Questions and answers about
the economy.

How do vaccines affect the risks we face and the way we behave?

Being vaccinated against Covid-19 reduces the chances both of becoming seriously ill oneself and of transmitting infection to other people. This has big implications for the behaviour of both vaccinated and unvaccinated individuals – and for public health policy.

Before the vaccine rollout, the main way to curb the spread of Covid-19 was through changes in social and economic behaviour – whether voluntary or mandated. These measures have caused damage to society in terms of wellbeing, educational attainment and economic prosperity.

Vaccines have now changed the equation. At the time of writing, 88% of the UK adult population have received at least one dose of the vaccine and over 70% are fully vaccinated. Immunisation now provides a significant policy lever to carry us through the remaining stages of the pandemic.

Figure 1: UK vaccination rates

Source: Our World in Data

As a tool of public health policy, vaccination has a set of special properties that have attracted the attention of economists. This article sets out how economists think about vaccines, how they work and how we should go about assessing their ‘value’. But before explicitly considering how to value different health interventions, we need to be clear about what public policy – especially public health policy – seeks to achieve.

What should be the objectives of public health policies?

An overriding objective of public health policies must be to avoid widespread mortality and severe illness in the population. As will become clear, that does not necessarily involve eliminating infection, as some pharmaceutical interventions – such as vaccines and antiviral treatments – can work to diminish the effects of infection, even if they do not reduce the spread of the disease.

Indeed, research has shown that individuals who are vaccinated against Covid-19 experience fewer and less severe symptoms compared with those who are not vaccinated. But while the vaccines do prevent infection up to a point, there are still ‘vaccine breakthrough cases’.

Any public policy must keep an eye on non-health-related issues that contribute to wellbeing and economic welfare, in addition to the monetary cost of the policies themselves. Decisions on the number of vaccines to roll out depend on all these considerations, as well as on infection-mitigating behaviour among the population, such as maintaining social distance and/or continuing to wear a mask.

Vaccines have two main functions:

  1. Reducing the probability that infected people become ill.
  2. Reducing the probability that infected people transfer infection to others.

To disentangle these two effects, we must bear in mind that infections that do not cause notable illness can be disregarded as a matter of public health policy. No country has a ‘National Athlete’s Foot Action Plan’ – and for good reason.

Equally, infections that are not transmissible are less pressing from a population-level health perspective. These are treated on a patient-by-patient basis, not in terms of population health.

What is the value of a vaccine to society?

Setting aside behaviour change for a moment, the ultimate reason for vaccinating a population is to reduce the overall disease burden, measured in terms of suffering from illness and in lives cut short because of a disease.

From a public health perspective, it is the health of the population that counts, not the health of any given individual. In contrast, from the perspective of a physician, it is the health of the individual that is the primary objective, not that of the population at large.

To see this distinction more clearly, consider a person who lives alone on an island. If this individual were to be vaccinated against a disease caused by an animal such as a bat, the private and social benefit of the vaccine would be the same. As the person is alone, he or she cannot infect others, so the value of the vaccine is avoiding infection for the individual.

Now consider another person arriving on the island and assume that the disease is transmissible between people. In this case, the private value of the vaccine to the first person remains unchanged, but the social value has increased because, by vaccinating the first person, it becomes less likely that the second person will be infected.

This situation also shows why there is, in general, a case for public intervention. If the first person disregards the health of the second person, then he or she may be insufficiently motivated to get vaccinated in the first place. This would mean that overall social welfare will be lower, and infection will spread.

But this also points to two solutions. First, a government or health authority could compensate the first person to encourage him or her to get vaccinated. We are currently seeing many examples of this – from vaccine subsidy vouchers for young people in Greece to million-dollar vaccine lotteries in several US states.

Second, the government could restrict the activities of the non-vaccinated person and insist that he or she does not come into contact with others in society – which constitutes indirect encouragement to get vaccinated. For example, the French president, Emmanuel Macron, recently announced that soon, only vaccinated people (or those with a negative test) may eat out at restaurants or use public transport.

There is also a strategic element to the vaccination decision. Suppose now that both individuals can choose whether to be vaccinated and that either could become infected directly from a bat or from proximity to the other individual.

In this case, each person could reason as follows: ‘The risk from infection from a bat is too small for me to get vaccinated. But if the other person is infected, then the total risk is too high and it will be worthwhile to get a vaccine.’

If each person takes this approach, there could be several different outcomes. Economists often use a system of logic called game theory to analyse these types of situations. In one outcome of the ‘game’, the first person gets vaccinated while the second doesn’t – or vice versa. This means that only one person chooses to get vaccinated.

Importantly, a person’s decision to vaccinate is now contingent on the vaccination choice of others. When such strategic considerations are present, voluntary vaccine uptake will generally be ‘inefficient’ from a social perspective ­– not enough people will get the jab (Chen and Toxvaerd, 2014).

Returning to the two properties of vaccines, it is clear that different vaccine types will have different private and social values. When there is no behaviour change, then a vaccine that only decreases the probability of severe illness may have high private value but only a modest social value (beyond the private value).

On the other hand, a vaccine that leaves the probability of severe illness unchanged but reduces the probability of transmission will have a modest private value but a significant social value. In practice, vaccines will do both to some extent.

On occasion, vaccines are so effective that they achieve what is known as ‘sterilising immunity’ (see here and here for non-technical explanations of how this works). In other words, they may protect the vaccinated person so that the cells in the body reject the infection in the first place.

In terms of private value, such a reduction in infection probability is comparable to a vaccine that reduces the severity of the illness. From the perspective of overall social welfare, such a vaccine is comparable in effect to one that reduces the onward transmission of infected individuals.

