The Economics of Vaccinations

Nov 13

by Kashvi Mahesh

In the realm of financial literacy, we often talk about investing: putting money in today to reap benefits, or avoid losses, tomorrow. Vaccination is one of those “investments” that may not show up in your personal stock portfolio, but certainly pays dividends for you, your household, and society at large. Preventing disease through vaccination has far-reaching economic benefits: less medical spending, fewer lost workdays, stronger productivity, and ultimately, more robust financial outcomes.

1. The big picture: What vaccination prevents

When people get vaccinated, diseases don’t just skip them, they also avoid creating ripple-effects of cost. These ripple effects include:

Direct health-care costs: doctor visits, hospitalisation, medications.
Indirect costs: absenteeism from work or school, caregiver time, long-term disability.
Macro-economic effects: burden on health systems, disruption to business, and slower economic growth.

For example, the Centers for Disease Control and Prevention (CDC) notes that immunisation is “one of the most cost-effective ways to improve health,” and that each dollar spent on vaccination in low- and middle-income countries (LMICs) can yield about $52 in social and economic benefits. CDC+1

2. Return on investment: Quantifying the savings

From a financial-literacy perspective, it helps to treat vaccination like an investment with a return. How big is the return? Some striking figures:

A study of 94 LMICs estimated that vaccination between 2011–2030 would avert US $1,510 billion (i.e., US$1.51 trillion) in direct illness costs, and up to US $5,662 billion (US$5.66 trillion) when including value of a life-year. Immunization Economics+1
For the same group, immunisation program costs were small in comparison; the benefit-cost ratio was estimated at ~26:1 for 2011-20, and ~20:1 for 2021-30 (cost-of-illness model). Johns Hopkins Public Health+1
In one scenario of routine childhood immunisation in the US, net savings from 1994-2023 birth cohorts were estimated at US$540 billion in direct costs and US$2.7 trillion in societal costs. CDC

Put simply: for relatively modest spending on vaccines, society can avoid very large costs.

3. How this translates to financial literacy terms

Here’s how you can connect the vaccination lens to personal and household finances:

Reduced out-of‐pocket health spending: If you or your children don’t fall sick (or get severely sick) because of vaccination, your medical bills go down. Some indirect costs vanish too: fewer travel, fewer lost wages if you need to care for someone.
Stability of income and productivity: Illness hits your earning ability (you can’t work) or forces you to take unpaid leave. Vaccination acts like insurance, not in the sense of paying monthly premiums (though sometimes you do), but by lowering the risk of income disruption.
Lower risk of catastrophic event: A severe disease outbreak in a family can wipe out savings, force debt, or divert money from other goals (education, asset purchase). Preventive health measures like vaccination reduce this tail-risk.
Macro benefits that trickle down: A nation with fewer disease burdens has stronger growth, more stable public finances, and better infrastructure. In turn, that supports better jobs, higher wages, and better returns for individuals.

4. Key mechanisms of cost savings

Here are the specific ways in which vaccination translates into savings and benefits:

Avoided treatment cost: Fewer illnesses mean fewer doctor visits, fewer hospital stays, fewer medications. For example, modelling shows for LMICs many billions were saved in treatment costs alone. cdn.pfizer.com+1
Avoided productivity losses: When people are sick (or care for someone sick), they may miss work or work at lower capacity. Vaccination prevents many of these losses.
Avoided long-term disability or premature death: These carry huge economic costs, not just immediate bills but lifelong lost income, lost contributions to economy, lost human capital. Studies factor these in (value of statistical life, value of life-year) and find enormous benefits. Immunization Economics+1
Avoided outbreaks/emergencies: When disease spreads, costs escalate: emergency response, lockdowns, business disruption. Vaccination helps avoid or reduce these large spikes. For example, modelling for pandemic response finds large savings from faster vaccination. institute.global+1
Broader societal effects: Healthy populations mean better school attendance, stronger workforce, more human capital investment, less pressure on public health budgets, meaning public funds can be used elsewhere (education, infrastructure). Vaccine Alliance+1

5. Considerations and caveats

While the economic case for vaccination is strong, there are some nuances worth noting (especially in a financial-literacy context where risk, timing, and scale matter):

Timing matters: The benefit of vaccination accumulates over years. Some costs are immediate (vaccine purchase, administration) while benefits (avoided illness, productivity gains) accrue over time.
Coverage and effectiveness matter: The greater the uptake and the higher the vaccine effectiveness, the larger the benefits. If coverage is low, the potential savings shrink.
Context matters (income, health system): Many of the large benefit figures come from LMIC settings where disease burdens used to be higher and the marginal benefit of vaccination is high. In high-income countries with already low incidence, the savings may still exist but relative magnitude can differ. For example, for an annual COVID-19 vaccine in an adult individual perspective, cost savings depend on risk of infection and other factors. OUP Academic
The intangible benefits are hard to quantify: Some benefits (e.g., improved quality of life, reduced anxiety, societal resilience) are valuable but beyond simple dollar-in, dollar-out accounting. Economic models attempt them (value of statistical life) but by necessity use assumptions.

6. What’s the takeaway?

Here are actionable points:

If you’re deciding on health-investment priorities (for self, your children, your family), view vaccination not just as a medical decision but a financial one. The “return” may not appear as a stock gain, but as avoided costs and income stability.
Factor in long-term thinking: just like retirement planning, prevention is an upstream investment. Spending a modest amount now (vaccine cost/time) may avert large costs later.
Understand risk management: Illness is a risk to income, savings, and financial goals. Vaccination is one layer of mitigation, alongside insurance, emergency funds, healthy lifestyle, etc.
Appreciate societal context: Even if your personal benefit seems modest, the aggregate societal benefit matters, strong societies create stronger personal opportunities (jobs, wages, business). Participation in vaccination contributes to that ecosystem.
Consider opportunity cost: Sometimes we focus on other investments (“Should I invest this money in X or Y?”) and neglect health-prevention investments. It’s worth valuing prevention alongside investment portfolios.

In the world of finances, we often emphasise returns, risk, cost efficiency, and compounding. Preventive health via vaccination checks many of these boxes: a relatively low cost upfront, large long-term upside, risk reduction, and incredibly high return on investment when looked at societally. In short, preventing disease isn’t just good for your health, it’s good for your wallet.

If you’re managing your finances with a long-term view, add “health-risk mitigation” (including vaccination) into your portfolio of investments. Because when illness takes you out of the workforce or piles up unexpected costs, your financial plan does not operate in isolation. And in that sense, vaccination is not just a health decision, it’s a financial smart move.

References:

Samarth Singh