The Fallacy of a Vaccine as a Public Good
Category: General
By: Kwame Owino,
By: Kwame Owino.
Writing in December 2020, there’s a high chance that in the next year, the primary goal of governments regarding the Covid-19 emergency will involve a policy plan for ensuring universal access to vaccines. Whether the public infrastructure to deploy the solution effectively is available or not, will be evident in Kenya in a short while. My guess is that even if the vaccine were made available in sufficient quantities, the inherent weaknesses in the public sector’s management and priorities will show.
There is no doubt that the ability to bring under control infections from the Sars CoronaVirus2 and the Covid-19 illness is not only a public health challenge but also an imperative of economic policy in 2021. The Kenya Economic Update by the World Bank in November 2020 estimated that the effect of the reduction in the growth rate was not only severe but that it had resulted in a rise in the poverty rates in Kenya. It finds that the cumulative effect of loss of employment, depressed economic growth, firm closures, reduced earnings and other disruptions has led to the expectation that the Gross Domestic Product will at best contract by 1.0%, a number well below the population growth rate.
That publication also confirms that the national poverty rate has risen by 4 percentage points, meaning that an additional 2 million Kenyans have fallen into poverty. This leaves no doubt that the direct effect of the illnesses and the necessary responses to reducing spread caused significant damage to the income of households and added other adverse effects to the broader economy. Public attention now moves to what options the government fo Kenya has to ensure that vaccines are procured from the pharmaceutical firms that have developed them. There is justifiable worry that affordability of the vaccines will be an issue for both African and other low income countries. Access to vaccines could be constrained further by hoarding of medicines required for bringing the Covid-19 emergency under control.
An estimate derived from a static model by the Institute of Economic Affairs showed that the monthly economic value foregone from the restrictions and the cessation of economic activity due to this illness lies in the Kenyan Shillings 34 -50 billion range throughout 2020. That estimate was based on the early assumption that GDP growth rates in Kenya would decline to 2%, a figure that seems to have been overly-optimistic. That notwithstanding, the recorded loss makes it obvious that the government of Kenya should spend as much as it can up to that limit to procure vaccines or any treatment to ensure prompt resumption of economic activity.
And yet at the global level, the vaccines that have been produced vary in cost between US$3-$37 per dose with a requirement of at least two doses administered at least a month apart. Given these costs, there is a justifiable concern about how to ensure access for the populations of low income countries. Granted, there are initiatives such as COVAX initiative under the direct coordination of the World Health Organization, it is evident that the countries with poorer populations would need to be careful about what options they have for access to the vaccines. This is because besides the fact that these countries have poorer populations, the convergence of the negative effects of the pandemic has damaged the economies and affected the growth rates and the revenues available to the governments.
In the interest of prosecuting the claim on behalf of low income countries, Mohammed Yunus signed a declaration by many scholars and other political leaders calling for a global mechanism to ensure free access to vaccines developed to prevent Covid-19. Understandably, the signatories were responding to the advance purchase agreements that many countries with richer populations were making to have earlier access to vaccines for their populations.
The logic of this statement resonates with many people in low-income countries because it is supported by the correct view that while the production and administration of the vaccine against Covid-19 has real costs, vaccination of people in one part of the world would be less effective if other parts of the world are unable to provide vaccine protection to their populations. A student of economics would recognise this argument as stating that pandemic control is a good that requires vaccines to be universally provided for maximum effectiveness.
This situation presents an opportunity to clarify certain points about the nature of a vaccine as a good and whether the specific health service of vaccination makes the vaccine a public good. Settled economics literature classifies goods (including services) as either excludable or non-rival. By definition, a good is rival if consumption by one person diminishes another person’s consumption of the same good. On the other hand, a good or service is excludable, if a person can be prevented from using it. The typical introduction class in microeconomics will present a two by two matrix of the attributes as illustrated in the table below.
While the statement by the eminent persons calls for a global mechanism to expand access by providing free or low-cost vaccines, it does not make a claim that vaccines are public goods. However, some well-meaning Kenyans with statist impulses have claimed that vaccines should be converted to public goods because health should be either a right or one to which access should be provided. While this statement is well-meaning in the sense that it argues for reduction of suffering, its claim that vaccines generally and the Covid-19 vaccines that have been developed by December 2020 are public goods is mistaken and uninformed.
