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Simple economics of vaccination: public policies and incentives

Author

Listed:
  • Jesús Villota-Miranda

    (University of La Rioja)

  • R. Rodríguez-Ibeas

    (University of La Rioja)

Abstract

This paper focuses on the economics of vaccination and, more specifically, analyzes the vaccination decision of individuals using a game-theoretic model combined with an epidemiological SIR model that reproduces the infection dynamics of a generic disease. We characterize the equilibrium individual vaccination rate, and we show that it is below the rate compatible with herd immunity due to the existence of externalities that individuals do not internalize when they decide on vaccination. In addition, we analyze three public policies consisting of informational campaigns to reduce the disutility of vaccination, monetary payments to vaccinated individuals and measures to increase the disutility of non-vaccination. If the public authority uses only one type of policy, herd immunity is not necessarily achieved unless monetary incentives are used. When the public authority is not limited to use only one policy, we find that the optimal public policy should consist only of informational campaigns if they are sufficiently effective, or a combination of informational campaigns and monetary incentives otherwise. Surprisingly, the requirement of vaccine passports or other restrictions on the non-vaccinated are not desirable.

Suggested Citation

  • Jesús Villota-Miranda & R. Rodríguez-Ibeas, 2024. "Simple economics of vaccination: public policies and incentives," International Journal of Health Economics and Management, Springer, vol. 24(2), pages 155-172, June.
    • Handle: RePEc:kap:ijhcfe:v:24:y:2024:i:2:d:10.1007_s10754-024-09367-2
    DOI: 10.1007/s10754-024-09367-2
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    References listed on IDEAS

    as
    1. Joshua S. Gans, 2023. "Vaccine Hesitancy, Passports, And The Demand For Vaccination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(2), pages 641-652, May.
    2. Ganesh Iyer & Vivek Nandur & David Soberman, 2022. "Vaccine hesitancy and monetary incentives," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-10, December.
    3. Francis, Peter J., 1997. "Dynamic epidemiology and the market for vaccinations," Journal of Public Economics, Elsevier, vol. 63(3), pages 383-406, February.
    4. Neilson, William & Xiao, Yancheng, 2018. "Equilibrium vaccination patterns in incomplete and heterogeneous networks," European Economic Review, Elsevier, vol. 105(C), pages 174-192.
    5. Dan Yamin & Arieh Gavious, 2013. "Incentives' Effect in Influenza Vaccination Policy," Management Science, INFORMS, vol. 59(12), pages 2667-2686, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Vaccination; Herd immunity; SIR model; Public policies; Endemic steady state;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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