Finance Xpress: August 2020

Finance Xpress

Financial Benchmarks Investors Should Consider To Gauge Performance

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DR Podcast 335: How to Make the Most of Credit Card Rewards

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Finance Xpress

What You Need To Know About Renting A Room In Your House

4:23 AM

Are you thinking about renting out a room in your house to make extra money?

We owned a house before we started traveling full-time, and over the years we had four different roommates.

We were able to rent out an extra bedroom and the finished basement to our roommates, and it was a good way to make extra money.

While having roommates is not always perfect, the extra money we made over the years was really appreciated. It helped me pay off my debt and save some money.

And, I have experienced renting a room in a house on both ends.

Before I bought my house, I rented a spare room from someone else, and the roles were flipped.

While renting out a room involves some work, it is a somewhat passive source of income that can help you bring in some extra money without too much effort.

Making extra money by renting out a room in your home can have benefits such as:

Having more money to pay off your mortgage sooner
A roommate can watch your pets when you’re on vacation (in fact, I know of several people who have roommates for this very reason, and they give a discount to qualified roommates)
You can stop living paycheck to paycheck
Early retirement may be possible
You can diversify your income sources

While renting a room in your house most likely won’t make you rich, it may earn you a good amount of side income.

I know of a few people who have rented out several rooms in their house to roommates and they’ve been able to completely pay off their mortgage with that extra money.

According to Zillow, 30% of the U.S. adult population lives with either a roommate or parent. And, that has increased over the years. In some places, such as New York City, Los Angeles, and Miami, the percentage is over 40% of adults have roommates.

That’s a lot of people who have roommates!

There are many things to think about if you are interested in renting out a room in your house. It’s not an easy decision and will require some thought. Some people will love the extra cash they make by having roommates, and some people might find that they aren’t meant to live with others.

There are many things you can rent to make extra money, and renting out a room is probably the biggest and most consistent cash flow of things you can rent.

Side note: This post is about renting a room in your house on a long-term basis. If you are interested in renting out a spare room on a short-term basis (such as for vacations), I highly recommend you check out Airbnb. You can learn more at How We Reached Financial Independence Using Airbnb & Real Estate.

Content related to how to rent a room:

Below is what you need to know when renting out a room in your house for extra money.

What does renting a room include?

Are you wondering what exactly it means to rent out a room in your house? If you’ve never done it before, then you probably have questions as to exactly what it involves.

Renting a room in your home can mean a few different things. It may mean that you are renting out:

A bedroom within your home
Your full basement
Part of the basement
Mother-in-law quarters
Bedroom + living and eating areas, and so on

If you have a separate entrance, such as a basement with it’s own access door or mother-in-law quarters that have its own entrance, then renting it out will mean that you’ll have more space to yourself. Your renter will be able to come and go much more easily than if they have to use the main entrances in your house.

However, having a space with its own entrance isn’t as common, and you can still rent out a room without a separate entrance.

Many times when people get roommates, they are sharing their space and having another person live in their home. So, you’ll most likely be sharing the kitchen and living areas, and you may even be sharing a bathroom.

These are all things to think about when adding a roommate to your home. Are you prepared to have someone else use your kitchen, bathroom, washer and dryer, dining room, etc.?

You should take some time to think about how you use your home and how renting a room in your house will impact your life. You may have to make some adjustments to your lifestyle, but they may be worth it for the extra money.

Is it legal to rent a room in your house?

Before you spend any more time thinking about this, you should understand renting a room in your house laws, meaning is it legal where you live.

I recommend checking the laws in your city or town if you’re unsure. Some places can be a little more strict than others, and you don’t want to get in legal trouble.

If you are renting your home from someone else, then it’s always wise to ask for your landlord’s permission before renting space in your house. Your landlord might want a new contract written up or they might even say no.

If you live in a neighborhood that’s in a homeowners association, sometimes they don’t allow renters either. It’s very wise to check with your HOA so that you don’t get fined.

And, you will have to comply with federal and state housing laws. The Fair Housing Act prohibits discrimination in housing because of: race, color, national origin, religion, sex, familial status, or disability. You can learn more about this here.

How much should you rent a room for?

Determining reasonable rent for a room is a hard part of the renting process, but it’s important to charge a fair rate for your space and what comes with the rental.

I highly suggest that you start with some research before assigning a random number to your spare room. I say this because if you price it too low, then you may actually end up costing yourself money in the end (due to wear and tear, utility bills, etc.).

Also, if you price the room too high, then no one may be interested.

You can determine the price of your rental by checking comparables. You should look at:

What the going rates are for other spare rooms in your area
What extras they may be offering (private entrance, garage or driveway access, backyard, etc.)
Whether there is a private bathroom included or not, and more

One thing you will have to determine is whether you will include utilities in your rental rate or if you will split all of the utility bills with your new roommate. You may lose money if you include utilities and your new roommate is wasteful when it comes to electricity, water, etc. By splitting utilities, your roommate will most likely be more mindful of what they are using. But, it can be easier to just include all bills into the monthly rent payment.

I’ve seen room rental prices from anywhere around $400 a month to over $1,000 a month, depending on the area, home, and amenities.

Remember, even just $400 a month is $4,800 a year. That is a good chunk of money!

How can I find renters for my spare room?

There are many places where you can advertise your rental.

You can:

Share with friends and family
Put a sign on your front lawn
Share the information on your personal Facebook page
Place an online ad on a website such as Craigslist

Everyone and everything is online now, so posting your ad online will most likely be your best choice.

Always be honest with your listing. You should be honest about how big the room is, what rooms come with the agreement, if there is a separate entrance, and more. Also, be sure to include pictures of what is included.

Should I be renting out a room in my house to a friend?

All of the people who have rented a room from me have all been friends or family, and they were all a good fit for us. Wes and I knew the people were looking to rent a room, and we had extra space in our house that we could rent out for extra money.

While we had a positive experience, I have heard about horrible experiences renting a room to friends or family. It might be someone who thinks they don’t need to take the rules of the agreement seriously, that it’s okay to be late with rent, and that they can make a mess.

In many of these situations, it hurt the relationship between the people.

My best piece of advice is to be upfront with your rules and expectations, and tell your friend or family if there are any issues as soon as they come up.

However, if you’re worried about hurting your relationship, then you may want to avoid it all together.

How can I make sure it’s a good fit with my future roommate?

You probably don’t want to take any random person when renting out a room in your house.

So, always conduct interviews just like you would if you were renting out your whole home.

Here are some things you should ask about when interviewing a potential roommate:

Do they have a consistent job
Their recent living history and why they need a new place to live
Their work schedule (like, if they work the night shift while you work a normal day schedule)

Conducting interviews is important because you can learn more about the possible roommate and determine if the two of you will get along. You will be living within feet of them, so this is a very wise step to take.

I also recommend asking for references, as this is what a landlord or property manager would do when renting to a new person.

You can even do a background check if you would like as well. After all, you will be living with them!

Should I set rules with my roommate?

Before your new roommate moves in, it is always a great idea to go over the rules and expectations for living together.

This can help you avoid misunderstandings and arguments, and you can even create a contract that covers all of these things.

Some of the things you may want to talk about and put in a written contract include:

The monthly rent amount
The date that rent is due each month and how it is to be paid
The length of the rental period
Whether or not they can have guests, parties, sleepovers, etc.
The noise level that is allowed
Cleaning duties
Which areas are off limits
Smoking policy
If pets are allowed
Where they are allowed to park
How to split bills and costs, such as utilities, toilet paper, trash bags, and more

And the list goes on. I recommend talking about this stuff as far in advance as possible so that there are no surprises on either side.

Do I have to pay taxes if I rent out a room in my house?

I am not a tax expert, so I would rather point you to tax professionals who knows these answers from a legal perspective.

Two resources that can help answer this questions are:

Summary – Should I rent out my extra room?

As you can see, there’s a lot that goes into renting a room in your house. While it can be somewhat passive once you have the person actually living with you, setting it up and preparing to find someone isn’t always an easy task.

But, that doesn’t mean that it has to be impossible.

Think about both the positive and negative impacts it may have on your life. The biggest positive is that you can make extra money renting a room in your house. You may be able to save more money, stop living paycheck to paycheck, and pay off debt.

The hardest part is that you will have to get used to living with other people in your space. And in rare cases, you may end up with a roommate who doesn’t want to pay rent or makes a mess. This doesn’t happen often, but you should be aware of it.

