{"id":4023,"date":"2024-09-02T11:35:38","date_gmt":"2024-09-02T09:35:38","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=4023"},"modified":"2024-09-02T11:35:38","modified_gmt":"2024-09-02T09:35:38","slug":"are-we-ready-for-the-next-pandemic","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/09\/02\/are-we-ready-for-the-next-pandemic\/","title":{"rendered":"Are We Ready for the Next Pandemic?\u00a0"},"content":{"rendered":"

COVID-19 wasn’t the last epidemic we\u2019ll face; there will be more, and we would do well to be prepared. Concepts from economics, including behavioural economics, can help us better understand the issues and find more adequate solutions. This article addresses a hot topic in the column dedicated to health issues.<\/span><\/i><\/p>\n

During the COVID-19 pandemic, the world faced a dramatic health crisis that profoundly influenced health, the economy, and societies globally, highlighting the need to be better prepared for future pandemics. Already in 2009, during the H1N1 epidemic\u2014commonly known as swine flu\u2014economist Gary Becker emphasised the importance of preparing for pandemics not only as health issues but also as economic ones, asking, “Is this the major pandemic feared by experts?” The H1N1 of 2009 was not, but ten years later, those fears proved more than justified. Experts now predict more pandemics in the future and urge us to learn from past experiences, especially the recent COVID-19, to plan adequate preparation. In 2009, Becker pointed to some fundamental economic concepts useful for preparation.<\/span><\/p>\n

Externalities and State Intervention<\/b><\/h3>\n

The first of these concepts is externality, which occurs when the actions of an individual or company affect the well-being of others, either positively or negatively. In a pandemic context, virus transmission from infected to healthy individuals represents a significant negative externality. Measures such as mask-wearing and vaccination can be essential to limit the virus’s spread. However, their adoption is generally lower than desirable because individuals often do not consider the benefits these practices bring to others, constituting positive externalities. This leads to reduced adoption of protective measures, allowing the virus to spread and potentially overwhelm health systems, as seen during COVID-19. In these cases, economic science suggests that public intervention to encourage, incentivise, or mandate the adoption of protective behaviours is crucial for collective well-being.<\/span><\/p>\n

Cost Evaluation and Investments<\/b><\/h3>\n

Economics also helps us evaluate how much to invest to minimise the risk of future pandemics. In his 2009 article, Becker calculated the costs of a potential pandemic and quantified the necessary investments. Using data from COVID-19 in Italy, which caused nearly 200,000 deaths, we can apply similar methods. Economists use the “value of a statistical life” to quantify the monetary loss of human lives; estimates for Italy range from 25 to 65 million euro per life. Adopting an intermediate value of 45 million euro per life, the cost of COVID-19 deaths in our country can be estimated at around 900 billion euro. This figure, representing only part of the pandemic’s total cost, underscores the importance of preventive investments. Assuming a 1% probability of a similar pandemic in the next 20 years, the expected cost and willingness to pay to avoid it would be about 9 billion euro. Extending the analysis to the European Union, which recorded over 2 million deaths, the necessary investment would be around 100 billion euro. These numbers raise a crucial question: are we investing enough to prepare for future pandemics? Post-emergency, the top political agenda items have changed, and although we can debate the exact figures regarding necessary investments, the additional funds allocated for healthcare appear entirely insufficient.<\/span><\/p>\n

The Missing Collaboration in International Politics<\/b><\/h3>\n

The global scope of health crises underscores the need for close international cooperation. Epidemiologists and public health experts have always emphasised the importance of collaboration among countries. After COVID-19, the international community has understood its value even more. Yet despite renewed awareness, significant difficulties persist in achieving effective and lasting cooperation. At the end of May 2024, after two years of negotiations, World Health Organization member countries failed to reach an agreement on the proposed international treaty to prepare for future pandemics. The lack of agreement has so far prevented the establishment of binding policies for pathogen surveillance, rapid data sharing, and the creation of reliable supply chains for tests, vaccines, and treatments. Discussions on the treaty faced significant obstacles, particularly regarding the section on “Access to Pathogens and Sharing Benefits,” which would have mandated the rapid sharing of genetic sequences and samples of emerging pathogens crucial for developing tests, vaccines, and medicines. Low-income countries demanded fair and timely access to these tools and urged information sharing to enable low-cost local production and prevent monopolies by wealthier countries. In exchange for sharing genetic sequences and samples, advanced countries would commit to reserving 20% of vaccines\u201410% for donation and 10% at reduced costs\u2014to low-income countries. The agreement could benefit all, as seen during COVID-19, where the most problematic virus variants emerged in areas with low vaccination coverage such as Beta in South Africa, Delta in India, and Omicron in Botswana and South Africa. However, negotiations stalled because countries like the United States and Switzerland, home to major pharmaceutical industries, were reluctant to accept conditions that could reduce their profits. It is hoped that an agreement will soon be reached, but overcoming obstacles requires understanding the incentives at play. Here, economic science offers useful tools for analysing these incentives and ensuring that international agreements benefit all involved countries, maximising the effectiveness of collective action against global health threats.<\/span><\/p>\n

