One hundred years ago, the Spanish Flu pandemic brought devastation to the world, killing an estimated 50-100 million worldwide. Though not nearly as severe, this current flu season is proving to be one of the deadliest in recent history, even when compared to the H1N1 pandemic of 2009. Current predictions indicate that the virus is not about to slow down. Indeed, last week’s prevalence was calculated at 51 per 100,000 people while this week saw 60 per 100,000 people. This number is so great that influenza is currently the 10th leading cause of death in the U.S. Of equal concern is the combination of the weakness of the vaccine combined with the strength of the virus, with numbers ranging from 10% to 55% for the effectiveness of the vaccine.
Verging on pandemic levels, this flu season has not only put a strain on hospitals and community health centers; many economists predict that there will be a noticeable economic impact as well. Though exact numbers have not been calculated, economists have generated models based off of previous flu seasons to try to predict how this season’s virus will impact various sectors of the economy.
Predictably, the number one sector of the economy impacted by illness as a whole is the labor sector. Historical records indicate that during any large-scale public health crisis, work places see a high degree of absenteeism, both as a function of avoidance of sickness and to avoid sickening others. Reduced workforce participation can also be tied to caring for sick family members, particularly children. This creates the unfortunate scenario where labor supply is variable yet wages are fixed. Thus, firms see an increase in per hour labor costs.
Similarly impactful, medical expenditures have a noticeable increase during flu season, both within healthcare firms as well as on a household level. As healthcare commodities are largely inelastic, a severe flu season may see many households spending less money on other goods while increasings their medical expenditures. Looking at this phenomenon from a global perspective, international tourism may take a hit as well. Countries with sub-standard public health systems, particularly those that are more susceptible to pandemic-level crises, would likely face a reduction in tourism.
Looking at these behavioral changes associated with public health crises, many experts argue that vaccinations serve as both a medical and economic solution. When a population is vaccinated at its optimal level, the total costs are around $4.5 billion per season. This steep cost is estimated to reduce illness-related workdays by about 4.8 million days per year while reducing medical treatment costs by $20.5 billion per year.
Despite reductions in the costs of flu vaccinations, there is still a lower-than-optimal rate of vaccination. Thus, it seems as if policy makers have found their solution. It is simply a matter of finding a nudge that pushes people to make the decision to get themselves vaccinated.
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Garrett, T.A. (2007). Economic Effects of the 1918 Influenza Pandemic (Rep.). St. Louis, MO: Federal Reserve Bank of St. Louis
Prager, F., Wei, D., & Rose, A. (2017). Total Economic Consequences of an Influenza Outbreak in the United States. Risk Analysis, 37(1).
Woods, B. (9 Jan, 2017) Get ready, some medical experts are predicting the worst flu season in history.