Abstract

Individuals' free choices in vaccination do not guarantee social optimum since individuals' decision is based on imperfect information, and vaccination decision involves positive externality. Public policy of compulsory vaccination or subsidised vaccination aims to increase aggregate private demand closer to social optimum. However, there is controversy over the effectiveness of public intervention compared to the free choice outcome in vaccination, and this article provides a brief discussion on this issue. It can be summarised that individuals' incentives to vaccination and accordingly their behavioural responses can greatly influence public policy's pursuit to control disease transmission, and compulsory (or subsidised) vaccination policy without incorporating such behavioural responses will not be able to achieve the best social outcome.