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Using private demand studies to calculate socially optimal vaccine subsidies in developing countries

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  • Joseph Cook

    (Evans School of Public Affairs, University of Washington)

  • Marc Jeuland

    (Department of Environmental Sciences & Engineering, School of Public Health, University of North Carolina, Chapel Hill)

  • Brian Maskery

    (Department of Environmental Sciences & Engineering, School of Public Health, University of North Carolina, Chapel Hill)

  • Donald Lauria

    (Department of Environmental Sciences & Engineering, School of Public Health, University of North Carolina, Chapel Hill)

  • Dipika Sur

    (National Institute of Cholera and Enteric Diseases, Kolkata, India)

  • John Clemens

    (International Vaccine Institute, Seoul, Korea)

  • Dale Whittington

Abstract

Although it is well known that vaccines against many infectious diseases confer positive economic externalities via indirect protection, analysts have typically ignored possible herd protection effects in policy analyses of vaccination programs. Despite a growing literature on the economic theory of vaccine externalities and several innovative mathematical modeling approaches, there have been almost no empirical applications. The first objective of the paper is to develop a transparent, accessible economic framework for assessing the private and social economic benefits of vaccination. We also describe how stated preference studies (for example, contingent valuation and choice modeling) can be useful sources of economic data for this analytic framework. We demonstrate socially optimal policies using a graphical approach, starting with a standard textbook depiction of Pigouvian subsidies applied to herd protection from vaccination programs. We also describe nonstandard depictions that highlight some counterintuitive implications of herd protection that we feel are not commonly understood in the applied policy literature. We illustrate the approach using economic and epidemiological data from two neighborhoods in Kolkata, India. We use recently published epidemiological data on the indirect effects of cholera vaccination in Matlab, Bangladesh (Ali et al., 2005) for fitting a simple mathematical model of how protection changes with vaccine coverage. We use new data on costs and private demand for cholera vaccines in Kolkata, India, and approximate the optimal Pigouvian subsidy. We find that if the optimal subsidy is unknown, selling vaccines at full marginal cost may, under some circumstances, be a preferable second-best option to providing them for free. © 2009 by the Association for Public Policy Analysis and Management.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 28 (2009)
Issue (Month): 1 ()
Pages: 6-28

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Handle: RePEc:wly:jpamgt:v:28:y:2009:i:1:p:6-28

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Web page: http://www3.interscience.wiley.com/journal/34787/home

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  1. Geoffard, Pierre-Yves & Philipson, Tomas, 1996. "Rational Epidemics and Their Public Control," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 603-24, August.
  2. Francis, Peter J., 1997. "Dynamic epidemiology and the market for vaccinations," Journal of Public Economics, Elsevier, vol. 63(3), pages 383-406, February.
  3. Whittington, Dale & Sur, Dipika & Cook, Joseph & Chatterjee, Susmita & Maskery, Brian & Lahiri, Malay & Poulos, Christine & Boral, Srabani & Nyamete, Andrew & Deen, Jacqueline & Ochiai, Leon & Bhattac, 2009. "Rethinking Cholera and Typhoid Vaccination Policies for the Poor: Private Demand in Kolkata, India," World Development, Elsevier, vol. 37(2), pages 399-409, February.
  4. Dipika Sur & Joseph Cook & Susmita Chatterjee & Jacqueline Deen & Dale Whittington, 2007. "Increasing the transparency of stated choice studies for policy analysis: Designing experiments to produce raw response graphs," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(1), pages 189-199.
  5. Tomas Philipson, 1996. "Private Vaccination and Public Health: An Empirical Examination for U.S. Measles," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 611-630.
  6. Boulier Bryan L. & Datta Tejwant S. & Goldfarb Robert S, 2007. "Vaccination Externalities," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-27, May.
  7. Avner Ahituv & V. Joseph Hotz & Tomas Philipson, . "Will the AIDS Epidemic be Self-Limiting? Evidence on the Responsiveness of the Demand for Condoms to the Prevalence of AIDS," University of Chicago - Population Research Center 93-3, Chicago - Population Research Center.
  8. Shanmugam, K R, 2001. " Self Selection Bias in the Estimates of Compensating Differentials for Job Risks in India," Journal of Risk and Uncertainty, Springer, vol. 22(3), pages 263-75, May.
  9. Soma Bhattacharya & Anna Alberini & Maureen Cropper, 2007. "The value of mortality risk reductions in Delhi, India," Journal of Risk and Uncertainty, Springer, vol. 34(1), pages 21-47, February.
  10. John Mullahy, 1999. "It'll only hurt a second? Microeconomic determinants of who gets flu shots," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 9-24.
  11. Hemenway, David, 1994. "Economics of Childhood Immunization," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 519-23, July.
  12. Suraratdecha, Chutima & Ainsworth, Martha & Tangcharoensathien, Viroj & Whittington, Dale, 2005. "The private demand for an AIDS vaccine in Thailand," Health Policy, Elsevier, vol. 71(3), pages 271-287, March.
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Cited by:
  1. Marette, Stéphan & Roe, Brian E. & Teisl, Mario, 2012. "The welfare impact of food pathogen vaccines," Food Policy, Elsevier, vol. 37(1), pages 86-93.
  2. Jeuland, Marc & Lucas, Marcelino & Clemens, John & Whittington, Dale, 2010. "Estimating the private benefits of vaccination against cholera in Beira, Mozambique: A travel cost approach," Journal of Development Economics, Elsevier, vol. 91(2), pages 310-322, March.
  3. Adida, Elodie & Dey, Debabrata & Mamani, Hamed, 2013. "Operational issues and network effects in vaccine markets," European Journal of Operational Research, Elsevier, vol. 231(2), pages 414-427.
  4. Whittington, Dale & Jeuland, Marc & Barker, Kate & Yuen, Yvonne, 2012. "Setting Priorities, Targeting Subsidies among Water, Sanitation, and Preventive Health Interventions in Developing Countries," World Development, Elsevier, vol. 40(8), pages 1546-1568.

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