First, the nature of the vaccines is that it is provided in doses and that each recipient would receive 2 doses within a month. By example, the specific vial for inoculation provided to a person in the United Kingdom or Brazil, would not be available to another in Kenya implies that the vaccine itself is rivalrous (subtractive). In addition, inoculation of a person based in those same countries would have no effect in preventing illness for a person in Kenya, indicating that it is also excludable. By virtue of the fact that the vaccine is both excludable and rival implies that it is a private good and not a public good as has been stated by pundits and people with supreme confidence in the authority and capability of states.
However, considering clearly the statement that Mohammed Yunus co-authored, the call was to ensure that the access to vaccines is provided liberally and specifically to ensure that “Covid-19 vaccines are a global common good”. They argue for global policy to ensure that the patents for the production of vaccines are placed in the public domain to enable the production of generic medicines. This is sensible reasoning based on an appreciation of the commercial rights of developers of medicines and the incentive structure for firms.
The nature of the vaccine as a technology of medical intervention leaves no doubt that it is a private good. Governments may have an interest in increasing access to vaccines out of the realisation that the Covid-19 is a vicious illness and that pandemic control requires universal access to the vaccines. Regardless of that, it merely shows that governments have an interest in dramatically raising access to a private good (the vaccine) in the service of society through pandemic control. The latter (pandemic control) is a public good and it is most efficiently achieved through universal access to a private good. To argue that vaccines have become public goods is either mistaken or to be hacking at an ideological point. There is a legitimate purpose for governments to pay for the Covid-19 vaccination for as many citizens as possible in order to restore economic activity. The political preference for a good or service to be paid for out of taxes does not make it a public good.
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The Fallacy of a Vaccine as a Public Good
| Post date: Mon, Dec 14, 2020 |
| Category: General |
| By: Kwame Owino, |
By: Kwame Owino.
Writing in December 2020, there’s a high chance that in the next year, the primary goal of governments regarding the Covid-19 emergency will involve a policy plan for ensuring universal access to vaccines. Whether the public infrastructure to deploy the solution effectively is available or not, will be evident in Kenya in a short while. My guess is that even if the vaccine were made available in sufficient quantities, the inherent weaknesses in the public sector’s management and priorities will show.
There is no doubt that the ability to bring under control infections from the Sars CoronaVirus2 and the Covid-19 illness is not only a public health challenge but also an imperative of economic policy in 2021. The Kenya Economic Update by the World Bank in November 2020 estimated that the effect of the reduction in the growth rate was not only severe but that it had resulted in a rise in the poverty rates in Kenya. It finds that the cumulative effect of loss of employment, depressed economic growth, firm closures, reduced earnings and other disruptions has led to the expectation that the Gross Domestic Product will at best contract by 1.0%, a number well below the population growth rate.
That publication also confirms that the national poverty rate has risen by 4 percentage points, meaning that an additional 2 million Kenyans have fallen into poverty. This leaves no doubt that the direct effect of the illnesses and the necessary responses to reducing spread caused significant damage to the income of households and added other adverse effects to the broader economy. Public attention now moves to what options the government fo Kenya has to ensure that vaccines are procured from the pharmaceutical firms that have developed them. There is justifiable worry that affordability of the vaccines will be an issue for both African and other low income countries. Access to vaccines could be constrained further by hoarding of medicines required for bringing the Covid-19 emergency under control.
An estimate derived from a static model by the Institute of Economic Affairs showed that the monthly economic value foregone from the restrictions and the cessation of economic activity due to this illness lies in the Kenyan Shillings 34 -50 billion range throughout 2020. That estimate was based on the early assumption that GDP growth rates in Kenya would decline to 2%, a figure that seems to have been overly-optimistic. That notwithstanding, the recorded loss makes it obvious that the government of Kenya should spend as much as it can up to that limit to procure vaccines or any treatment to ensure prompt resumption of economic activity.
And yet at the global level, the vaccines that have been produced vary in cost between US$3-$37 per dose with a requirement of at least two doses administered at least a month apart. Given these costs, there is a justifiable concern about how to ensure access for the populations of low income countries. Granted, there are initiatives such as COVAX initiative under the direct coordination of the World Health Organization, it is evident that the countries with poorer populations would need to be careful about what options they have for access to the vaccines. This is because besides the fact that these countries have poorer populations, the convergence of the negative effects of the pandemic has damaged the economies and affected the growth rates and the revenues available to the governments.
In the interest of prosecuting the claim on behalf of low income countries, Mohammed Yunus signed a declaration by many scholars and other political leaders calling for a global mechanism to ensure free access to vaccines developed to prevent Covid-19. Understandably, the signatories were responding to the advance purchase agreements that many countries with richer populations were making to have earlier access to vaccines for their populations.