Still, plenty of people each and every year find roommates and successfully live with them.

Whether or not you rent a room in your house is up to you. I’m so glad we had people renting from us over the years, and I would do it again if I needed to.

Are you interested in renting a room in your house for extra money? Why or why not?

The post What You Need To Know About Renting A Room In Your House appeared first on Making Sense Of Cents.

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Will a Covid-19 Vaccine Change the Future of Medical Research? (Ep. 430)

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We explore the science, scalability, and (of course) economics surrounding the global vaccine race. Guests include the chief medical officer of the first U.S. firm to go to Phase 3 trials with a vaccine candidate; a former F.D.A. commissioner who’s been warning of a pandemic for years; and an economist who thinks Covid-19 may finally change how diseases are cured.

Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.

* * *

When you’re in the middle of a global pandemic, which has been destructive and disruptive on so many levels, it’s hard to have much clarity about anything. It’s even harder to have any certainty. But one thing seems at least likely, when history looks back, the Covid-19 pandemic will be divided into two eras: before the vaccine and after the vaccine. Assuming, of course, there is a successful vaccine.

After all the illness and death, the economic hardship, the frustration and the finger-pointing, a vaccine is the single event that will help us turn the page. Vaccines typically take years to develop. Not this time. A month ago, the first American vaccine candidate went into Phase 3 clinical trials, which means we could be very close. And there are a number of other promising vaccines. Today on Freakonomics Radio, we hear from the chief medical officer at the biotech firm that developed this first U.S. vaccine candidate:

Tal ZAKS: When people ask me about, well, “How has this been possible to move so fast,” there are three components.

We hear from a former F.D.A. commissioner about going from successful vaccine to successfully vaccinating billions of people.

Peggy HAMBURG: It’s like building the plane as you’re trying to fly it in gale-force winds of a pandemic vortex.

And if you are the kind of person who likes to look for a silver lining in even the darkest clouds, we hear how Covid-19 may inspire a new way to fund medical R&D:

Andrew LO: We actually have the ability to develop therapeutics for many of these diseases, if not cures. So, why aren’t we doing it?

* * *

Tal Zaks, who grew up in Israel, started out in cancer research, which led to cancer-drug development at pharmaceutical firms like Sanofi and GlaxoSmithKline. And now?

ZAKS: I’m the chief medical officer at Moderna.

Moderna is a biotech company in Cambridge, Mass.

ZAKS: And the magic sauce, if you will, it’s a place where science, medicine, and engineering find this fascinating melting pot.

Until recently, Moderna was best known for its very successful 2018 I.P.O., and its multi-billion-dollar valuation, despite a glaring lack of success in bringing drugs to market. Some investors became frustrated as the company shifted its focus to vaccines. In the pharmaceutical industry, vaccines are considered difficult and financially unviable. After all, a vaccine is a drug that people will take only once, or maybe a few times — not every day. But now, Moderna is better known as having developed, in partnership with the National Institute of Allergy and Infectious Diseases, one of the most promising vaccines for Covid-19.

ZAKS: So, our vaccine candidate is called m.R.N.A.-1273. It is an m.R.N.A. molecule.

m.R.N.A. meaning messenger R.N.A.

ZAKS: It’s a transient instruction set, it lasts in the cell from 24 to 48 hours or so. And then it’s degraded and gone. But in that time, it coaxes the cell to produce the protein that it encodes for. And so that fundamental information, if you will, is the underpinning of our technology.

And how is it supposed to work?

ZAKS: So, what it does is it actually takes the instruction sets for part of the virus, the protein that the virus uses to attach itself to cells, and it encodes them in this messenger R.N.A., so that when we inject the vaccine into somebody’s arm, it actually causes that person’s own body to make that protein. Just that piece of the virus. So, that the immune system can get educated, can get immunized against that piece of the virus.

So, that now if you’re walking down the street and somebody sneezes on you and there’s SARS-CoV-2 in the snot, it actually doesn’t do you any harm because your immune system has seen that protein before. And it reacts very quickly to prevent the spread of the virus in your body.

In the global race for a Covid vaccine, different researchers are trying a variety of methodologies and platforms. The m.R.N.A. approach is not among the most common. More typically, vaccines are developed using a weakened or inactivated version of the virus itself. This means scientists have to grow and tweak the virus to generate a viable vaccine. An m.R.N.A. approach lets you skip that. Indeed, Moderna’s vaccine candidate entered Phase 1 safety trials just two months after Chinese health officials shared the genetic sequence for the novel coronavirus.

ZAKS: In fact, Moderna has never had the SARS-CoV-2 virus anywhere in our premises. We don’t need it. We start from the digital information of what the virus encodes for and go on from there.

And on July 27th, Moderna became the first U.S. vaccine candidate to enter Phase 3 trials, also known as efficacy trials. That will determine whether the Moderna vaccine can reliably and safely protect against Covid-19.

ZAKS: The way the trial is set up is, we’re taking 30,000 participants, we’re trying to choose people who are at risk for infection, because if you went and vaccinated somebody like me — well, I’d go back into my own house.

That’s because Zaks, like many of us, is working at home.

ZAKS: I’ve not been to the office since March.

Stephen DUBNER: I assumed that Moderna was one of the exceptions, that there’s a lab, and that all the industrious people have to go there and be physically present.

ZAKS: That is absolutely true. The best thing I can do for them is to stay out.

Which is why Zaks himself would not be a good candidate for the vaccine trial.

ZAKS: You know, the likelihood of me getting infected is going to be very low and the trial would never read out. We’re also trying to enroll participants who are at risk of severe disease should they get infected. And that has to do with the elderly people with comorbid conditions.

Participants in the Moderna trial are being recruited from nearly 100 locations across the country.

ZAKS: So, what we do is we vaccinate people. Half of them are going to get our vaccine. Half of them are going to get a placebo. And we basically then wait and start to see who raises their hand and says, “I don’t feel too good, doc, maybe I’ve got Covid.” And once they do, then a whole system kicks into gear to diagnose them, measure their oxygen level, make sure they’re cared for, but at the same time, start tallying up a scorecard.

How many cases occurred on the Covid-immunized arm versus how many cases are occurring on a placebo? And as you can imagine, the moment we will have sort of a statistically significant difference that will drive our determination of efficacy.

DUBNER: Can you tell me anything about what you know so far?

ZAKS: Well, what I know so far is two very important things. The first is, I know that the vaccine can generate neutralizing antibodies that are, on average, higher than what you see even with infection. And the second thing I know is that the safety and tolerability profile, so far as we’ve seen from Phase 1 and Phase 2 trials, is it’s pretty much what you’d expect. So, now the question is, well, what does that look like in a much larger population of tens of thousands of people? And does that immune response — that you are optimistic will prevent disease — can it indeed be shown to prevent disease?

Shortly after Moderna’s vaccine candidate entered Phase 3 trials, there was another m.R.N.A. candidate, from the pharmaceutical firm Pfizer and their German partner BioNTech. There are other vaccine candidates in Phase 3 that use a D.N.A. mechanism, including one from Oxford University and the British-Swedish pharma firm AstraZeneca; there’s one from the Chinese firm CanSino Biologics; and the American firm Johnson & Johnson just announced that its Phase 3 trial, to begin in September, will enroll up to 60,000 participants. Other companies are going the conventional route of using an inactivated virus, including the American firm Merck. Other candidates, like the one from the American firm Novavax, use a protein-based mechanism. Each scientific approach has its upsides and downsides. In the case of the m.R.N.A. approach that Moderna is using, one downside is that it’s relatively unproven — and not just at producing a successful vaccine.

DUBNER: So, as I understand it — and please correct me if I’m wrong — several other pharma and biotech companies have tried an m.R.N.A. approach for various treatments and abandoned it. And again, as I understand it, no m.R.N.A. drug has ever been approved for human use. So, despite your optimism on the Covid-19 vaccine that Moderna is working on, why should we believe that this one will work?

ZAKS: Well, I think what we have done uniquely is leverage a decade of engineering and science on top of medicine to sort of break the riddle of how to get an m.R.N.A. to make enough protein. And the second element is, we already have proven time and again that we can generate neutralizing antibodies with this vaccine. So, the question ahead of us is not whether m.R.N.A. will work. The question ahead of us is whether neutralizing antibodies are going to prevent Covid-19. And I think the likelihood of that answer is very, very high.

