Measuring the Economic Risk of Epidemics

20 Pages Posted: 14 Jan 2020

See all articles by Ilan Noy

Ilan Noy

Victoria University of Wellington

Nguyen Doan

Victoria University of Wellington

Benno Ferrarini

Asian Development Bank

Donghyun Park

Asian Development Bank - Economic Research

Date Written: 2019

Abstract

We measure the economic risk of epidemics at a geo-spatially detailed resolution. In addition to data about the epidemic hazard prediction, we use data from 2014-2019 to compute measures for exposure, vulnerability, and resilience of the local economy to the shock of an epidemic. Using a battery of proxies for these four concepts, we calculate the hazard (the zoonotic source of a possible epidemic), the principal components of exposure and vulnerability to it, and of the economy's resilience (its ability of the recover rapidly from the shock). We find that the economic risk of epidemics is particularly high in most Africa, the Indian subcontinent, China, and Southeast Asia. These results are consistent when comparing an ad-hoc (equal) weighting algorithm for the four components of the index, with one based on an estimation algorithm using Disability-Adjusted Life Years associated with communicable diseases.

Keywords: epidemic, influenza, risk measurement, economic impact

JEL Classification: E010, Q540

Suggested Citation

Noy, Ilan and Doan, Nguyen and Ferrarini, Benno and Park, Donghyun, Measuring the Economic Risk of Epidemics (2019). CESifo Working Paper No. 8016, Available at SSRN: https://ssrn.com/abstract=3518964

Ilan Noy (Contact Author)

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Nguyen Doan

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Benno Ferrarini

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Donghyun Park

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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