There is research in progress on different aspects of Covid-19 vaccination efficacy. At the time of writing, these estimates are:

  • Prevention of infection: 19.2% (‘confidence interval’, CI, 15.4% to 22.8%).
  • Prevention of transmission when infected: 84.7% (CI 83.5% to 85.7%).
  • Prevention of serious illness when symptomatic (age 15-34): 74.0% (CI 73.3% to 74.8%).
  • Prevention of serious illness when symptomatic (age 35-70): 49.3% (CI 47.8% to 50.8%).
  • Prevention of fatality when seriously ill: 92.9% (CI 92.3% to 93.4%).

These are running estimates and no doubt researchers will learn more in the coming months and years. It should also be kept in mind that different vaccines have different properties, and that there may be variation in how different population groups respond to vaccines.

The distinction between the private and social values of vaccine depends on two features:

  1. The properties of the disease and the vaccine (as above, the extent to which the latter reduces the probability that infected people become ill and reduces the probability that infected people transfer infection to others).
  2. Whether the spread of the disease causes people to change their behaviour.

It is useful to consider the cases with and without behaviour changes separately.

Why might vaccines fail to change behaviour?

The economics and policy of vaccination without behaviour change has received ample attention in the past, and has been widely studied in both public health and economics (see Chen and Toxvaerd, 2014 for a review of the latter).

The simplest example of why diseases (and hence vaccines) might not influence behaviour is when the severity of the illness is low or the alternative measures that can be adopted to avoid infection are negligible in terms of cost or discomfort.

When behaviour change can be disregarded, then the first property of a vaccine (reducing the probability that infected people become ill) has equal value for individuals as for society. Decreases in severity do not influence any decisions other than the one to vaccinate, and this cannot influence the spread of the disease directly or indirectly.

In this case, any discrepancy between private and social value derives exclusively from the second property of a vaccine (reducing the probability that infected people transfer infection to others). Put differently, in this case, the value of a vaccine depends on the extent to which vaccinated individuals help to control the onward spread of the disease to third parties.

Purely self-interested individuals may not fully consider how their vaccine status influences the spread of the disease more widely. As a result, they may not be sufficiently willing, from a social perspective, to vaccinate themselves.

This means that for diseases without behaviour change, vaccines that only reduce the probability of serious illness but have modest effects on the spread of the disease, are beneficial, but have overall limited social value in terms of reaching herd immunity. In such settings, individual decisions will be close to socially optimal and there may be limited scope for improving outcomes through public policy.

A prominent feature of Covid-19 has been how it has affected the population differently, with some age groups and demographics at greater risk than others. These differences influence people’s incentives to comply with public health recommendations and should also be considered when thinking about vaccine participation.

For example, young people with low susceptibility to illness may have little private incentive to get vaccinated, but doing so may be highly socially valuable, because it indirectly protects other groups more at risk from infection and illness.

What happens when vaccines do lead to changes in behaviour?

We can examine the effects of vaccines on behaviour in two ways: differentiating between the vaccinated and the non-vaccinated; and between behaviour before and after vaccination. It is useful to distinguish between the changes that vaccination has on an individual and what those changes lead to at the society level.

On the individual level, to the extent that vaccination decreases the probability of falling ill, the individual will consider the vaccine as an ‘imperfect substitute’ for behaviours that mitigate the probability of getting infected in the first place, such as social distancing and physical barriers such as screens and facemasks. These measures can often be costly and cumbersome. And once available, vaccines remove the need for the majority of these behaviours.

Suppose that the vaccine rollout is such that some groups get vaccinated first, as was the case in the UK. What behaviour changes can we expect from people after a group has been vaccinated?

Those who get vaccinated are better protected against infection. This means they have weaker personal incentives to be careful and may therefore ‘let their guard down’. There is increasing evidence that such behavioural change is taking place. But while vaccines provide significant protection against severe illness, they are not perfect and such changes in behaviour may at least partly undermine the protective effects of the vaccine rollout.

Now consider the behaviour of those who are not yet vaccinated. How can we expect them to react?

If they make decisions based on risk considerations, then they would react to more vaccination by being less cautious. The reason is simply that when there are more people in the population that are vaccinated, then overall transmission of the disease should be lower (all else being equal), thereby lowering the risks for those not yet vaccinated.

Overall, vaccination may lead to increases in exposure, which may result in more infection of both vaccinated and non-vaccinated individuals alike (relative to the benchmark without behaviour change).

Looking at the evidence, we know that as vaccines are rolled out across the globe, people engage in less social distancing (Auld and Toxvaerd, 2021). This is due to a combination of voluntary changes in behaviour and to relaxations in public health measures. It is still an open question how much each of these sources contributes to these overall changes in behaviour.

For a disease that causes no change in behaviour, the effects of vaccines on transmission are arguably more important in terms of public health than the effects on the severity of illness.

But when behaviour changes, this is no longer necessarily the case. Reducing transmission is still important in terms of impact on others (which economists refer to as an ‘externality’), but a vaccine that changes the odds of becoming seriously ill also affects behaviour. The reason is that those odds will condition people’s actions before becoming infected – it will alter their incentives to self-protect.

To summarise, when infections influence behaviour, there are two channels through which people’s decisions influence the wellbeing of others. There is the direct effect of the vaccine decision itself; and a secondary effect via behaviour that may change people’s incentives to protect themselves.

Where can I find out more?

Who are experts on this question?

Author: Flavio Toxvaerd
Photo by CDC on Unsplash
Recent Questions
View all articles
Do you have a question surrounding any of these topics? Or are you an economist and have an answer?
Ask a Question
Submit Evidence