If the Moderna trial is successful, their vaccine could be approved for emergency use as early as this fall. When you think about the successful vaccines in our collective past — for polio or measles or H.P.V. — the timeline from discovery to licensing is, on average, 10 to 15 years. The novel coronavirus that causes Covid-19, meanwhile, was identified less than one year ago. There’s obviously been huge pressure to find a vaccine in this case, since the disease has proven so communicable, sometimes fatal, and has disrupted life around the globe. Still, how has there been so much progress so fast? I asked Tal Zaks to explain the speed from the Moderna perspective.

ZAKS: There are three components. One is, our science and technology enables us. It enabled us to start in record time and it’s also enabling us to increase our manufacturing so rapidly. No. 2, the level of collaboration has meant that we don’t usually wait for the weeks and months that you typically wait in the drug-development cycle. I think we’re very fortunate in this country to have the F.D.A. that we do. They are working nights and weekends just like we are.

And the last element that I think people often don’t appreciate: one of the biggest reasons that it takes so long for developing vaccines is because, remember, vaccines are treating a healthy population, trying to prevent a really uncommon event of an infection. And so typically, you go and you treat thousands, sometimes tens of thousands, and then you sit around and you wait for years for the events to accumulate. Well, in the current transmission in the United States, unfortunately, that transmission is high. And in a very paradoxical manner, the worse it is out there, the quicker we will be able to demonstrate efficacy.

HAMBURG: We are moving at unprecedented speed.

That’s Peggy Hamburg. She’s a physician and public-health expert who was the commissioner of the F.D.A. from 2009 to 2015. She’s still involved with a variety of institutions, including the National Academy of Medicine, that promote vaccine development and access to vaccines.

HAMBURG: Vaccine development is a challenging process. It can be very high-risk. Most vaccines that are initiated in the R&D process go on to fail.

Much earlier in her career, Hamburg did AIDS research — at the N.I.A.I.D., as a special assistant to Anthony Fauci. (Yes, Fauci has been there quite a while.) Later, when she ran New York City’s health department, Hamburg promoted needle-exchange programs to reduce the spread of H.I.V., the virus that causes AIDS. It is easy to forget how frightening, and fatal, H.I.V./AIDS was. We can forget because of the massive research that led to therapeutics which have made the condition treatable. But it’s also worth remembering that, despite all that research, a successful AIDS vaccine has never been discovered.

HAMBURG: Certainly, the experience with H.I.V. vaccines is a reminder that even with some of the best minds in science, and considerable investment of time and dollars, it’s a scientific challenge that has proven very, very hard to crack. It looks as though this coronavirus is probably a lot easier to make a vaccine against. But that remains to be seen.

Hamburg is impressed by the accelerated timeline of the Covid-19 efforts. Typically, many vaccine candidates don’t make it all the way through the three main phases of clinical trials. So, companies try to minimize their losses.

HAMBURG: And each of those stages is generally done in a very discrete way, where you do a stage, you sort of assess where you are, you make more vaccine so you can go on to the next stage. And that can take a very, very long time. And in this case, there’s been a real effort to compress the stages in important ways.

In the U.S., this effort has been coordinated at the federal level by Operation Warp Speed, whose stated goal is to “deliver 300 million doses of a safe, effective vaccine for Covid-19 by January 2021.” Among the agencies involve d are the Department of Health and Human Services and several constituent H.H.S. agencies including BARDA, the Biomedical Advanced Research and Development Authority, as well as the Department of Defense. Instead of the normal discrete approach that Peggy Hamburg described, Operation Warp Speed is compressing the process: Moderna, for instance, was allowed to move into Phase 3 trials even though its Phase 1 and 2 studies are still ongoing.

HAMBURG: And importantly, also, the companies and the government working together are investing in making a lot of vaccine beforehand, even not knowing whether a given vaccine candidate is going to make it through these different stages and actually cross the finish line. So, you may be creating a manufacturing facility and preparing for a large scale-up and actually making vaccine that ultimately, will end up in the garbage. But that’s going to be important, because as soon as we have a vaccine that proves that it’s safe and effective for use, you’re going to want to be able to give it to not just hundreds of thousands of people, but literally billions of people, because this is a global pandemic.

Operation Warp Speed is trying to increase the odds of success by spreading R&D money across a bunch of vaccine candidates, and not all American firms. For instance, $2.1 billion has gone to Sanofi and GlaxoSmithKline, in return for 100 million future doses. BARDA recently awarded Moderna $1.5 billion for 100 million future doses; that was on top of an earlier nearly $1 billion from BARDA. Moderna, keep in mind, is a publicly traded company whose market capitalization at one point had more than quadrupled on the news of its vaccine efforts. I asked Tal Zaks what this new tranche of government money meant to the firm, and what it entitled the U.S. government to.

ZAKS: The company has been funded over the years by billions of dollars of private investment. Those billions created the opportunity for the U.S. government to come in earlier this year and say, “I’m going to add some money to the pot to make sure that you get the development for this vaccine right.”

However, I can promise you that every one of those dollars will be accounted for. That’s not money that goes to our coffers, nor is it money that goes to our profits. That’s going to be part and parcel of our ability to manufacture and provide access to the U.S. population through what I anticipate to be central purchasing by the U.S. government, or at least I hope so.

DUBNER: And is that purchasing, whether it’s central or otherwise, is that guaranteed? What if the U.S. government says, “We’re going to give you guys $30 a dose,” and then let’s say Saudi Arabia or China comes and says, “You know what, Tal? I’ll go $100 a dose, and I’m going to buy double what the U.S. had committed to buy.” What happens then?

ZAKS: So, we have been very disciplined and very thoughtful back from January and February about how we do this. We’ve set a price that was reasonable and a price that allowed governments to pre-purchase access. We’ve not played any favorites. Clearly we’re domiciled in the United States. And I think the U.S. has sort of first dibs.

But we’ve also set up a manufacturing site in Switzerland to enable sort of a neutral country for rest-of-world supply. And at that point, what we’ve said is, to the governments who are interested, basically, it’s a question of time, which is to say, if you sign up now, then I can guarantee you that the first production lot, you’ll get a cut of it. And that’s how we’ve tried to be responsible to the unmet need out there.

DUBNER: So, Moderna has been criticized for its, “secrecy,” for not sharing its methodology and results in peer-reviewed scientific settings. One scientist who used to work at Moderna says it is as much, if not more, of an investment firm than a biotech firm, or at least a biotech firm that will successfully bring drugs to market. How do we know that you’re not the next Theranos, I guess, is what I want to know.

ZAKS: Look, that would have been a legitimate question in 2015, 2016. It’s not today, for the very simple reason that we’ve published dozens of scientific papers on everything from the underlying science of our technology to our effects in human beings. Now, it’s true that in the beginning, we didn’t publish much.

And I’ll tell you a personal story. When I joined in 2015 and I came to one of my first executive committee meetings, I said to the team, “Okay, so we’re not publishing much.” And everybody said, “Yep.” I said, “Well, why is that?” And they looked at me, said, “Well, why do you want to publish?” And I said, “Well, so that we attract good talent.” And they looked at me and said, “Well, we got good talent.” “Okay, so that you’ll attract funding.” And they looked at me and said, “Well, we’ve got funding.”

So, I have to think, “Okay, so why do we publish?” And the answer was for all of the above reasons — except for I.P. considerations. In the early days, it was very important to not publish so that we could get all of our patents, which is ultimately what value here is built on. Now, I will tell you this, my comeback, because it made me step back and think — I said, “Okay, let me just be clear. Every experiment we do in men, even Phase 1, even when it’s not required by regulations, we will publish. Otherwise, I’m not your chief medical officer.” And they said, “Yep, of course.”

And then I went a step further, said, “Okay, so when we get into the clinic, we should be publishing the preclinical basis for our clinical experiment. Do you agree with that?” And everybody looked at me and said, “Yep, that makes sense. That’s got nothing to do with our I.P.” And we’ve done that. I would challenge you to find any other company who is entering Phase 3 trials today who have been as transparent about their clinical activities as we have.

LO: The comment that Moderna looks as much like an investment company as a drug company, from a financial economist’s point of view, I have to say, “Is that a bad thing?”

That is Andrew Lo, who happens to be a financial economist, at M.I.T. He is, among other things, a leading scholar in the field of risk.

