Question

The mayor of Gotham City, worried about a potential epidemic of deadly influenza this winter, asks an economic adviser the following series of questions. Determine whether a question requires the economic adviser to make a positive assessment or a normative assessment. a. How much vaccine will be in stock in the city by the end of November? b. If we offer to pay \(10 \%\) more per dose to the pharmaceutical companies providing the vaccines, will they provide additional doses? c. If there is a shortage of vaccine in the city, whom should we vaccinate first-the elderly or the very young? (Assume that a person from one group has an equal likelihood of dying from influenza as a person from the other group.) d. If the city charges $$ 25 per shot, how many people will pay? e. If the city charges $ 25 per shot, it will make a profit of $$ 10 per shot, money that can go to pay for inoculating poor people. Should the city engage in such a scheme?

Short answer

a. Positive assessment, b. Positive assessment, c. Normative assessment, d. Positive assessment, e. Normative assessment.

Step-by-step solution

Identifying Type of Assessment for Part (a)

To determine the type of assessment for the question about the amount of vaccine stock, you consider whether the question asks for factual information (positive assessment) or asks for an opinion based on values or judgement (normative assessment). Since the question demands concrete data regarding vaccine stock, it requires a positive assessment.

Identifying Type of Assessment for Part (b)

Assessing whether pharmaceutical companies will provide additional doses for a higher payment involves predicting an outcome based on a hypothetical change. This prediction can be made using economic models making it a positive assessment, as it does not involve a subjective judgement.

Identifying Type of Assessment for Part (c)

Deciding whom to vaccinate first involves values and ethics, since it is about prioritizing one demographic over another without a clear cut criterion from an economic standpoint. Thus, the question requires a normative assessment.

Identifying Type of Assessment for Part (d)

The question related to the number of people who will pay for the vaccine at a certain price point involves analyzing market behavior. This requires economic modeling to predict people's behavior, classifying it as a positive assessment.

Identifying Type of Assessment for Part (e)

The advisability of the city engaging in a profit-making scheme to fund inoculations for the poor involves ethical considerations and public policy opinions, which makes it normative. It's a decision based on what should be done, and involves value judgements.

Key concepts

Positive Assessment

In economics, a positive assessment, also known as positive analysis, involves examining factual and objective data. It deals with 'what is' or 'what will be' rather than 'what should be'. When economists engage in positive assessments, they aim to understand or predict outcomes without imposing their own value judgments or opinions.

For instance, in the given exercise, when the Gotham City mayor asks about the quantity of vaccine stock by the end of November, or the potential behavior of pharmaceutical companies in response to increased payment, these questions demand a positive assessment. They are seeking verifiable information or predictions based on economic models. Such analyses use statistical, mathematical, or computational techniques to forecast market behavior and gauge the impacts of various variables on economic outcomes.

Normative Assessment

A normative assessment differs from a positive assessment as it involves subjective opinions based on personal values, beliefs, or ethical considerations. It revolves around what ought to be, incorporating value judgments and recommendations for how things should be done.

In the situation provided, when decision-making involves prioritization of public health measures, such as who should receive the vaccine first, or whether the city should engage in profit-making schemes to fund inoculations for the poor, the questions move beyond factual data into the realm of ethics and morality. This is where normative assessment plays a crucial role. It helps to formulate policies and make decisions that reflect societal values and goals but does not predict outcomes based on data or models.

Vaccine Economics

The field of vaccine economics is a specialized area within health economics that evaluates the cost-effectiveness, distribution, and societal impacts of vaccination programs. The analysis encompasses aspects such as production costs, pricing strategies, supply chain logistics, and the broader economic benefits of preventing diseases through vaccination.

In our current scenario, the economic advisor to the mayor of Gotham City would employ vaccine economics to assess the market behavior in response to increased offers for vaccine doses, or to determine the pricing strategy for the vaccines. Understanding the willingness to pay and the elasticity of demand for vaccines can play a pivotal role in developing efficient and equitable vaccination strategies.

Market Behavior

Market behavior refers to the aggregation of choices made by consumers and producers in a given market. It is influenced by a variety of factors, including price changes, consumer preferences, and economic incentives. Economists use market behavior to make predictions and advise policymakers on potential outcomes of different economic scenarios.

In the context of Gotham City's vaccination plan, determining how many people will pay a set price for a vaccine shot is an example of analyzing market behavior. Economic tools like demand curves and price elasticity help predict how variations in price can affect the quantity of vaccine demanded. The assumption is that individuals will act rationally in response to price changes, and these predictions can help the city plan its budget and target the necessary funding to maximize public health benefits.