8/22/2017
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Real World Economics: Measles outbreak illustrates economic phenomena


Sunday May 14, 2017

Minnesotans like to excel, but I’d venture no one takes pleasure in us exceeding any other states in measles cases.

The latest outbreak includes more than 50 cases, nearly all in Hennepin County and in Minneapolis, but there are at least two cases outstate. Nearly all of the cases are Somali-Americans. Public health officials are working hard to contain the outbreak and we can be thankful that we are not anywhere near the 460 cases and three deaths that occurred in 1990.

Ironically, announcements of new cases coincided with a presentation in Minneapolis by one of the leaders of the anti-vaccine movement that sees vaccinations as a cause of autism. Some 90 people attended. Many were Somali. A few were critics of the anti-vax movement who went to hear their opponent and express their disagreement.

As in most situations, there are economic factors at play. The core economic idea here is that vaccinations against infectious diseases have “external effects.” That is, they impact people other than an individual actually getting the vaccine. Such effects can be negative, or “external costs” — think pollution, where one person’s actions harm someone else. But they also can be positive, also called “spillover benefits,” where one person’s actions to meet their own needs benefits others.

When there are no external effects, either positive or negative, then letting individuals make their own choices about what goods and services they buy results in an optimal outcome for society. One attendee at the anti-vaccination presentation, the mother of a child who developed autism after having been vaccinated, articulated this sentiment: “If the consequences are greater than the benefits, it’s better to leave it alone.”

Such individual weighing of alternatives certainly is true for some medical situations. Years ago my orthopedist advised me on my osteo-arthritic foot: “Take Tylenol, live with it as long as you can and then we will fuse the joint. But you won’t be able to walk as before.” Five years ago, facing neck cancer, my ENT, radiologist and oncologist agreed that radiation was the best course. Chemotherapy in addition was an option, but might not be necessary.

In such medical cases, letting me decide how to proceed is little different than weighing whether to get two- or four-wheel drive on our crossover vehicle or whether to eat steak or Mexican food on a Friday night. No one else is affected but us.

Vaccinations against communicable diseases are different however. Get your children vaccinated and they will be much less likely to get the disease. Often they will be completely protected. Benefits go beyond that however. One person vaccinated is also one less person who can transmit the disease to others. The more people are vaccinated, the less risk for everyone and the less likely that an epidemic will break out. At some point, usually around 90 percent, you achieve “herd immunity.” If someone bearing the disease flies in from elsewhere, he may transmit it to a few other people, but the disease will die out because most of the people will be immune because of vaccination.

So getting the shot not only protects the patient, but also reduces risk for others. There is a spillover benefit.

Yet just as uncontrolled external costs reduce efficient use of resources in meeting people’s needs, so poorly incentivized spillover benefits do the same. The incentive may be a “carrot” — some individual reward, or it may be the “stick” of mass government mandate. But without some government action to provide such incentives, be it carrot or stick, the outcome will not be optimal for society.

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Of course, when the perceived direct individual benefit is great enough, people will seek the vaccination in any case. Sixty years ago, polio struck such fear into parents that they fought to get their kids included in the initial trials of the injected Salk vaccine. My cousin spent weeks in Minneapolis’s Sister Kenny Institute and had a hand permanently withered from polio. My mother made sure that my sister and I got the four-shot series twice, just to be sure.

Of course, there always have been skeptics. I remember a neighbor telling my mother that she, herself, would never take “the needle of death.” And it is not a coincidence that most recent measles outbreaks have occurred in isolated cultures or communities, Somali, Amish and Orthodox Jewish, that are suspicious of mainstream values.

Vaccinations are a special case of spillover benefits in that the level at which other people seek the treatment affects the expected costs of not getting it yourself. If you do not get vaccinated, but most other people do, your own risk is minimal because of herd immunity. There is an incentive to “free ride,” getting the benefit from others being vaccinated without incurring any of the real or imagined risks yourself.

The fact that vaccination programs drastically reduce the number of cases skews people’s estimation of the danger of the disease. Getting measles is no longer the common experience that it was in my childhood. Most people do not personally know anyone who got extremely ill or died from the disease. They do know people from my age cohort who had it and survived. So they underestimate how serious measles can be.

There is an element of “survivorship bias” at play here. Just as we know the Warren Buffetts who get rich managing investment funds but don’t know about the thousands of others with apparently similar qualifications who failed, we know myriad people over age 50 who survived measles, mumps and rubella, but we don’t know the ones who died.

Behavioral psychologists and economists like Daniel Kahneman and Amos Tversky examined how humans perceive risk. Usually we overestimate dangers from unfamiliar risks, like being killed by terrorists, and underestimate familiar risks, like being killed by a texting driver.

Measles is different. Nowadays, most people are not personally familiar with measles. But because they know parents and grandparents survived it, they discount the danger. Autism is more real, everyone knows someone with an autistic child. So regardless of scientific consensus that there is no link between vaccination and autism, many people worry that there is.

So there is an “information problem,” another reason for which a free market can fail to allocate resources optimally. In many cases, these is a simple lack of information. With my cancer, my doctors could not be sure how well the tumor would respond to radiation or how severe the negative side effects of chemotherapy would be. Both vary from one individual to another.

They left the decision up to me and I chose the “belt and suspenders” option. It turned out that my tumor responded well to radiation and damage to my salivation and taste from the radiation probably was amplified by the simultaneous chemo. Would I have been better off skipping the chemo? Perhaps, but no one knew the exact costs and benefits beforehand. I’d make the same decision again.

With vaccinations, scientists say anti-vaccine parents are not making a decision with a lack of information. Rather, they believe wrong information. And so society as a whole is worse off, but with most of the harm concentrated among those who relied on erroneous beliefs.

Society is better off if people are vaccinated against communicable diseases based on the best scientific information available. But medical treatments are very personal and government compulsion skates on very thin ice. Early mandatory vaccination programs met strong resistance, such as the one against smallpox in Brazil a century ago that caused riots with 30 dead, hundreds injured, and thousands jailed or sent into internal exile. That level of resistance has passed, but too much use of sticks is counterproductive. The carrot of public education is better, but one should remember the ancient Greek aphorism that “against ignorance, even the gods struggle in vain.”
 



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