A pub yarn

I was lucky to meet one of the many people named David Brown that are in circulation at any one time. Like me he was also a new arrival to the outlandish planet Oz. In a previous life he worked as a gas fitter in the city of Manchester, but he switched to the computer industry. My colleague was a determined fellow with piercing eyes and many stories about friendly ladies he encountered during professional visits to their homes. It was during these apprentice years in the underworld of pipes and drains that he probably learned what he knew about the world.

In those early days in the great city of Sydney we used to go to the pub every Friday after work for a couple of beers and a few stories. There were many funny stories of gas explosions and hasty retreats instigated by the unexpected arrival of husbands.  I have long forgotten the details of those stories, but I remember a comment he once made during one of those sessions.

He observed that young fellows having their whole life in front of them are eager to drive fast cars, go bungee jumping, climb mountains, and engage in all sorts of dangerous activities. On the other hand, elderly folk are much more careful in what they do and value life much higher. To him this reflection appeared to be a contradiction of common sense because people with the most to lose are least careful while those with the least to lose are most careful. 

However, to an economist this is an expected behaviour and goes by the name of scarcity value. People tend to value more what is in short supply.

An example of this is the attitude towards the AZ vaccine which is currently the only alternative available for people over 60 years of age in Australia. It has been reported that the injection has a side effect with very low probability but severe consequences. Whilst the uptake by the target group is very small, the vaccine is well accepted by a segment of the population under 60 that has access to a different vaccine which is in low supply. This phenomenon can be explained by the scarcity value of the remaining life.

According to medical advice the risk of covid-19 complications is proportional to age due to the increased probability of an adverse outcome, whereas the nominal risk of the AZ vaccine appears to be age independent, therefore constant. The two curves cross approximately at age 60. Therefore, the vaccine is recommended for people over 60 and not indicated for people under 60. The higher risk for the latter group is mitigated by the availability of an alternative serum with a risk curve below that of Covid-19. The chart shows a simplified linear model describing the policy. The three curves in the chart represent the relative risks of alternative:

  1. AZ vaccine without compensation for scarcity (nominal risk)
  2. AZ vaccine compensated for scarcity (perceived risk)
  3. Immunisation refusal (Covid-19)

When we consider the scarcity value given to the remaining life by the two demographics, the perceived risk becomes proportional to age due to the increasing value of the remaining time. Observing that the AZ vaccine is not universally rejected due to its side effect, we could conclude that the slope of the perceived risk curve is different to the slope of the covid-19 curve, therefore these two curves must intersect at some point.

From the behaviour of the two age groups, that intersection point appears to be slightly above the age 60 and explains the two observed attitudes towards the AZ vaccine. For the younger group the risk of the vaccine is lower than the risk of covid-19 and because the AZ vaccine is more available than the alternative serum, they choose the shot despite the counter indication. For the older group the risk of the AZ vaccine is higher than the risk of covid-19 and that explains the low immunisation uptake given the absence of an alternative.

I support immunisation against viral infections. The hypothesis presented here is a possible explanation of an observed behaviour, either in full or as a contributing factor and does not preclude alternative explanations.

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