strongly till at least eighty percent are vaccinated. There is some ray of hope emerging from Britain where hospitalizations have not increased while deaths have remained low in the wake of the new spread of delta variant. Israel would have to be observed over the next few weeks for the same.

 

The steps should be clear in seeking to procure vaccines from all possible sources. As mentioned in the previous posts, the government must offer incentives sufficient enough for the vaccine majors to shift production base to India. Rather than focus on PLIs on numerous industries, it would have been better to focus the same on vaccines. The mission to make vaccines in India irrespective of the company should have begun well early last year when the pandemic was in infantile stages. It is still delayed but enough potential exists if India has to make its mark in ‘Vaccine Maitri’ once again.

 

 

 

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