LO: Any biotech company — and I don’t have any particular inside information about Moderna — but any biotech company has to manage their finances properly. In the same way that you and I have to make sure that we are spending within our budget and we are saving for retirement, a company has to be equally responsible. With a biotech company, this is even more important because funding is the lifeblood of a biotech company. Without money, they can’t conduct clinical trials. They can’t do research. And so, all the progress that we see will stop if they run out of money. And the asset that they worked so hard to develop actually gets destroyed.

You know, if you’ve got a parking lot and you go bankrupt — well, the parking lot gets transferred to your creditors and they’ll develop the parking lot. No big deal, no loss. But if you’re developing a drug and you go bankrupt, and all the expertise that’s involved in developing the drug go off to other areas and other pursuits, because they’ve got families to feed, the value of that asset — even though you’re close but not quite there — it’s destroyed.

It’s like building half a bridge. A half a bridge is not half as good as a full bridge. So, based on an outsider’s perspective looking in, Moderna has managed their finances quite successfully. They have a lot of cash. Their cash is going to be used to develop not just this vaccine, but a number of other vaccines. But there is tremendous amounts of risk. If they’re successful, I hope they’ll make a lot of money. If they’re not successful, then the investors could literally lose everything.

I asked Lo how he’d come to be interested in the economics of drug development.

LO: Well, I got interested in medicine a few years ago when a number of friends and family were dealing with various kinds of cancer. And the more I looked into the situation, the more I realized that finance actually plays a pretty big role in drug development and delivery. And so, I’ve been working over the last few years on applying concepts of financial engineering — things like portfolio theory, securitization, risk management — to seeing whether or not we can actually come up with better business models for developing drugs and getting better drugs to patients faster and ultimately cheaper.

So, he’s been exploring what kind of incentives will best lead drug companies to invest in the risky and costly business of vaccines.

LO: Exactly. The question is, what is a particular drug worth, and therefore, what are you willing to pay for? It’s a very difficult question because it varies. And frankly, when I started studying the economics of these different drugs, I was quite surprised that vaccines were priced so cheaply. I mean, to give you an example, for flu, it’s on the order of $10 to $20 a dose. For some of the rarer diseases, maybe it’s up to $100 a dose. That’s in the United States. In third-world countries, it tends to be much less. You can get vaccines for a few pennies a dose in certain cases.

And it always struck me as odd because if you think about what a really effective vaccine does — what would you pay for something that basically eliminates the risk of getting a disease permanently? I would have thought you’d pay a lot. For example, if you have cancer, God forbid, if there is a cure, you would pay a lot for that cure. The typical cost of a leukemia patient for taking Gleevec is on the order of $100,000 to $150,000 a year. And yet, we’re balking at paying, I don’t know, $50 or $100 for vaccines, even though it actually will prevent you from getting the disease for a very, very long time, if not for the rest of your natural life.

DUBNER: So, there are many firms and institutions seeking to develop a successful Covid-19 vaccine right now, obviously. Let’s assume that one or more are successful relatively soon. Fingers crossed. What can your research tell us about the most successful way to coordinate distribution, how to balance medical need with the economics? What can you tell us about who gets it, when do they get it, who pays for it, and so on?

LO: I wish I had a good answer for you but let me first start out by saying that part of the challenge of thinking about these issues is that it’s not just about the economics. The fact is that when you’re dealing with life-and-death issues like Covid-19, there are ethical issues that come into play that have nothing to do with economic considerations. Or rather, they shouldn’t have anything to do with it.

So, I think what we can say is that it’s important to get the economics right, meaning it’s important that we get the pricing of these vaccines correct so that they provide both a reasonable rate of return to investors who have risked their capital to develop these vaccines, while at the same time making sure that there’s no price gouging going on and that ultimately we provide access to everybody. So, that’s the balance that I think we have to strike.

DUBNER: I hate to say it, that sounds impossible to me. I mean, your brain is obviously much larger than mine, but those sound like they are often quite competing forces.

LO: They are. But I think we’ve been able to thread this needle in many other contexts. For example, we have drugs for cancer, for diabetes, for heart disease. And the kind of social contract that we’ve struck is that we are willing to let pharma companies and biotech companies make a lot of money, in some cases crazy amounts of money, in exchange for eventually giving society the underlying secrets of their sauce for free.

There are companies that have made tremendous amounts of money based upon patents for certain drugs. But at some point, those patents expire. And when they do, the drugs become essentially free. That’s happened with statins, for example, that deal with heart disease. But nevertheless, because infectious diseases are a public-health issue, governments have to be involved in ways that for other drugs they don’t.

And so, we need to be careful that while we want to give everybody access at a reasonable price, we also want to make sure that these biotech and pharma companies that have risked their investors’ capital are able to continue doing so in the future. That’s the balance that I think we have been able to strike in the past for private-sector initiatives. And for public-health initiatives, I believe that collectively we have big enough brains to figure out exactly how to thread that needle.

Here’s what we know so far about the pricing of a prospective Covid vaccine. At a Congressional hearing in July, AstraZeneca and Johnson & Johnson said they would sell their vaccines at cost, at least during the pandemic. Merck, Pfizer, and Moderna have said they plan to make a profit. Pfizer estimated a price of $19 per dose for a two-dose vaccine, but priced less for low-income countries. Moderna priced their vaccine at around $25 to $30 a dose, although the implied price based on their Operation Warp Speed deal is slightly lower. I asked Moderna’s Tal Zaks how his firm has been thinking through the pricing of what could be its first blockbuster drug.

ZAKS: I think of it as three elements. The first is, what do I think the value that this vaccine brings? The second is, what is my responsibility to society in the context of a pandemic, of this unheard-of crisis? And the third is, where do I objectively land up in the real world? And so let’s start with those. In terms of value, it’s pretty clear that even if you take away the value to the economy and take away the value to society and just stay with the hardcore direct health-care benefits that this vaccine is expected to prevent, you’re going to come to a very expensive price.

Now, it’s going to be a price that none of us are going to be comfortable paying, which is where the second element comes in. Okay, this is a pandemic. I’ve got a responsibility to society. So, most of that value will go to society. I will actually end up with a small proportion of that. And then the third element for me is, okay, what makes sense. And I have to tell you, when I step back and I see that our price range and what we’ve disclosed is actually cheaper than a diagnostic test, I feel good about it, because think about it — every time you get a fever, you get sick, and you’re worried about it, you have to go get tested, you’re going to use a diagnostic test probably more than once or twice. Whereas a vaccine, you get two doses, you should be good for a while.

* * *

The former F.D.A. commissioner Peggy Hamburg warns that developing a successful Covid-19 vaccine isn’t the only hard part of immunizing the population.

HAMBURG: Just because you can make a vaccine and even test it doesn’t mean that you can scale it up to the kinds of huge numbers that we’re talking about. And lots of things can go wrong in that process. It’s having all of the tools that you need to package it into the glass vials with the rubber stoppers, having the needles and the alcohol swabs to administer it, and then getting it to the people who need it.

The supply of a successful vaccine is bound to be limited, at least in the beginning. This gets to the question of who gets it first — which countries, and which individuals within a country. Hamburg sits on the board of GAVI, the Global Alliance for Vaccines and Immunizations.

HAMBURG: Yeah. Well, GAVI is an organization that has now existed for several decades. It was created through a combination of philanthropy and support from a range of nations in order to provide this well-proven public-health tool of vaccines to the poorest countries of the world who otherwise might not have access.

In normal times, GAVI shares the cost of vaccines with developing countries, and also negotiates lower prices with drug manufacturers. For the Covid-19 pandemic, GAVI created what’s called the COVAX Facility, which encourages high-income countries to fund a portfolio of promising vaccines. Those countries would guarantee themselves future doses while their money would subsidize vaccine purchases for lower-income countries.

DUBNER: And can you describe the incentives that COVAX gives high-income countries and whether, in this case of Covid-19, it’s going to be enough? You know, if supplies are limited, what’s to prevent a government from going outside of COVAX, even if they have contributed, and making their own deal with pharma companies and buying up supply?

HAMBURG: Well, at present, while many countries have expressed interest in supporting COVAX, the United States has not made any such commitments. It is understandable that the United States and many other nations are pursuing strategies to help ensure vaccine development and access within their own countries. But I think there is a very strong and powerful argument for why it is in the U.S. interest and in the interest of other nations to also invest in and support access to Covid-19 vaccines in countries around the world.

