NO : WP-2023-08
AUTHOR : Upasak Das, Rupayan Pal, Udayan Rathore and Bibhas Saha
TITLE : Rein in Pandemic by Pricing Vaccine: Does Social Trust Matter?
In this paper, we explore the role of Generalized Social Trust (GST) in promoting public health during
pandemics. We theorize and empirically test the effect of GST on individual’s likelihood (LTP) and
willingness to pay (WTP) for vaccines of different efficacy. Using survey data from Madhya Pradesh,
India, which was collected just before the COVID-19 vaccine rollout in 2021, we find a positive role of
GST in promoting LTP and WTP for different vaccine variants. Our identification strategy relies on
exogeneous variation in out-group trust of neighbors of respondents as instrument variables. The
findings are robust to multiple internal validity checks. Importantly, we find that when efficacy of the
vaccine falls, the marginal effects of GST on LTP and WTP increase. The finding suggests that when an
individual with higher GST faces a higher chance of infecting others through availability of lower
efficacy vaccine, she is less likely to free ride and thus pay more at the margin.
JEL Code: I12; H23; H51; Z13; I18