Pandemic Chronicles: Vaccination and the Tipping Point to Herd Immunity

Society is at a tipping point with two critical issues: climate change and the COVID-19 global pandemic. A tipping point is a phenomenon where enough people have collectively changed their social behavior to push society towards either a positive or negative direction. The climate change crisis is similar to the current public health pandemic in that it requires coordination among individual members of society in order to avert a disaster.

Ideally, countries would make good on their treaty commitments by investing in clean energies and take steps to meet greenhouse gas reduction targets. But since the Paris climate change treaty is voluntary and non-legally binding, what actually happens is some countries set meaningful national targets and takes steps to get there while other countries free ride by staying their current course.

In a Nature article “Tipping Climate Cooperation,” the authors use game theory to explain the global coordination dilemma between nations to address a problem that might become dangerous some day but not immediate.Their insight shows that When the uncertainty is small, however, societies are much more likely to coordinate efforts and avoid the tipping point.

In climate change forums, countries like America and China are strategic actors who weigh the choice of cutting or not cutting greenhouse gases depending on their payoffs. Each country’s pay-off (or expected benefits) in treaty adoption are dependent on the other country’s choice. As the payoff matrix above shows, there are two states of the world that represents Nash equilibria. A Nash equilibrium is a condition where neither country can improve its payoff or outcome by changing its strategy.

One Nash equilibrium captures the ideal scenario in which both countries don’t renege on their treat commitments and take actions at home to cut CO2 emissions. But the other state of the world (i.e. Nash equilibrium) is where neither country chooses to invest in clean energy or measures to cut carbon emissions. That’s a less desirable scenario because society is worse off. Yet, given then uncertainty around climate change risks in the short term, there is no immediate pending disaster.

Because of short-sightedness or lack of domestic support, free rider countries are less likely to jump on the bandwagon. To reach the ideal scenario, several things need to happen, including directly observing the real catastrophic impact of extreme weather patterns, or improving scientific research to reduce the uncertainty about the tipping point. These social, political, and economic considerations are similar to the current state of the COVID-19 pandemic.

Herd Immunity – Coordination Problem

At the beginning of May 2021 the U.S. government and the Centers for Disease Control and Prevention updated its guidance to allow Americans to go about their daily lives without a mask if they are fully vaccinated while calling out those unvaccinated to get vaccinated in order to get the same treatment in common public squares. After an intensive COVID-19 vaccination campaign to reach millions of Americans, experts believe America is at an inflection or tipping point to averting the raging pandemic. Previously, there were a lot of uncertainty whether we would reach the end of the tunnel on this dark chapter in the modern public health crisis. But since vaccinations and aggressive public health measures have taken place, more people will have an incentive to get vaccinated. Why? The tipping point.

Tipping point in collective behavior: over half of the U.S. are vaccinated. The unvaccinated are now the minority. Monthly cases and deaths are trending down. Society, governments, and organizations are rewarding the vaccinated to prompt social change in the unvaccinated population.

There are places that people would like to attend, like places of worship, grocery stores, and night clubs. These places have different levels of restrictions for those who are not vaccinated while allowing those who are vaccinated to enter without wearing a mask.

Chart: CDC's New Mask Guidance for Vaccinated, Unvaccinated People
Source: CDC Guidance

For churches, since it’s a place of faith, those centers recommend attendees who aren’t vaccinated to follow health guidelines by wearing masks and maintaining social distance. Worship centers tend to not impose hard requirement to show attendees are vaccinated, rather it’s an honor system.

Church Mask Policy Change

Nightclubs and Ride Shares

Nightclubs, on the other hand, are social spaces that attract people of all backgrounds. People interact closely and crowds tend to be more concentrated. Those places have an incentive to impose a requirement for people to show evidence of vaccination to enter. For example, Rumi is a nightclub in New York City populated with millenials and Genzers. To enter, customers go through two checkpoints: (1) age verification and temperature check; (2) vaccination card. These same people often commute using ride sharing services including Uber and Lyft, both of which have stated that they will maintain current mask restrictions for all customers (or no service).

