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the UK economy.

Not over yet

Surging cases and hospitalisations among young people are a reminder that the UK is still stuck in the mire of Covid-19. While the economic and social value of vaccines is as clear as ever, ensuring universal uptake means understanding the needs and wants of different groups.

People across the country are starting to enjoy their relative freedom this summer. But a recent statement by the newly appointed chief executive of the NHS England, Amanda Pritchard, was a reminder that the Covid-19 storm has not yet passed. Talking to the BBC this week, she warned that 18 to 34-year-olds currently accounted for one in five Covid-19 hospital admissions. The message was clear: All young people who have not yet received their vaccine should step forward and get their jab as soon as possible.

Figure 1: Vaccine take-up in England versus Scotland

Source: Rapid Charts

The value of vaccination

In a recent Economics Observatory article, Flavio Toxvaerd (University of Cambridge) explains that because Covid-19 affects age groups very differently, younger people have less incentive to get vaccinated, potentially explaining their lower vaccine participation.

As Flavio explains, vaccines present ‘private value’ to individuals, by reducing their likelihood of developing a severe form of coronavirus, and ‘social value’, by reducing the probability of an infected individual passing the illness on to others. This private value is lower for younger individuals who are less likely to fall seriously ill from the disease. But the social value of young people getting vaccinated is significantly higher, as it helps prevent transmission to other groups who are more at risk.

This gap explains why public intervention is needed to get these groups on board. Over the past few weeks, governments around the world have adopted various approaches to boost vaccination numbers. In Greece and the US, forms of compensation such as vaccine subsidy vouchers and million-dollar vaccine lotteries have been set up to encourage take up. Some places are choosing to adopt a more restrictive approach, with French president Emmanuel Macron announcing that soon only vaccinated people will be allowed in public places such as restaurants and cafés. With France home to one of the largest ‘anti-vax’ populations in Europe, and with presidential elections coming up early next year, this decision could turn out to be politically costly for President Macron in the near future.

The end of lockdowns?

With the vaccine rollout paving the way for the reopening of large sectors of the UK economy, GDP data published by the ONS on Monday revealed just how significant impact last year’s lockdowns had on UK output. Ben Pimley (University of Bristol) tells us that overall, GDP fell by 9.8% in 2020, with Scotland’s output decreasing by 19.4% during the first lockdown. The last quarter of 2020 saw a slight increase in GDP compared with the previous three months across the UK nations. But crucially, no nation was able to fully compensate for the catastrophic numbers of April-June. Monthly data also confirms this, with a clear drop in output in November coinciding with the second major lockdown.

Figure 2: UK regional quarter on quarter GDP growth, Q4 2018 – Q4 2020

Source: Office for National Statistics

The sharp fluctuations in economic activity caused by the alternation of lockdown and non-lockdown periods have prevented UK nations from enjoying a ‘V-shaped’ recovery.

But as Flavio point out, immunisation through vaccination may offer a solution to this for policy-makers. Avoiding high mortality rates and illness is the main priority of public health policies. With vaccines now significantly reducing these risks, lockdowns are no longer the main way to curb the spread of Covid-19, suggesting the UK may finally be on a path of economic recovery.

Cricket and economics

The easing of restrictions has allowed the return of major sporting events, with England’s five-match Test series against India kicking off this week. For the occasion, Carl Singleton and Sarah Jewell (both University of Reading) looked into what economics can learn from cricket, and vice-versa. Thanks to a long history of meticulously detailed scorecards, the sport offers a significant amount of data from which to draw conclusions. For example, the study of cricket umpires has helped economists understand what drives ‘unconscious bias’. Since 2002, all umpires on the field were from neutral countries (to avoid bias). But during Covid-19, non-neutral umpires were briefly re-introduced, often in empty stadiums. Interestingly, despite this temporary change, the data reveal no home advantage in Test cricket during Covid period.

In terms of what cricket can learn from economics, Carl and Sarah investigated how different incentives and mechanisms could help cricket administrators increase public involvement in the sport. For example, there is evidence that superstar players attract large audiences, but that slow over rates (how much play you get to see in a period) tend to put people off. With this in mind, competition organisers have increasingly focused on attracting cricket superstars, have introduced the short ‘Hundred’ tournament and have introduced penalties for players that delay the rate play. But it is yet to be seen whether this model has been a success. People’s involvement with the sport is also linked to their affinity with local teams as well as the thrill of the game. The possibility of surprise and suspense are key to keeping audiences involved. Money can buy superstar talent but does not necessarily guarantee that fans will keep coming back for more.

Observatory News

Author: Juliette Brown
Picture by Erik Witsoe on Unsplash

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