Optimising Incentives<\/b><\/h3>\n

A fundamental mechanism is the “advance commitment” proposed by Nobel laureate Michael Kremer. This mechanism incentivises the research and development of products with low short-term profitability for private markets, such as vaccines for common diseases in developing countries. The approach involves governments or international bodies committing to purchase a determined quantity of a product at a guaranteed price once developed and approved. This reduces financial uncertainty for pharmaceutical companies, ensuring a market and economic return if the product is realised, thus overcoming economic barriers that hinder investments in research for diseases prevalent in poor countries. The idea materialised during the COVID-19 pandemic with the “Operation Warp Speed” initiative in the United States. Through the advance commitment program, the US government guaranteed significant investments in pharmaceutical companies for the accelerated development of COVID-19 vaccines, reducing financial uncertainty for producers and speeding up the availability of effective vaccines. Facilitating an agreement on the WHO treaty is crucial for wealthy countries to be willing to invest significant resources and actively involve the private sector considering economic incentives. Collaboration between governments and private industries, incentivised by clear and early financial commitments, is essential to mobilise the necessary resources and expertise to tackle global health emergencies.<\/span><\/p>\n

Preparation in Italy<\/b><\/h3>\n

And in Italy, what have we learned from the pandemic experience? Unfortunately, the debate on pandemic management and preparedness is often a source of frustration. The creation of a parliamentary commission seems focused on finding culprits rather than drawing lessons to improve preparation for future health emergencies. During the COVID-19 pandemic, especially in the early stages, there was great uncertainty about many aspects of the virus, including transmission modes and the most effective protective measures. Decisions made then were often based on the best available information at the time, even if some later proved less effective than others. Some policies adopted, such as school and business closures, became extremely controversial, highlighting the difficulty of making the best decisions with limited and constantly evolving information. In response to these complex decision dynamics, Emily Oster, an economist at Brown University, proposed a “pandemic amnesty” in an article in <\/span>The Atlantic<\/span><\/i> for those who made difficult decisions and offered solutions in good faith based on available information at the time to avoid conflicts and blame that may arise after the fact.<\/span><\/p>\n

A Scientific Commission, Not a Tribunal<\/b><\/h3>\n

It is necessary to adopt a more constructive and forward-looking approach. Instead of forming investigative commissions focused on punitive aspects, it would be more useful to create a commission of authoritative and independent experts from various scientific and academic disciplines, which should receive a clear and full mandate from Parliament. The commission, operating transparently and communicating openly about its deliberations, would not only increase trust in institutions but also ensure that policies are based on clear scientific consensus. It should also identify issues that, while scientifically clear, require political decisions. In this context, economic science can help outline the “trade-offs” that decisions entail, offering a clear representation of the compromises associated with different options. The controversies following the update of the national pandemic plan in January 2024 show that we are far from achieving a consensus that allows us to look to the future with confidence. The COVID-19 experience has also taught us that scientific knowledge alone is not enough; we must also consider the psychological mechanisms governing individuals’ behaviours. In this context, a fundamental contribution comes from behavioural economics, which has highlighted how psychological and social aspects\u2014such as risk perception, pandemic fatigue, and social norms\u2014are crucial in influencing responses to policies during pandemics, from preventive behaviours to lockdowns. It should also be noted that some essential interventions are universally recognised: the COVID-19 experience has made evident the importance of strengthening the health system with investments in research and development, creating stockpiles of antivirals, vaccines, and masks, improving territorial medicine, strengthening surveillance systems, and training specialised personnel in case tracking to ensure an effective response to future health emergencies. COVID-19 will not be the last pandemic we face. As this article goes to press, concerns are rising about the spread of H5N1 avian influenza among cattle, with some cases also reported in humans. Economic sciences can provide essential tools to contribute effectively to preparedness for future health emergencies. The concept of externalities, understanding incentives, understanding trade-offs, designing effective market mechanisms, and insights from behavioural economics are fundamental for formulating policies that effectively balance costs and benefits and improve global and national preparedness for health crises. While economics, in collaboration with other disciplines, can be a useful guide in these processes, it is up to politics and institutions to create the right conditions for effective preparedness at national and international levels.<\/span><\/p>\n

Bio<\/b><\/em><\/p>\n

Mario Macis is a professor of economics at the Johns Hopkins University Carey Business School and the Johns Hopkins Berman Institute of Bioethics, and a research associate at the National Bureau of Economic Research (NBER) Economics of Health Program.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

COVID-19 wasn’t the last epidemic we\u2019ll face; there will be more, and we would do well to be prepared. 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