The Loss from Pandemic Influenza Risk

Authors: Victoria Fan, Lawrence Summers, Dean Jamison

Abstract:

This chapter assesses the expected annual loss from a pandemic with risk r, expressed as a percentage of the annual probability of a pandemic, and severity s, expressed as the fraction of the world population that dies from the pandemic, using the historical and modeling literatures to generate expected values of r and s and using those values to generate estimates of mortality and its associated losses. In addition to the enormous loss in terms of human suffering, an important dimension of loss lies in a pandemic’s effect on income. Premature deaths reduce the size of the labor force, illness leads to absenteeism and reduced productivity, resources flow to treatment and control measures, and individual and societal measures to reduce disease spread can seriously disrupt economic activity. The second major dimension of loss from a pandemic lies in the intrinsic value of lives prematurely lost and of illness suffered. Efforts to measure the dollar value of losses associated with premature mortality and illness remain imperfect, but extensive empirical findings appear in the economics literature, particularly for losses from premature mortality.