This is a global pandemic. Virus and disease anywhere puts us all at risk. In addition, we just were talking about how vaccine development is an uncertain, high-risk prospect — we don’t know which vaccine strategies are going to work. So, in fact, you can argue that while you might make some big investments in companies that you’ve prioritized and vaccine candidates that you as a country believe hold the most promise, you’re better off if you diversify your portfolio.

DUBNER: But you must be frustrated that COVAX is not getting greater buy-in than it is, yes?

HAMBURG: Well, it’s an extraordinary undertaking and I think reflects the kind of global coalition that we need to address a global pandemic and that, frankly, we need in a globalized world. But—

DUBNER: But isn’t it inherently hard to build that coalition once you’re in the pandemic?

HAMBURG: It’s very hard to build that kind of coalition ever. And it’s especially hard when you’re in the midst of a crisis. It’s like building the plane as you’re trying to fly it in gale-force winds of a pandemic vortex. But I think that this is, really, also the time to be doing it before we have clear winners and losers in the vaccine race. Because that’s when, in fact, the argument for “What’s in it for me? What’s in it for the U.S.?” in some ways is the strongest. Because it may be that there are vaccines being developed in other countries that will, in fact, cross the finish line first.

DUBNER: Yeah. We’ve been reading lately that current F.D.A. Commissioner Stephen Hahn is “caught between scientists and the president,” as The New York Times put it. I’m curious how you would describe what you see to be his dilemma.

HAMBURG: Well, there’s no doubt that these positions in public-health leadership and especially, I think, the F.D.A. — you are operating at the interface of science, medicine, public health, and politics. And that can be a dangerous interface. I had the opportunity to talk with him before his confirmation process. And I told him then that he absolutely needed to stand by the science, that he would be pushed in many different directions, many competing priorities, many different stakeholders, many with loud voices and sometimes sharp tongues. But that, at the end of the day, what enables you to keep on track is using science as your North Star.

He sits at the head of a unique and essential public-health agency that was put in place over 100 years ago to promote and protect the health of the American people. It is a regulatory agency that, in fact, is the gold standard for the world. The responsibility is huge, but the opportunity to make a difference by doing the right thing is also huge.

DUBNER: Putting aside the supply of a Covid-19 vaccine, what about the demand? So, presumably if the F.D.A. did not approve a vaccine but somehow the White House said, “No, this is the one, let’s all take it,” presumably that would dampen the public’s appetite for a Covid vaccine. But even, let’s say, the F.D.A. approves, I’ve seen research suggesting that only half of Americans at the moment say they would take it. Can you talk about that for a moment, general appetite for vaccines? What happens if take-up rate is only, let’s say, 30 to 50 percent?

HAMBURG: Well, vaccine hesitancy has been a longstanding concern. It’s been fueled by a strong anti-vaccination movement in this country and elsewhere. But also, in the case of the current public-health crisis, there have been concerns because of the politics of the situation and the acceleration of the R&D process that’s been much discussed — people who normally are supportive of vaccines, asking questions of, “Can we really trust it? Will it be safe? And if they say it’s effective, can we really believe that?”

And, of course, there are populations that over time, not because of the anti-vax movement, but because of other experiences, that have questioned certain kinds of medical research and medical programs. You know, many in the Black community remember the Tuskegee experiments and other situations of exploitation. So, this is the moment now to get out there and start engaging the many different constituencies that we would want to get vaccinated that may have questions.

DUBNER: I know that in 2008, you co-wrote a report called “Germs Go Global: Why Emerging Infectious Diseases Are a Threat to America.” You and your co-authors advocated for more public-health capacity, more monitoring of infectious disease, more international coordination, and also urged Congress to add incentives for vaccine and diagnostic R&D. So, tell me, how much of that actually happened? And for that which didn’t happen, why not?

HAMBURG: Well, that report was reflecting experience with both SARS and the biological threat of anthrax as a deliberate cause of disease. It also was reflecting back on experience I’d had as New York City health commissioner, dealing with what was then still an emerging pandemic of H.I.V. disease, as well as the resurgence of tuberculosis there, now in a more dangerous, drug-resistant form. And all of those experiences led me early on to be focused on vulnerabilities to infectious-disease threats that had the capacity to be catastrophic.

Many thought I was crazy early on. And some high-level people in science, medicine, and public health did sort of pat me on the shoulder and say, “You should really work on real world issues. Maybe you’ve been reading too many science fiction books.” But Covid-19 is the living experience of some of our greatest concerns. It has been surprising to me that we haven’t done better in our response, surprising and deeply saddening and scary.

I asked Andrew Lo, the M.I.T. economist who studies risk, why he believes the U.S. was so underprepared for a pandemic like Covid-19.

LO: Well, I would say that it’s two things. It’s a market failure, certainly, because, after all, infectious diseases are a public-health issue and there is an element of a public-goods aspect. You don’t want people to be infected, not just for their own benefit, but you don’t want them to be infecting others. But there’s also a behavioral failure. And the behavioral failure is that we don’t like paying for things that we don’t really need right away.

DUBNER: Flood insurance, for instance.

LO: Exactly. Out of sight, out of mind. And so, until recently, infectious diseases have been pretty much out of mind. And historically, particularly over the last 10, 20 years, governments have not been willing to pay for a number of vaccines, particularly those for diseases that have not yet broken out. In other words, they don’t stockpile vaccines. And a number of organizations have pointed out that that’s probably not a good idea. We probably need to think more proactively about developing vaccines for infectious diseases that might break out in the near future.

That need gave Lo an idea: to increase the financial incentives for pharma and biotech companies by setting up targeted investment funds.

LO: Let’s back up and just think about how a drug gets developed. A typical cancer drug takes about $200 million in out-of-pocket costs. That’s the kind of cash you would need to take a drug from the preclinical stages all the way through clinical trials — Phase 1, Phase 2, Phase 3 — and then get it approved by the F.D.A., if you’re lucky. The process of doing that, this $200 million, is actually fraught with a great deal of risk. In fact, for cancer, historically, the probability of success is about 5 percent. So, in other words, if you start out with a $200 million investment, you wait 10 or 15 years for the clinical trials to be done, and then at the end of that process, you’ve got a 5 percent chance of getting any kind of economic return.

That’s not very attractive. And so, financial engineering takes that and says instead of doing one at a time, maybe you do a whole bunch of them at a time. For example, if you did 150 of them at a time, even if individually they have a 5 percent chance of success, out of 150 independent trials, each with a 5 percent chance, you’ll actually have the probability of producing at least three hits with a probability of 98 percent. So, this is basically Moneyball applied to cancer-drug development.

What Lo is suggesting here is not so different from the portfolio the U.S. government has been building with Covid-19 vaccine candidates. It’s just on a larger scale, with a more systematic approach. Lo believes this concept could be applied to drug R&D of all kinds. In one recent paper, he and his co-authors explored the idea of a megafund devoted to vaccines.

LO: It turns out that for the cost of something on the order of $25 to $50 billion, we could actually develop a portfolio of vaccines for nine of the most serious infectious diseases, as identified by experts like the World Health Organization. And from my point of view, that is a wonderful, wonderful bargain. Because if you look at what’s happened now with Covid-19, with SARS in the past, with MERS, with some of the other threats, any of which could break out and spread very, very quickly, this is a good investment for society.

DUBNER: Were any of those nine somewhat close to what turned out to be this novel coronavirus?

LO: Yes, there was at least one that was similar to a coronavirus.

DUBNER: When did you write this paper?

LO: Well, we actually wrote the paper three years ago, but we struggled to get it published because there wasn’t nearly the interest that there is now. And so we just posted it a few weeks ago on medRxiv.

DUBNER: So, I don’t mean to be a conspiracy theorist or a pure speculator. But let’s say you had published that paper a few years ago and that had led to the development of said fund of, let’s say, $50 billion. Would there have been a Covid-19 vaccine before Covid-19 started to do so much damage?

LO: Well, you know, it’s easy to say, “Could have, would have, should have.” And I think that nobody really knows for sure. But I think it is possible to conclude that had such a fund been set up even a year ago, there would be a lot more focus and attention on these issues and we would have been able to react much more quickly. $50 billion is literally a drop in the bucket when it comes to being able to deal with these kinds of threats. And the thing that really frustrates me is that it’s not as if we don’t have the scientific expertise. We actually have the ability to develop therapeutics for many of these diseases, if not cures. So, why aren’t we doing it?

ZAKS: Well, I think Monday morning quarterbacking is always easy.

That again is Tal Zaks, the chief medical officer at Moderna.

