Politically optimal lockdowns with vaccine hesitancy: Theory and evidence from Switzerland

Abstract

Literature on optimal lockdowns is abundant. However, when are lockdowns politically optimal? Specifically, is there a level of restrictions that a majority will be ready to tolerate, thereby minimising political conflict over optimal policy choices? The answers emerge from an extended voter preferences framework, where citizens living in a pandemic choose their vaccination status, and some are vaccine-hesitant. The model demonstrates that a society will be ready to tolerate harder restrictions when citizens are more productive or their vaccine salience is higher. However, the productivity and vaccine salience effects are mitigated by the government’s capacity for fiscal transfers. Similar to other political economy models of intra-pandemic societies, zero restrictions emerge as politically optimal in societies with sufficiently high vaccine hesitancy or low productivity. Canton-level evidence from the 2021 Swiss referendum on expanding COVID-19 restrictions offers strong support for the theory. A discussion of policy implications completes the analysis.