Vaccination Economics: The Hidden Costs of Infectious Diseases

Public health officials emphasize that vaccination is the most cost-effective strategy to combat infectious diseases such as flu, measles, and COVID-19. As Canada faces rising threats from diseases, including the **H3N2 strain** of flu and a new variant of COVID-19, the economic implications of vaccination programs must be considered. In particular, the recent loss of measles elimination status underscores the urgent need to address these health challenges from an economic perspective.

The economics surrounding vaccination is complex and multifaceted. While public health experts traditionally focus on quality of life and life expectancy, understanding the economic consequences of infectious diseases reveals significant cost implications. **Gregory Mason**, an associate professor of economics at the **University of Manitoba**, argues that the benefits of vaccination extend beyond personal health, impacting broader economic performance.

A historical example highlights the importance of vaccination in economic terms. During the **Vietnam War**, the U.S. Congress sought to cut unnecessary spending, which led to proposals to cancel measles immunizations. A retrospective study published in **1969** by **Axnick, Shavell, and Witte** examined the cost-benefit analysis of measles vaccination, revealing that the direct costs of the vaccination program amounted to about **$108 million**. However, the avoided costs from illness — such as lost school days and productivity losses from caregivers — were estimated to yield **$531 million** in lifetime productivity gains. This stark difference led Congress to abandon plans to eliminate the measles vaccination program.

Understanding the costs associated with infectious diseases can be broken down into three categories: direct costs, indirect costs, and intangible costs. Direct costs include the price of the vaccine itself and its distribution. The indirect costs involve care for those who suffer complications, such as encephalitis, which, although rare, can result in serious outcomes. Most importantly, the intangible costs arise when individuals, especially children, lose their potential contributions to the economy due to illness or death. For instance, the loss of a child’s future earnings can represent a substantial economic impact, as children typically have **35 to 40 years** of potential work ahead of them.

Recent research on flu vaccination further supports this economic argument. Estimates suggest that the flu incurs costs ranging from **US$50 to US$90 billion** annually in the U.S. alone. In Canada, this figure approximates **$5 billion**. The cumulative impact of seasonal flu, respiratory syncytial virus (RSV), and COVID-19 presents significant challenges to economic productivity. Alarmingly, vaccination rates in Canada for flu, COVID-19, and measles, mumps, and rubella (MMR) have declined in **2025** compared to **2024**, largely due to misinformation and public hesitance.

The issue of vaccine hesitancy is compounded by concerns about adverse events. Reports indicate that a small percentage of individuals, particularly young men, may experience myocarditis following COVID-19 vaccinations. Yet, the risk of developing myocarditis from COVID-19 itself is significantly higher. This discrepancy illustrates the importance of weighing the risks of vaccination against the dangers posed by the diseases.

Behavioral economics also plays a crucial role in understanding vaccination choices. The concept of “familiarity breeds contempt” suggests that those who have been consistently vaccinated may begin to undervalue subsequent vaccinations. This phenomenon can lead to decreased vaccination rates over time. Additionally, the concept of externalities is relevant; vaccination serves as both a private good, benefiting the individual, and a public good, contributing to community immunity.

Canada’s reversion from measles elimination is a detrimental mark against its public health achievements. Measles, with a basic reproduction number (R0) estimated between **12 and 18**, can spread rapidly in unvaccinated populations, making herd immunity crucial. The measles vaccine boasts an effectiveness rate of **95 percent**, but decreasing vaccination rates jeopardize this effectiveness, particularly for highly contagious diseases.

Lastly, game theory provides insights into human behavior concerning vaccination. When vaccination rates surpass **95 percent**, unvaccinated individuals may opt to become “free riders,” benefiting from herd immunity without receiving the vaccine themselves. However, if vaccination rates fall below **80 percent**, the risk of outbreaks increases, leading to a vicious cycle of declining immunity.

The economic implications of vaccination extend far beyond individual health, impacting productivity and long-term economic stability. As Canada and other nations face mounting challenges from infectious diseases, a comprehensive understanding of the economic costs associated with these public health issues is essential. Addressing vaccination hesitancy and promoting informed decision-making can significantly bolster public health and economic resilience.