ZAKS: I think it’s pretty clear to all of us that no country in the world has been prepared in terms of the infrastructure required to deal with this pandemic.

DUBNER: Now, if I’d come to you and Moderna, let’s say five years ago, and said, here is $30 billion — which is roughly the market cap of your company right now — and said, I want you to use this to develop a stockpile of vaccines for, let’s say, the 10 or 20 most likely infectious diseases to emerge over the next five to 10 years. Could you’ve done that?

ZAKS: I believe so. Internally, we already have this project, we call it the Never Again Project, of how do we ensure that we sustain ourselves and the platform, the manufacturing, the science capabilities, because there will be a SARS-CoV-3. Now, that being said, of course, there is a very difficult, inherent commercial challenge here, or economic challenge, of how do you prepare yourself for a need that actually isn’t there today? Somebody has got to bear the cost of that.

DUBNER: To a federal government of a country the size of the U.S., a $30-billion rainy day vaccine fund doesn’t seem very expensive, does it?

ZAKS: Look, $30 billion is still a lot of money when you look at all the competing priorities at the federal level. If you think back to how we all were walking around in October, November of 2019, I think $30 billion to do that would have sounded like a large number for us. I think our perspectives have irrevocably changed.

LO: The difficulties are it’s kind of hard to think and make decisions when you’re under pressure.

Andrew Lo again.

LO: You know, if I asked you to do some math problems and put a gun to your head, you might make more careless mistakes than usual. And I think the same is true. We have a very big gun to our head. People are dying every single day and we need to get a vaccine and other therapeutics to those patients as soon as possible. The benefit, on the other hand, is that now everybody is focused on this issue. And certainly, in the scientific community, scientists and clinicians have come together like never before.

DUBNER: Can you talk about how you see Covid-19 and a vaccine potentially changing the way we think about access to health care generally? Not everybody will have pancreatic cancer. Not everybody will have type II diabetes. But everybody will presumably need — or many people will want, at least — a vaccine for Covid-19. So, do you think about access to certain strains of health care more like access to utilities, where it can be privatized to a large degree, but the government is involved in regulation and pricing?

LO: The question that you’re getting at is, is health care a right or a privilege? If we believe that health care, or certainly access to Covid-19 therapeutics, is a right, then we have to change the way we go about developing those things. You know, it’s a lot like utilities that we take for granted. Many decades ago, we decided as a society that electricity was so important, that everybody in this country has a right to electricity, that we actually took electricity off the table from the private sector. Electricity does not get charged whatever the market will bear. We tell the electric companies what they can charge. We set the price through a process involving the government.

And so, I think that this is the question we have to answer: Are some drugs so important to public health that we don’t want to have the private sector solely in control of their pricing and their manufacturing. And I don’t know what the answer is, because this is obviously not just an economic question. It’s a political question, an ethical question, and a cultural question. But it’s one that we haven’t been dealing with, we sort of pushed it off. And I think that Covid-19 has brought it to the forefront.

DUBNER: So, let’s extend that thought for a moment. When you make a comparison between, let’s say, an infectious-disease vaccine and electricity, I think, “Okay, but the R&D on electricity has been done.” Maybe there’s some slight upgrades happening every year. I have no idea. But we’re talking about funding and maybe offering future access to medicines that don’t exist yet. So, if we think about certain pieces of health care like vaccines in the future as more right than privilege, how would that change the upstream funding situation?

LO: It would mean that governments now would have to be involved in funding basic R&D for vaccine development and general research on infectious diseases. Now, I have to say that we already do some of that. The N.I.H. in particular spends between $35 and $40 billion a year on basic medical research and science. And so, that’s actually very important. And a lot of the reasons that we know as much as we do about Covid-19 is because of that funding. But that’s not enough.

Because of the public-health nature of infectious diseases, I think we’re going to have to have the government playing more of a role in that commercialization process. There’s a so-called valley of death between basic science and an actual commercial product. And that valley of death really represents a lack of funding because the risks of taking an idea out of the laboratory, into the clinic, into human trials, that’s a tremendous amount of risk that, for a variety of reasons, investors aren’t always comfortable with. The government can play a very valuable role in helping to de-risk that portion of the development cycle.

Even so, there’s still an element of risk and uncertainty. The SARS-CoV-2, which causes Covid-19, is, remember, a novel coronavirus. When a new disease emerges, there would still be R&D needed to make a precise vaccine. But the idea is that you could get a head start by preparing for similar types of diseases. In some ways, that’s what happened with Moderna and its Covid-19 vaccine candidate.

HAMBURG: In terms of long-term preparedness, Moderna and its vaccine is kind of an example of a strategy that works.

That, again, is Peggy Hamburg.

HAMBURG: It was receiving support for developing a MERS vaccine from an organization called CEPI, the Coalition for Epidemic Preparedness and Innovation, which was started after the Ebola outbreak.

MERS, or Middle East Respiratory Syndrome, was also a coronavirus.

HAMBURG: Because of those investments, in fact, Moderna was able to quickly switch over to a vaccine candidate against the SARS-CoV-2. And the Moderna vaccine was the first to go into clinical studies nine and a half weeks after the genome was posted.

DUBNER: In other words, there are big payoffs for early investment, yes?

HAMBURG: Early investment. And it’s not just in specifically developing candidate vaccines against pathogens of pandemic potential, but it’s also developing new platforms for vaccines, new strategies for vaccine development that can quickly be built up when disease X or Y emerges.

DUBNER: Do you think it’s possible, if we were looking back at now from, let’s say, five years hence, that there will be mechanisms developed, networks built in the pursuit of a Covid-19 vaccine, that will prove really beneficial in the treatment of other diseases?

HAMBURG: I absolutely do. Covid-19, marks a hugely important moment in time when the scientific research community came together across disciplines and sectors and borders. And I hope we won’t lose that spirit of collaboration, because we really have disadvantaged ourselves by working in a much more siloed way. And if we can break that down and really collaborate, as we are doing in important ways with the Covid-19 vaccine R&D efforts, I think it will be a huge, huge breakthrough for the future I think also, if we can really demonstrate that you can compress some of the stages of vaccine development, then I think it won’t be acceptable to go back to having vaccines take 10, 12 years to develop.

DUBNER: So, the solutions that you’re proposing, while deeply rational and desirable, sound perhaps close to impossible because there’s so much coordination that would need to happen among governments and institutions that typically aren’t great at that. I’m not saying the markets have done a great job either, but I am curious why you’re so optimistic when the past would suggest otherwise.

HAMBURG: Well, you know, I like to find optimism where I can. And frankly, the last months have been rather grim. I think a component of what we do as a nation needs to be reflective of the fact that science is a global enterprise, and that we have many, many shared interests and concerns and opportunities around the world, and that we need to be working in concert with others.

And I do think that recent years have been made more complicated by the kind of nationalism that we’ve seen in our country, and in other countries as well. And I’ve been a little saddened that a global pandemic has not overcome some of that way of thinking in our country. But I think the future, whether it’s addressing infectious disease threats or some of the other huge challenges before us, from climate change, to energy security, to food and water security, to nuclear nonproliferation, all require global commitments as well as the application of a concerted scientific strategy to finding meaningful and sustainable solutions.

* * *

Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Daphne Chen. Our staff also includes Alison Craiglow, Greg Rippin, Matt Hickey, Corinne Wallace, Mary Diduch, and Zack Lapinski. Our intern is Emma Tyrrell. We had help this week from James Foster. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

Tal Zaks, chief medical officer of Moderna.
Peggy Hamburg, physician and public-health expert and former F.D.A. commissioner.
Andrew Lo, finance professor at M.I.T.

RESOURCES

“Financing Vaccines for Global Health Security,” by Jonathan Vu, Benjamin Kaplan, Shomesh Chaudhuri, Monique Mansoura, and Andrew Lo (medRxiv, 2020).
“A Study to Evaluate Efficacy, Safety, and Immunogenicity of mRNA-1273 Vaccine in Adults Aged 18 Years and Older to Prevent COVID-19,” by ModernaTX (U.S. National Library of Medicine, 2020).
“The COVID-19 vaccine development landscape,” by Tung Thanh Le, Zacharias Andreadakis, Arun Kumar, Raúl Gómez Román, Stig Tollefsen, Melanie Saville, and Stephen Mayhew (Nature, 2020).
“The Complex Journey of Vaccine,” by the International Federation of Pharmaceutical Manufacturers & Associations (I.F.P.M.A, 2019).
“How long does it take to research and develop a new vaccine?” by Peter Hurford (Effective Altruism Forum, 2017).
“Germs go global: why emerging infectious diseases are a threat to America,” Margaret A. Hamburg, Jeffrey Levi, Kimberly Elliott, and Lynora Williams (Trust for America’s Health, 2008).

