Economic Impact of Influenza: The Macro Perspective

Objective: To estimate the macro-economic impact of pandemic flu on European economies and to assess the importance of a rapid nationalised intervention in the event of an outbreak. Motivation: There is a positive relationship between a nation's health and economic prosperity. However, in evaluating health care economists typically concentrate on economic impacts to the health sector only, which may mis-specify the social costs and benefits of a disease/intervention. SARS illustrated the potential for a health problem to have an impact on non-health sectors, such as trade and tourism, many times the magnitude of effects on the health sector. In the current climate of concern about the possibility of an influenza pandemic, this paper demonstrates the benefits of using a macro-economic approach to model a major disease outbreak Approach: Based upon epidemiological data from the 1918 and 1968 flu outbreaks, we estimate various potential shocks on specific European economies reflecting the impact of an infectious disease outbreak more generally. Aside from health sector impacts, this approach captures changes in behaviour that result from fear of disease, such as avoiding public transport and densely populated gatherings, and from public policy to contain an outbreak, such as school closure. We use a combination of disease estimates from past pandemics, risk analysis survey results and implications of current government policies for flu pandemic planning to construct economic shocks which are implemented within a macro-economic model. Main Outcome Measures: The economic impact of an infectious disease outbreak is calculated as percentage impacts on macro-economic indicators such as GDP, imports and exports, and disaggregated across various sectors. Results: Although final analysis is required, preliminary analysis just completed suggest that reductions in consumption in certain sectors due to infectious disease outbreaks seem substantial and significant. However, where outbreaks represent short sharp shocks, productivity increases rapidly post-outbreak in sectors that declined during the outbreak, creating strong post-outbreak gains which may outweigh the previous quarter's losses resulting in relatively small long-term losses. Conclusion: Our modelling demonstrates the usefulness of undertaking a macro-economic approach in assessing health care issues likely to have far wider economic effects than those identified to the healthcare sector. This approach is not a 'rival' to micro-economic analysis/modelling, but in the case of a global health threat where many affected individuals may not receive hospitalisation and where the greatest impacts on a country's economy do not occur in the healthcare sector, macro-economic modelling offers a more comprehensive estimation of impact. Our also model shows the importance of each country's transparency in the identification and handling of any potential outbreaks to enable rapid nationalised interventions to minimise the impact of an outbreak.