Introduction to Microeconomics: H1N1 Edition

Health officials in Ottawa have enacted a policy that will prevent people from waiting in line at H1N1 vaccination clinics on behalf of another. This policy effectively prohibits one of the few ways in which the inefficiency of the rationing system can be diminished.

Normally, market prices ensure that demand equals supply. If there is too much demand for a good or service, then the price will rise until enough potential consumers exit the market to re-establish equilibrium. And vice versa. The market for H1N1 vaccines is a great example of an unbalanced market. Demand for the innoculations far outstrips the ability of health authorities to deliver them. People are routinely lining up for five hours or more to receive the vaccination. A co-worker of mine regaled me this morning with the story of how he and his father-in-law showed up outside a clinic at 3:30am on Saturday; twenty others had beaten them there.

Now, these shots could be priced in such a way that these long waits would disappear. But selling the vaccine at a market price seems distinctly immoral to Canadian sensibilities. Fair enough. It is desirable that all members of our soceity have access to the H1N1 vaccine--should they desire it--with regard to income or ability to pay.

But when a good is rationed, long and undesirable queues are inescapable. And these queues place a disproportionate burden on some segments of society, in the same way that a market price would weigh more heavily on low income individuals. More speciifcally, queueing imposes a larger opportunity cost on those whose time is more valuable, i.e. high earners. A corporate executive or an electrician must give up 5+ hours of productive work just to get the vaccination. That is a huge cost relative to the McDonalds wage earner or the unemployed person.

With the great disparity in opportunity costs between individuals, the new policy makes little sense. Why shouldn't a person who earns $100 an hour (your lawyer or account perhaps) be able to pay somebody $15 an hour to save his place in line? Such a transaction would be beneficial for everbody by vastly decreasing the inefficiency of the vaccination campaign. H1N1 will impose a large enough economic cost without enacting such foolish policies.