The post Will a Covid-19 Vaccine Change the Future of Medical Research? (Ep. 430) appeared first on Freakonomics.

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How I Travel Full-Time By RV And Boat With My 2 Dogs

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Traveling with a dog is a lot of fun, but there are some important things to consider so you and your pet are prepared.

Sometimes people think we are crazy for bringing our dogs on our adventures, but I wouldn’t have it any other way. For us, it’s like bringing your kids along, haha!

Since we’ve been doing this for several years and in so many different ways, I figured I would be a good person to share what it’s like traveling with a dog for anyone who is interested in learning how it’s done.

You might be interested in going on a roadtrip with a dog. Maybe you want to sail or RV full-time with them, or perhaps you just want to take your furry companion on your next week long vacation.

Whether you want to travel full-time with your pets, or if you want to just go on the occasional trip, hopefully my experiences will help you.

Traveling with a dog has been a huge learning process for me.

We’ve had to go slow and learn what works for our dogs. I say this because there is no single right way to travel with pets. So, you may have to adjust a little for your specific animal, as all animals are different and have different needs. We even see differences between our two dogs in how they travel.

Before I go on, let me backup a little bit. If you follow me on Instagram, then you already know this – I travel full-time with my two dogs. We’ve been traveling with them for years now, and they are pretty used to it whether we are in a tent, Jeep, RV, campervan, or sailboat.

Our dogs have been to several new countries, many new states, national and state parks, hiked some of the tallest mountains in the U.S., swam in beautiful Caribbean waters, and more.

We absolutely love our dogs, and we go to the extreme to make sure they are happy and comfortable with what we are doing.

While we love bringing our dogs everywhere with us, that does not mean it’s easy. Traveling with a dog takes some serious planning, and it is not something to take lightly.

Everything takes a little bit longer due to bathroom breaks, walks, and all the planning, so it definitely takes more effort.

I have received a ton of questions over the years on how we keep everyone happy, us and the dogs, while we travel. Of course, my experiences won’t apply to all dogs, as all dogs are different. But, hopefully you will find some ideas or tips that will make traveling with pets a little easier on everyone.

Content related to traveling with a dog:

The four of us on SV Paradise (our boat)

About our dogs, Sailor and Mr. French.

Our bigger dog is Sailor, and she is about 85 pounds and is over 13 years old. Our smaller dog is Mr. French, and he is a 15-pound French Bulldog who is over 11 years old. We’ve had them since they were puppies (we adopted both of them) and love them so much!

Mr. French is happy to be wherever we are, and he doesn’t care much for being outside so he makes the perfect pet for an RV or boat. He enjoys sailing and likes to be right at the helm with us.

Sailor enjoys all of the smells when we travel to new places as well as the attention and petting from being a big dog at a campground, marina, or anchorage. Due to her bigger size, we have to do more to make sure she is comfortable and happy, but it is all worth it. She is a great hiking buddy and is very friendly and social with new people.

Honestly, while traveling with a dog is more work, I can’t imagine what it would be like to travel without them. They bring us so much happiness and love, so it is well worth it to us.

When traveling with a dog, here are my tips so that both the humans and animals are happy and healthy.

Here’s how to start traveling with a dog.

1. Take it slow when introducing your pets to travel.

If you want to start traveling with a dog, then I recommend taking it slow.

Whether you are going to live in a boat or an RV full time, or are just going on a weeklong road trip, I recommend slowly introducing your dog to travel.

This is the top tip we’ve heard from others who travel with their dogs, and it’s very true.

So, instead of throwing your pets into a long trip, you may want to start with something much smaller, so that they can get used to the process. You will be completely changing their routine, and many pets are used to following routines each day.

I also recommend trying to keep some of their routines as close to normal as possible, such as feeding times and when you let them out for exercise and bathroom breaks.

For example, when we started sailing, numerous people suggested starting the dogs out at a marina, then doing day sails, then an anchorage, and go from there. So, that’s exactly what we did. We didn’t want them to be afraid of sailing or make them afraid to get on the boat, so we took it as slow as possible. That’s worked out well for us, and we recently did a 9-day sail with them, and they acted like it was no big deal at all.

We got them very comfortable with being on the boat, and we haven’t had to quit just yet, so I would say it was a huge success.

If you are not planning on traveling full-time, but want to go on a road trip with your dog, I recommend not traveling too far at first, especially if they’re not used to being in the car. Slowly introducing them to travel is good so that they don’t get scared or stressed out. So, you may want to start by bringing them to a park nearby to help them with their nerves, as some dogs can be quite anxious!

This is what a normal day on the water looks like.

2. Know the rules and customs of where you are going.

Not every place you go to will be pet friendly.

When traveling with a dog, you will quickly learn that not every park or trail is open to dogs. Most national parks are this way and don’t allow dogs on the trails.

However, there are some national parks that do. This is why I recommend doing some research ahead of time so that you are not surprised or frustrated when you get to your destination.

No matter where you are traveling with a dog, respect the land and the people there. You should always pick up after your dog, even if that means that you will have to hike for hours with a dog waste bag. You should not let your pets trample over delicate areas, and don’t let them approach people who don’t want to be bothered.

The same also applies to campgrounds and hotels. You will want to make sure that you find dog friendly camping, dog friendly hotels, and more. You’ll want to call in advance to make sure the weight and breed are acceptable.

3. How to do veterinarian visits.

Going to the vet is an important part of being a pet owner, and you still need to do it when you’re traveling with a dog.

I receive a lot of questions about how we handle this.

Our dogs still see the vet each year, and sometimes more often if there are any issues. They just usually see a new vet each year. If we’re in the same place for longer than a year, then they might see the same vet more than once.

Our dogs have never had an issue going to a new vet, and they go each time with no problem. We simply make sure to bring all of their paperwork with us so that there is no confusion as to what was done at a previous appointment.

When it comes to medications, we try to stock up on what we need for the whole year.

If you’re going to start traveling with a dog, especially full-time here are some thing you’ll want to bring up with your vet to prepare:

Getting your dog microchipped. This is a great thing to have, and if you are going to a new country then it is usually mandatory.
Rabies vaccination – this is normal.
Seeing what vaccinations and medications are recommended or required in the area you will be traveling to in the next year. This can vary even state by state!

4. How to visit new countries with dogs.

When visiting new countries with our dogs, there have been a lot of steps and hurdles to go through.

Here are some of the preparations you may need to make when traveling with a dog to a foreign country:

Contact the government veterinarian agency of the country you are seeking to visit and ask for an up-to-date list of requirements for bringing a pet.
Bring your dog to a veterinarian where you are currently located and get all of the required shots, tests, paperwork, etc.
Visit the USDA or the equivalent in the country you are in to get your paperwork certified and stamped.
Send all of the required paperwork back to the government veterinarian in the country you are desiring to go to and have them approve it. You will also need to get a permit from them for your pet to enter the country.
Then, once you get to the new country, you may have to bring your pet to the government vet so that they can make sure it is the same pet on the paperwork, as well as to make sure the pet is healthy.

Now, these aren’t the exact steps for every single country, as every country has its own process.

The process can take several months from beginning to end, so you will want to make sure that you budget for plenty of time to get everything ready. When you’re boating with dogs, especially around the Caribbean, you can spend a lot of time researching this kind of stuff.

You’ll want to make sure you follow the steps exactly as detailed by the country you are going to, because doing them out of order (such as getting the vaccinations in the wrong timeline) will invalidate the process. This can be a costly and timely mistake, but it’s avoidable.

When you’re traveling with a dog or another pet, I also recommend:

Try to bring as much food for your pet as you can. We usually bring several months of dog food with us, as there may not be as many choices where you are going.
Keep your dog on a leash when it is required, if there are people near, and so on. And, always follow the leash rules of the area you’re visiting. Not everyone in other countries and areas like dogs, so you will want to keep that in mind.
When you go to the vet, try to get any standard medications that you may need. For example, our bigger dog can sometimes have an ear issue that requires a liquid steroid that you insert in her ears. We always try to have at least one backup on us so we don’t have to try to find a vet, as it can be quite difficult in foreign countries to get your dog to a vet if you don’t have a car, and not all islands have a vet either.
In some countries and/or areas, you may have to keep your pet documents on you at all times as you may be asked to show it at random times.

