Question

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as_______.

Answer 1

Answer:

Social Benefit / Positive Externality

Explanation:

Each economic transaction has benefits & costs to society.

Eg: Vaccinations purchase by patients-  benefits patients by preventing them from a disease for which they pays monetary cost to the doctor, which is latter's income benefit.

However, these both are patient's & doctor's private benefit & costs.

Externalities imply extra harm or benefit to other un-indulged parties, without any monetary exchange for that harm or benefit. Socially Beneficial are positive externalities, Socially harming are negative externalities.

Eg - In this case, vaccination is the positive externality : It has extra benefit for other people who are less probable to transmitting illness, without having paid for that prevention in any way.

But, Individual consumers (here patients) & producers (here doctors) decisions are based on their private benefit & cost. So, consumers' (here patients') willingness to pay will depend only on their private benefit of disease prevention & ignore the extra social benefit from the positive externality vaccination - as society less illness probability.