Using an expected utility model to analyze the social costs and benefits of childhood immunization

Randall Jones Hannum, Fordham University

Abstract

Existing cost-benefit studies dealing with childhood vaccinations generally compare disease costs in the absence of vaccination with disease costs when vaccinations are available. These studies are useful in showing the gains that have been realized from the introduction of vaccines but are not useful in guiding policy makers with regards to existing vaccination programs. In order to determine whether vaccination programs should be expanded, a comparison of marginal social benefits and costs is needed. This study illustrates a method for deriving marginal private and social benefits and costs from existing cost-benefit studies.^ An expected utility model is used to derive the marginal private and social benefits to be realized from changing the percentage of the population vaccinated. Underlying this model are the assumptions that social benefits are the sum of private benefits, and private benefits represent the reduction in expected disease-related costs resulting from vaccination. Since childhood vaccines, for the most part, reduce or eliminate the risk of infection for both those who are vaccinated and those who are not vaccinated, it would be expected that in a risk-neutral population, an equilibrium would be reached at the vaccination rate where expected disease costs are equal to the vaccination costs. This equilibrium, though, occurs at a vaccination rate below the level where disease-related costs are minimized. Increasing the vaccination rate from this level would lower overall disease related costs.^ Using this model to derive the marginal private and social benefits from a number of existing cost-benefit studies, one finds that the vaccination rates stated in or implied by the studies tend to be below the rates that would minimize the disease-related costs, which is what the model suggests. As a result, if it is assumed that vaccination costs remain constant, society could reduce overall disease-related costs by increasing vaccination rates. The model also suggests that efforts to increase vaccination rates for subgroups in the population would be unsuccessful in increasing vaccination rates for the entire population. A comprehensive approach is needed to achieve that result. ^

Subject Area

Economics, General|Health Sciences, Public Health|Sociology, Public and Social Welfare

Recommended Citation

Randall Jones Hannum, "Using an expected utility model to analyze the social costs and benefits of childhood immunization" (January 1, 1997). ETD Collection for Fordham University. Paper AAI9730093.
http://fordham.bepress.com/dissertations/AAI9730093

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