The logic of this statement resonates with many people in low-income countries because it is supported by the correct view that while the production and administration of the vaccine against Covid-19 has real costs, vaccination of people in one part of the world would be less effective if other parts of the world are unable to provide vaccine protection to their populations. A student of economics would recognise this argument as stating that pandemic control is a good that requires vaccines to be universally provided for maximum effectiveness.
This situation presents an opportunity to clarify certain points about the nature of a vaccine as a good and whether the specific health service of vaccination makes the vaccine a public good. Settled economics literature classifies goods (including services) as either excludable or non-rival. By definition, a good is rival if consumption by one person diminishes another person’s consumption of the same good. On the other hand, a good or service is excludable, if a person can be prevented from using it. The typical introduction class in microeconomics will present a two by two matrix of the attributes as illustrated in the table below.
While the statement by the eminent persons calls for a global mechanism to expand access by providing free or low-cost vaccines, it does not make a claim that vaccines are public goods. However, some well-meaning Kenyans with statist impulses have claimed that vaccines should be converted to public goods because health should be either a right or one to which access should be provided. While this statement is well-meaning in the sense that it argues for reduction of suffering, its claim that vaccines generally and the Covid-19 vaccines that have been developed by December 2020 are public goods is mistaken and uninformed.
First, the nature of the vaccines is that it is provided in doses and that each recipient would receive 2 doses within a month. By example, the specific vial for inoculation provided to a person in the United Kingdom or Brazil, would not be available to another in Kenya implies that the vaccine itself is rivalrous (subtractive). In addition, inoculation of a person based in those same countries would have no effect in preventing illness for a person in Kenya, indicating that it is also excludable. By virtue of the fact that the vaccine is both excludable and rival implies that it is a private good and not a public good as has been stated by pundits and people with supreme confidence in the authority and capability of states.
However, considering clearly the statement that Mohammed Yunus co-authored, the call was to ensure that the access to vaccines is provided liberally and specifically to ensure that “Covid-19 vaccines are a global common good”. They argue for global policy to ensure that the patents for the production of vaccines are placed in the public domain to enable the production of generic medicines. This is sensible reasoning based on an appreciation of the commercial rights of developers of medicines and the incentive structure for firms.
The nature of the vaccine as a technology of medical intervention leaves no doubt that it is a private good. Governments may have an interest in increasing access to vaccines out of the realisation that the Covid-19 is a vicious illness and that pandemic control requires universal access to the vaccines. Regardless of that, it merely shows that governments have an interest in dramatically raising access to a private good (the vaccine) in the service of society through pandemic control. The latter (pandemic control) is a public good and it is most efficiently achieved through universal access to a private good. To argue that vaccines have become public goods is either mistaken or to be hacking at an ideological point. There is a legitimate purpose for governments to pay for the Covid-19 vaccination for as many citizens as possible in order to restore economic activity. The political preference for a good or service to be paid for out of taxes does not make it a public good.
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Kenya’s National Budget: A Matatu Ride Reflecting Fiscal Volatility and Structural Inefficiencies
Introduction The matatu metaphor can be used to analytically frame Kenya’s budget as a system that is subject to binding constraints, evolving expectations, and continuous adjustment to shocks. Like the matatu sector, fiscal policy reflects a balancing act between efficiency and quick action seeking to respond to public service delivery while constrained by competing sector […]
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Introduction Imagine paying the same fare to travel at 6 a.m. as you would at 6 p.m., even though the matatu is half-empty in the morning and packed in the evening. At 6 a.m., there may be more seats available than passengers willing to pay for them. By 6 p.m., the situation is reversed. Hundreds […]
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Absurd hypotheticals are useful precisely because they stress-test a system until its constraints become visible. This note asks what would break first if SpaceX, now a public company following its record-breaking Nasdaq debut in June 2026, with a post-IPO market value of approximately US$ 2.5 trillion, sought a secondary cross-listing on the Nairobi Securities Exchange. […]
The Arithmetic of Ambition: What Kenya’s First-World Dream Really Requires?
Kenya’s proposed post-2030 Vision commits the country to high-income status “within a generation.” One positive issue that should be emulated is that the document seeks to solve the most important policy decision and the foundational problem in economics, which is to expand output and labour. Skeptics ask the most important question, why would this plan […]
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According to the Annual Debt Report 2024/25, as shown in Chart 1 below, Kenya today is such that for every one hundred shillings the Kenyan government raises in tax revenue, approximately ksh71 goes directly into servicing existing debt before a single hospital is staffed, a classroom is built, or a kilometre of road is constructed. […]