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

Author

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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.

Suggested Citation

  • Joseph Cook & Marc Jeuland & Brian Maskery & Donald Lauria & Dipika Sur & John Clemens & Dale Whittington, 2009. "Using private demand studies to calculate socially optimal vaccine subsidies in developing countries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(1), pages 6-28.
  • Handle: RePEc:wly:jpamgt:v:28:y:2009:i:1:p:6-28
    DOI: 10.1002/pam.20401
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    References listed on IDEAS

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    Cited by:

    1. Matthew Goodkin-Gold & Michael Kremer & Christopher M. Snyder & Heidi L. Williams, 2020. "Optimal Vaccine Subsidies for Endemic and Epidemic Diseases," NBER Working Papers 28085, National Bureau of Economic Research, Inc.
    2. 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.
    3. 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.
    4. John C. Eckalbar & Pete Tsournos & Walter L. Eckalbar, 2015. "Dynamics In An Sir Model When Vaccination Demand Follows Prior Levels Of Disease Prevalence," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 18(07n08), pages 1-27, November.
    5. Marette, Stéphan & Roe, Brian E. & Teisl, Mario, 2012. "The welfare impact of food pathogen vaccines," Food Policy, Elsevier, vol. 37(1), pages 86-93.
    6. Zachary S. Brown & Randall A. Kramer, 2018. "Preference Heterogeneity in the Structural Estimation of Efficient Pigovian Incentives for Insecticide Spraying to Reduce Malaria," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(1), pages 169-190, May.
    7. 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.

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