Tuesday, October 25, 2011

Does marginal cost change when more people start doing something?

I'm a little confused to be honest!Does marginal cost change when more people start doing something?Marginal cost to whom?



If you are going to do something you and your friends have never done before, your cost of doing it the first time would be somewhat high.



If your friends have done it, then the cost of your doing it the first time would be lower: you have their advice, you might be able to borrow equipment, the local stores might have the supplies you need (so you may not have to order online), etc.



So yes, when more people start doing something, you can expect the marginal cost for the next person to start to go down.



In the same sense, it doesn't cost twice as much to vaccinate 20 people than 10, so in vaccinations too, marginal costs go down. But what that has to do with the percentage getting sick, I don't understand.



A separate issue with vaccines is marginal benefits. The first person to get the vaccine is a big winner - that person is almost certainly (~99%) protected while everyone else is vulnerable.



Now assume that 99.9% of the population has already been vaccinated and you are the last one not vaccinated. The cost to you of getting vaccinated might be less than the cost for the first person, but benefits are a lot less. If everyone else is vaccinated, then they won't get sick. That means they can't pass the disease on to you. So you are safe whether or not you get vaccinated.



Where is the dividing line? It depends on the disease, how easily it spreads, how dangerous it is to get it, etc.



In almost all cases, it pays to get the vaccine anyway. But because of this theory, there have have been too many kids who have not been vaccinated against common childhood diseases.

http://www.foxnews.com/story/0,2933,3793

Since diseases such as german measles are much nastier to adults than to kids, this seems like a big mistake.