In Preparing for a Pandemic, (forthcoming AER PP), by myself and a host of worthies including Susan Athey, Eric Budish, Canice Prendergast, Scott Duke Kominers, Michael Kremer and others equally worthy, we explain the model that we have been using to estimate the value of vaccines and to advise governments. The heart of the paper is the appendix but the paper gives a good overview. Based on our model, we advised governments to go big and we had some success but everywhere we went we were faced with sticker shock. We recommended that even poor countries buy vaccines in advance and that high-income countries make large investments in vaccine capacity of $100b or more in total.
It’s now obvious that we should have spent more but the magnitudes are still astounding. The world spent on the order of $20b or so on vaccines and got a return in the trillions! It was hard to get governments to spend billions on vaccines despite massive benefit-to-cost ratios yet global spending on fiscal support was $14 trillion! Even now, there is more to be done to vaccinate the world quickly, but still we hesitate.
I went over the model for Jess Hoel’s class and we also had a spirited discussion of First Doses First and other policies to stretch the vaccine supply.