While it is a lot of work to bring your dog to a new country, it is possible and most government vets are super nice and helpful.

Some helpful resources for more information on each specific country include:

https://www.aphis.usda.gov/aphis/pet-travel
noonsite.com (this is most helpful for those who boat travel)
https://www.pettravel.com/

Can you spot Mr. French?

5. How to keep a tiny area clean when traveling with pets.

We keep our home as clean as it can be, which usually means vacuuming every single day. Our bigger dog sheds a ton, and we would be choking on hair all day if we didn’t vacuum as much.

We use a Dyson vacuum (this is the one that we love) and it works great. It’s small, rechargeable, and super portable.

We bring this with us whether we’re on the van or in the boat. Highly, highly recommend.

6. How to keep the temperature comfortable in an RV or boat for a pet.

For us, we try to follow good weather as much as we can. However, I know that is not always possible.

There are devices where you can track the temperature over a cell signal back to wherever your dog is (you can find a whole bunch of them on Amazon), which can be a great option. However, you might not always have a signal.

If we are unable to make the temperature comfortable for our dogs or if the electrical power isn’t stable, we simply do not leave our dogs alone.

But, it usually isn’t hard to make it comfortable for them. By opening windows, turning on fans, or the AC, you can make it pretty comfortable for both humans and pets.

Walking in Utah

7. Full-time travel with dogs – how they use the bathroom on the boat.

This is one of the most common questions we’re asked about traveling with a dog. People are fascinated with how our dogs go to the bathroom on our boat.

We always try to make regular and frequent bathroom breaks for our dogs.

Whether we are traveling by boat or car, we like to keep bathroom breaks as similar as possible.

We were nervous training our older dogs to use the bathroom on the boat, but it has been just fine. They only have to do this when we’re on an overnight sail, so it’s not very often. Keep in mind that 90% of the time you’re living on a boat is either at anchor or in a marina, so there is almost always land access.

When we look for a marina or an anchorage, we are always looking to see if there is a good area to let out the dogs. That may mean a beach, a grassy area, a dinghy dock so that we can walk to town with the dogs, and so on.

A lot of people falsely assume that when you’re sailing full-time, neither you or your pets touch land for years at a time, and that assumption just makes me laugh. Our dogs go to shore multiple times a day, except for when we are doing a long passage (which isn’t often).

Depending on where we are, we may have to take them for a short dinghy ride to shore or we’re at dock and can simply walk them off the boat to use the bathroom.

If we are doing a longer passage on our sailboat and there is no land for them to step their paws on, we do have fake grass on our boat that they are able to use. It doesn’t happen often though, and most of the time they still get walked 3-5 times a day even when we are on our sailboat.

8. How to keep dogs safe on a boat.

The longest sail that we have done with our dogs was 9 days, and they did extremely well on that sail.

Some of the things we do to make sure they are happy and safe include:

One of us is pretty much always keeping an eye on them. If we can’t pay close attention to them, then we put a leash on them or close off the inside area so they cannot fall overboard. (If you decide to leash your dog, please make sure they cannot fall off the boat and choke themselves. This applies to being on the boat, dock, land, etc. Sadly we know someone who had this happen to their dog and it had a very sad ending.)
We have life jackets for each dog, and we’ve tested them before bringing them out for sails.
At night, we keep everything closed off so that there are absolutely no worries with the dogs.
We make sure there is plenty of water, food, snacks, and snuggles.

We are lucky that our dogs are quite comfortable on the boat.

They don’t panic or bark.

They simply fall asleep and are relaxed when on the boat.

I think this ties back into #1 of this blog post – we slowly introduce them to new things. This has allowed them to be quite adaptable to any environment that they are put in, whether we are tent camping, roadtripping, in an RV, or on an overnight sail.

Testing out their new dog life jackets

9. The items that make it easy for traveling with a dog.

We have a lot of items on the boat that are specifically for our dogs, and many of them come with us when we move to our camper van. Here are the most helpful items we have:

Dog ramp – This is for when we are at a fixed dock, where it’s a long hop from our transom to the dock. We had a plastic one for a little bit but we found that it would bend in the heat so we had to switch to something better. We are much happier with an aluminum ramp now.
Dog toys – To keep our dogs busy and happy, I like to put peanut butter in a Kong and give it to them as a nice treat.
Dog waste bags – We keep a plethora of these onboard our boat and van. We usually bulk buy a big box of around 1,000 bags. We also make sure they are biodegradable and compostable.
Help ‘Em Up Harness – This is the harness we have for our bigger dog, and I highly recommend it. We put it on her so that she can easily get in and out of steeper places. It’s a little pricey, but well worth it to make sure your dog is safe.
K9 SportSack – We use this for our smaller dog so that we can easily just carry him around. He’s not a huge fan of walking everywhere so putting him in the backpack makes it easier on everyone.
Collapsible bowl – We always keep one of these in our hiking bag so that the dogs always have something easy to drink out of.
Life jacket – If your dog is going to be on a boat, you’ll want a life jacket for them.

10. Getting exercise is still important.

Some people think that having a dog on a boat or in an RV is bad for the dog. I don’t think that could be further from the truth, though.

Our dogs get 3-5 walks (sometimes more) each and every single day.

Exercise is so important whether you’re camping with a dog, sailing with them, etc. Don’t assume you’ll fit in walks – you have to plan them in advance.

We always make sure to give our dogs a long walk at the start of the day if we know we’re going to have a long drive or sail. This way, we can try to tire them out and get rid of a lot of energy.

Taking them for a walk is one of the first things we do when we stop, and then we always fit in another long walk before bedtime. You may feel exhausted after a long day of sailing or traveling, but don’t forget how important exercise and routines are to your pets.

11. Have a traveling checklist.

Before you leave for wherever you’re going, I recommend bringing anything you think you’ll need, even if you don’t end up using it. This may include:

Pet food
Water and food bowls
Collars, leashes, harnesses
Dog waste bags
Treats
Blankets and beds
Medication
Paperwork

Specific pets may need different items, and go over your list before you leave.

12. What about traveling with a dog on a plane?

I would be careful if you are wanting to fly places with your pets where they have to go in the cargo area, as it can be traumatizing to put them in the cargo area of a plane. It can be extremely hot, scary, and they will be away from you for quite some time.

I know several people who have moved to a new country and flew their dogs in cargo in order to make it possible to bring their pets. But, nearly all of these people have told me that they would never do it again, unless absolutely necessary.

If you are going on short trips by plane, I would not recommend putting your pets in cargo for that. Instead, if you have to bring your pet, I would simply find another way to travel. Or, you can find someone to watch your pet.

If your pet can sit with you on the plane, then that’s a whole different story. They may be just fine on the plane, but you should consult with a veterinarian if you have any questions. We’ve avoided flying with our dogs, so I’m just not as familiar with it.

We rented a pontoon in Nevada several years ago with the dogs

Traveling with a dog – in summary

I hope you found today’s article helpful.

Please remember that I am not a pet expert, nor a veterinarian. I do have a lot of experience traveling with a dog, but all pets are different. They have different needs and personalities, and what works for my dogs may not work for yours.

So if you have any concerns about traveling with your pet, please contact your veterinarian.

Traveling with a dog can be extremely enjoyable, but there are a few more things you’ll have to think about.

If you’re anything like me, though, it will be well worth it and your pet will enjoy it as well!

Do you like to travel with your dogs? What other questions do you have for me?

The post How I Travel Full-Time By RV And Boat With My 2 Dogs appeared first on Making Sense Of Cents.

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About our dogs, Sailor and Mr. French.

Here’s how to start traveling with a dog.

1. Take it slow when introducing your pets to travel.

2. Know the rules and customs of where you are going.

3. How to do veterinarian visits.

4. How to visit new countries with dogs.

5. How to keep a tiny area clean when traveling with pets.

6. How to keep the temperature comfortable in an RV or boat for a pet.

7. Full-time travel with dogs – how they use the bathroom on the boat.

8. How to keep dogs safe on a boat.

9. The items that make it easy for traveling with a dog.

10. Getting exercise is still important.

11. Have a traveling checklist.

12. What about traveling with a dog on a plane?

Traveling with a dog – in summary

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