Shopping Centers

Grocery stores approach the new government guidance in different ways, ranging from requiring all shoppers to still wear masks and maintain social distance to allowing the vaccinated to be maskless. Because of either hard requirements or public pressures from a large number of people who are vaccinated, people who are unvaccinated will have an incentive to get vaccinated. The combination of these policies carried out by private organizations, accompanied by local ordinances and requirements, as well as sustained commitment and guidance by the government to end the pandemic, will help push American society over the tipping point.

Consider the scenario below, where each Customer can choose to get vaccinated or not get vaccinated. Their individual choices and payoffs are dependent on what the other Customer do. If Customer 1 takes an effort to vaccinate, Customer 2 could be a free rider and not vaccinate. Why? Customer 2 may not want to take the effort, and may want to take advantage of others getting vaccinated and free ride off a perceived herd immunity. The expected payoff for C1 and C2 is (1,2), respectively.

There are two important outcomes from this decision matrix. The first is where both Customer 1 and Customer 2 vaccinate, which is the desired Nash Equilibrium, since neither Customer could increase its payoff by changing their strategy. Both Customers 1 and 2 choose to vaccinate after seeing a certain threshold of the population get vaccinated with minimal risk, while the vaccinated have the benefits of attending more more venues and activities. If unvaccinated customers wish to get the benefit accruing to vaccinated customers, then the unvaccinated have an incentive to get vaccinated. If enough unvaccinated people think that way, this establishes a tipping point in the health pandemic that inches us close to herd immunity. The other scenario, the undesirable Nash Equilibrium, is where Customer 1 and Customer 2 do not vaccinate. Here the expected payoffs are (2,2) for Customer 1 and 2, respectively. The social drivers for customers making this choice could be the following:

  1. if they’re skeptical of vaccines;
  2. if the unvaccinated don’t think there’s enough supply
  3. if they believe the pandemic will worsen (no light at the end of the tunnel)
  4. if the unvaccinated think their other people will also stay unvaccinated.

If the above drivers are strong enough, then it pushes society away from the tipping point and further away from herd immunity. The choices that we as individuals make based on our own expected payoff can put our friends, neighbors and overall society at risk.


Lenton, Timothy M. 2014. Game Theory: Tipping Climate Cooperation. Nature Climate Change 4 (1): 14–15

America’s Long Struggle to Create a Central Bank

On this day, December 23, 1913, President Wilson entered the Oval Office. In a jubilant mood he went around the room to shake hands with key advisers and associates while giving a congratulatory nod to the influential Congressman from Virginia, Carter Glass.

Wilson proceeded to use the four golden pens on his desk to sign the Federal Reserve Act. Wilson and his group of partners in arms had achieved the landmark legislation of his domestic agenda: the creation of the Federal Reserve. This culminated from more than 120 years since Alexander Hamilton had attempted the grand experiment of a central bank that floundered through multiple presidential administrations. Arthur S. Link, a Wilson biographer, captured that this moment “Thus ended the long struggle for the greatest single piece of constructive legislation of the Wilson era and one of the most important domestic Acts in the nation’s history.’’

But what is the Federal Reserve? When was it created? Was Presidential Wilson the mastermind behind it or some other driving force?

Wilson’s domestic agenda centered on the New Freedom. One key pillar is banking reform. In the realm of economic policy, creating a central bank would be Wilson’s enduring legacy, following a century of struggle to create a permanent national bank by the nation’s founders. This battle of more than a century has sputtered and spin since Alexander Hamilton’s fight for a national bank under George Washington’s cabinet. Wilson did not command economic thought leadership that motivated him to advocate for a central bank.

The urgency was more in response to a confluence of factors, including the Panic of 1907 and public policy support from various parties from bankers to Congressional leaders. Wilson’s 1912 election ran his campaign on a progressive platform. He was also leveraging on his reformist agenda as a New Jersey governor. He pledged financial reform, but never explicitly mentioned establishing a central bank. Though he was a government cholar, Wilson didn’t have sufficient knowledge of banking. So he relied on two key advisers: Louis Brandeis, a Boston attorney serving as an outside adviser, and William McAdoo, Wilson’s Treasury Secretary.

