Global health is a public good, which means that successfully addressing the current coronavirus outbreak (COVID-19) requires internationally coordinated efforts. While spillover events like COVID-19 cannot be prevented, there are investments that the international community can make to minimize their overall effects.
First, current information on economic activity can be used to produce estimates of “hotspots.” Second, a strategic global response network can create an infrastructure for rapidly addressing health risks. Finally, when designing policy to manage an outbreak, it is important consider how its incentives affect human behavior. This helps ensure that the policy actually achieves the intended outcome (reducing the spread of infection).
More than one month after the outbreak of COVID-19 was reported in China, the White House requested $1.25 billion in emergency funds to combat the outbreak. While only a handful of infections have reached U.S. soil, addressing infectious disease overseas is a form of national defense.
Further, the United States alone cannot manage the outbreak; there needs to be a globally coordinated response. This global effort does not preclude domestic investments in building capacity to respond to outbreaks either. Our work shows that this type of self-insurance via having plenty of nurses and hospital beds complements investments in preventing domestic outbreaks by fighting disease abroad.
The current coronavirus outbreak will not be the last disease outbreak, and these risks are also highly transferable. Isolated efforts to respond to risks in one location without a coordinated policy can leave other locations vulnerable through wildlife trade, human travel and other vectors.
The coronavirus is a zoonotic disease, meaning that the first human infections of the virus were transmitted (or spilled over) from animal populations. These spillover events are extremely rare. Since we cannot predict where or when the next spillover will happen, we cannot prevent outbreaks from occurring.
As a result, our ability to detect and rapidly respond to an event once it occurs is our best bet for reducing the economic and human cost of infectious disease. Since controlling a zoonotic disease outbreak is effectively a race between the spreading pathogen and containment, the more developed our response network before an outbreak happens, the faster and more readily we will be able to respond to it. Recent proposed cuts to both the domestic and global health funding in the form of cuts to the Centers for Disease Control and Prevention (CDC) and World Health Organization budgets, as well as the elimination of the cabinet-level position tasked with preparing for disease outbreaks, have made the United States less prepared for events like COVID-19.
While the number of the new infections that can be attributed to a single infected individual is influenced by characteristics of the pathogen, there are ways in which people can mitigate or exacerbate their risk of infection. The economics literature has shown that people respond to the risk of infection — they cancel trips, keep their children out of school and avoid potential sources of infection. Additionally, typical public health interventions such as contact tracing and encouraging hand washing are designed to reduce new infections. These efforts to avoid infection come with a cost — that forgone travel or time at school is costly to the people who miss trips or class.
In addition to infection and loss of human life, outbreaks such as the coronavirus have a broader economic cost. In January, Wuhan, China, a city of 11 million people, was placed in a travel ban and 10 other Chinese cities were placed under quarantine orders to contain the virus. The outbreak and regional containment measures aligned with the celebration of the Chinese New Year, which for most Chinese means long-distance travel and celebration with family. To date, travel bans and a reduction in flights to Asia are projected to cost the airline industry $28 billion. Similar travel restrictions are now in place in South Korea and Europe, and the CDC has suggested that Americans prepare for major disruptions in the form of school closures, cancelled events and more.
In addition to avoidance behavior and quarantine, containment measures produce tremendous indirect economic effects. Travel bans and reduced sales of jet fuel lowered demand for oil and impacted global oil prices. Asia is a tremendous player in global supply chains, and understaffed ports have halted the transportation of all goods, from fresh food to electronics. Companies like Apple are affected when, as travel bans and trade restrictions are put in place, they are forced to source materials and manufacture parts in different locations. These efforts can affect international supply chains and lead to economic chaos.
Unfortunately, these changes in behavior, while potentially chaotic, do not by themselves eliminate the risk of infectious disease. Travel bans are imperfectly enforced, driving trade and travel underground. This makes it more difficult to screen for the disease.
What’s more, uncoordinated quarantine efforts and communication strategies intended to mitigate economic damages risk downplaying the threat and complicate the politics of investing in what does work, while time to react is scarce. A public that does not understand the risk will be less likely to support the investments needed to counter outbreaks. When the potential outcome of being proactive is becoming an international pariah and economic disaster, policymakers face perverse incentives to underreport.
Additionally, go-it-alone policies, while immediately satisfying, may damage longer run efforts to build capacity and international cooperation, both of which are necessary to effectively manage the risk of not just of the current outbreak but a future pandemic.
Kevin Berry is an assistant professor of economics at the University of Alaska Anchorage. He is an author on seven peer-reviewed academic papers on prevention and infectious disease. Follow him on Twitter @kberry6788. Katherine Lee is an assistant professor of agricultural economics and rural sociology at the University of Idaho.