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You Should Get a Flu Shot
The majority of adults don't plan on getting a flu shot this year, and their behavior is in line with the economics of positive externalities.
Flu shots are often the textbook example of positive externalities in economics. Unfortunately, the National Foundation for Infectious Diseases found that only 49% of people plan on getting their flu shot this year. Even among those at higher risk for complications, 1 in 5 respondents said they won’t get vaccinated. The decision isn’t necessarily coming from a lack of understanding of how the flu shot works, but rather an issue facing most externality-generating behavior.
Positive externalities occur when people consume or produce things that have a positive effect on others. After some people get their flu shots, others who did not get their flu shot still benefit because the chances of contracting the flu are lower. While there are some myths about the effectiveness of flu shots, nearly 70% of the original survey respondents believe that getting annual flu shots are the best way to prevent flu-related deaths and hospitalizations. And yet, people remain hesitant to get their vaccine.
Even though flu shots provide social benefits, most people make the decision of whether to get the flu shot after weighing their own private costs and benefits. The private benefits are a reduced likelihood of the person receiving the flu shot contracting the flu or a reduction in the severity of illness if they still come down with the flu. The private costs of a flu shot include soreness around the injection site and minor flu-like symptoms. There are other costs associated with getting a shot that we may not realize. It takes time to go to the administration site to get the shot and there’s also a monetary cost associated with it. If your health insurance plan includes an annual flu shot, it just means you have pre-paid for that service with your premiums.
The NFID survey asked adults why they weren’t planning to get a flu shot this year and the top responses were largely related to the private benefits being too low or private costs being too high. Here were some of the top reasons for not getting a flu shot this season:
41% think flu shots don’t work very well
39% are concerned about the vaccine’s side effects
28% say they never get the flu
24% are concerned about getting the flu from the shot
20% do not think influenza is a serious illness
People weigh the private costs and benefits of making a decision. Even if getting a flu shot benefits several people, the costs are borne by the person being vaccinated. When people make in these situations, they often don’t internalize the externality they create for others. The decision is a private one, but the benefits are shared socially. As a result, too few people are vaccinated each flu season. The CDC has set the national target at 70%, but US adults aren’t even close to that level. The light blue line shows the historical flu shot coverage rate for adults over the age of 18:
While individuals typically make decisions that focus on private benefits and costs, the efficient outcome in markets with externalities should be one based on social costs and benefits. The social benefits of flu vaccinations are large. Economists have estimated that a one percentage point increase in the vaccination rate results in approximately 795 fewer deaths and 14.5 million fewer work hours lost due to illness each year.
Government can play a role in encouraging positive externalities by providing subsidies for the behavior that generates the external benefit. While governments could mandate vaccination, that isn’t a politically popular move. Subsidies provide a payment to individuals as an incentive to increase uptake of the externality-generative behavior. Receiving a subsidy for getting a flu shot would increase the private benefit a person receives beyond the health improvement. Alternatively, the money could be used to reduce the private costs of getting a flu shot by providing more administration sites and paying producers to lower the cost of the shot.
The out-of-pocket cost for a flu shot can be between $20 and $70 depending on which kind of vaccine people receive. Workers with health insurance often pay no out-of-pocket fees for the flu shot because the shots have been subsidized by their health insurance companies. Just as governments would collect taxes to finance a subsidy program, health insurance companies include this cost in their annual premiums.
Flu shots help keep the American economy productive, and it also helps lower the cost of hospitalizations. If hospitalization rates decrease, health insurance companies pay out fewer claims. It’s likely profitable for health insurance companies and larger firms to subsidize the cost of vaccination for their customers and employees. The alternative is to save some money on flu shots, but risk the costs associated with hospitalization and absentee workers.
If you’re interested in finding flu vaccines in your area, check out the VaccineFinder managed by Boston Children’s Hospital, the CDC, and The Department for Health and Human Services.
Vaccine manufacturers have projected that they will supply the U.S. with as many as 183.5 million doses of influenza vaccines for the 2022-2023 season [Centers for Disease Control and Prevention]
68% of children and 34% of adults received their flu shot last year at a doctor’s office [Centers for Disease Control and Prevention]
53% of US adults trust the CDC a great deal or a lot for flu vaccine information [National Foundation for Infectious Diseases]
The average direct medical costs associated with the flu are estimated to be $10.4 billion per year [Evidence-Based Practice]