The expense of major epidemics goes far beyond the outlays for drugs, doctors' visits, and hospitalizations. A pandemic like Ebola that lasted a year could even trigger a major global recession. While scientists are scrambling to find a cure for Ebola, the biggest challenge for economists is to measure the impact fear has on consumer confidence. Why do alarms from new cases add to stock-market jitters? Who calls for widespread travel bans? When are we going to face mass trade disruptions?
In June 2009, the World Health Organization raised the worldwide pandemic alert level for swine flu to the highest possible. It meant that the disease, which originated in Mexico, had spread worldwide and there were cases of people with the virus in most countries.
When an outbreak of Avian influenza – also known as Avian flu or bird flu – reached its peak back in 2006 spreading throughout Asia, Europe, the Middle East and Africa, some officials called it the most serious ever known health threat facing the world.
Hong Kong’s SARS experience in 2003 showed how epidemic-stoked fears can totally cripple an advanced economy. The severe acute respiratory syndrome, which began in southern China and lasted about seven months killing just over 900 people, reduced the global GDP by $33 billion.
When a pandemic happens, the economic losses come from sickness or death, but those are only the first-order effects. Next come what experts call efforts to avoid infection – reductions of air travel and consumption of numerous mass services like transport, tourism, or retail shopping.