Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

Abstract: Vaccinations are very effective in reducing the risk of infection on an individual level and thereby also reduce the risk of subsequently infecting others. This vaccination spillover effect reduces health related transaction costs in economic interactions and increases both consumer and producer surplus. In this paper, we quantify the valuation for vaccination spillovers for close contact services in an experimental setting. To generate a comprehensible scenario, we exploit the substitutability of testing for the disease and vaccination spillovers for infection risk reduction. We elicit individuals' willingness to pay (WTP) for testing and randomize the vaccination status of the service provider. The spillover effect of the service provider's vaccination is equivalent to 69% of the full infection risk reduction via testing. We demonstrate that higher levels of disease specific risk aversion increase both the WTP for testing and the vaccination spillover effect in levels, resulting in a constant relative vaccination spillover effect.

Keywords: vaccinations, vaccination spillover, transaction costs, infection risk, randomized experiment

JEL-codes: I10; I12; D10; J20 September 2023

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