Cost-benefit analysis (CBA) is a systematic framework used to evaluate the economic efficiency of a project, policy, or investment. It involves:
- Identifying and quantifying all the relevant costs: This includes direct costs (e.g., construction materials, labour) and indirect costs (e.g., environmental damage, loss of productivity).
- Identifying and quantifying all the relevant benefits: This includes both tangible benefits (e.g., increased revenue, improved health outcomes) and intangible benefits (e.g., reduced pollution, increased happiness).
Key Concepts:
- Market vs. non-market valuation: Some benefits and costs may be easily reflected in market prices (e.g., labour costs, goods purchased). Others require economic methods to estimate their value (e.g., environmental damage, improved air quality).
- Discounting: As benefits and costs occur over time, CBA uses discounting techniques to bring them to a common present value for comparison.
- Distributional impacts: CBA not only looks at the overall efficiency of a project but also considers how the costs and benefits are distributed among different groups.
Benefits of CBA:
- Provides a structured approach to decision-making.
- Helps to identify the most economically efficient option among alternatives.
- Considers not only the financial but also the wider social and environmental impacts.
Limitations of CBA:
- Difficulty in quantifying certain benefits and costs, especially non-market ones.
- Sensitivity of results to assumptions and choice of methodology.
- Does not take into account ethical considerations or political feasibility.
CBA can also quantify the complex issue of public health interventions like vaccines. Considering the typical mortality rates for healthy adults, the benefits of the vaccine seems limited at best. The following data illustrates this point:
- Worldometer: Estimates a crude mortality rate (CMR) for individuals under 65 with no underlying conditions at 0.09%, meaning 86 deaths per 100,000 population.
- Our World in Data: Presents an interactive chart showing the mortality risk by age group, with the lowest risk for the 20-29 age group at around 0.01%, meaning approximately 10 deaths per 100,000 population.
The potential side-effects however, are considerable:
Most Common Side Effects (generally mild and short-lived):
- Pain, redness, or swelling at the injection site: This is very common and typically resolves within a few days.
- Fatigue: Feeling tired after vaccination is common and usually goes away within 1-2 days.
- Headache, muscle aches, chills, fever: These flu-like symptoms are common and usually mild, subsiding within a few days.
- Nausea, vomiting, diarrhea: These are less common but can occur, typically lasting 1-2 days.
Less Common Side Effects:
- Allergic reactions: These are rare but can be serious, requiring immediate medical attention.
- Enlarged lymph nodes: This is uncommon but usually resolves on its own.
- Myocarditis and pericarditis: These are very rare, mainly affecting young males after mRNA vaccines, and typically resolve with treatment.
- Thrombosis with thrombocytopenia syndrome (TTS): This is an extremely rare but serious blood clotting condition associated with the J&J/Janssen vaccine.
Conclusion:
CBA provides valuable insights into the economic efficiency of the COVID-19 vaccines. While challenges exist in quantifying some benefits, the potential costs seem significant. However, it is incumbent on all to conduct their own CBA and satisfy themselves that the costs are out-weighed by the benefits.