While Louis Brandeis was Wilson’s most trusted voice from outside the White House bubble, like his predecessors, the president needed someone in his cabinet who could carry through monumental efforts like banking reform. He needed someone who had a business mindset but not beholden to bankers because that person would broker legislative proposals with repercussions for the broader economy. That is where William Gibbs McAdoo played an key role. Like Wilson, McAdoo had roots in the South. He began his law practice in Chattanooga, Tennessee and thereafter moved to New York to lead a railroad company. With an eye for politics, McAdoo became head of the Democratic National Committee in 1912, and gave support to candidate Wilson’s bid for the White House. As an independent lawyer-business leader who also had political ambitions, McAdoo would become Wilson’s U.S. Treasury Secretary and a close confidant. McAdoo was pivotal in the passage of the Federal Reserve Act and financing of World War I which Wilson reluctantly entered.

Congress, who represented various economic areas of the country, wanted regional banks to control the Federal Reserve System. That decentralized representation would be a counterbalance against Wall Street’s influence. Meanwhile, President Wilson wanted a centralized board to place a check on regional Federal Reserve banks, assuming those entities would be owned by private banks. William Jennings Bryan, a progressive voice in the Democratic party leadership, was committed to currency reform but opposed to a Wall Street take over. He was vocal during the 1912 Democratic convention in expressing support for Wilson. Because of his standing as a public leader with oratorical power, and a strong following in rural areas, Wilson appointed Bryan as his secretary of state. Bryan remarked, “The currency can be given all the elasticity it needs without increasing the privileges of the banks or the influence of Wall Street.” Wilson later would echo Bryan’s point, in saying “The greatest monopoly in this country is the money monopoly.”

The progressive wing was highly skeptical that the new system could be taken over by private banks, and Wall Street could undermine oversight on the banking system. Louis Brandeis in particular did not want bankers to be part of the Federal Reserve Board since as part of the banking system, they could not be trusted with objectivity and having public interest in financial stability and regulation

To reconcile the various perspectives on the central bank plan, President Wilson sought the advice of folks in Congress, relying on Representative Carter Glass of Virginia, who became chairman of the House Committee on Banking and Finance, and the committee’s adviser, H. Parker Willis, an economics professor from Washington and Lee. In order to get a viable version of the bill out of committee, Glass and Willis actively hashed out the pros and cons of the banking proposal.

During the negotiations, President Wilson consulted his trusted economic adviser, Brandeis, for direction. Congressman Bryan and Glass had valid concerns to which Brandeis came up with a middle ground. Brandeis told the president: “The conflict between the policies of the Administration and the desires of the financiers and of big business, is an irreconcilable one”. He warned that “Concessions to the big business interests must in the end prove futile.’’ To push forward, the proposal needs to satisfy both conservative and the progressive stakeholders. However, Brandeis voiced his concern that the proposed central banking system should not be owned by private banks but public. He argued that private interests would have undue influence over the system, and government oversight would be steered to benefit the industry while undermining public interest.

On June 17, President Wilson met with Congressman Glass, Secretary of the Treasury William G. McAdoo, and Senator Robert Owen of Oklahoma, chairman of the newly created Senate Banking and Currency Committee. The stakeholders landed a final proposal. There would be 12 regional banks around the country that are owned by private banks. In DC, a centralized Federal Reserve Board would be exclusively controlled by the government. For a sustainable currency, Federal Reserve Notes would be accepted as obligations of the United States. This avoids the pitfalls of the greenback currency that was issued on a temporary basis by Abraham Lincoln’s government to finance the Civil War. This compromise between the various views on central banking gave the proposal enough momentum to become a landmark legislation.


Heckscher, A. (1991). Woodrow Wilson: A Biography. Charles Scribner’s Sons.

Hofstadter, R. (1955). The Age of Reform. Vintage.

Link, A. S. (1956). Wilson: The New Freedom. Princeton University Press.