My sort-of academic travel to the world of epidemics (I)*

This summer I started working with epidemics. Do not misunderstand me. I wanted to know a little bit more about its linkage with economic growth and economic development. I aim to publish the results in a small paper soon. I departed from the very bottom: I wanted to know how epidemics affected the development of a country. This is, so far, an interesting topic. It is evident for anyone that, if an epidemic hits a country, the number of employees will be reduced because either many of them die or have to rest in order to overcome the disease; if this happens, the output of the economy would not be optimal because there are less workers employed that could be. That one is a basic assumption that I had to use when formulating and writing the model.

Moreover, I had to study the obvious relation between health and income. We could say easily, and taking into account what was said before, that a better health for the average citizen would result into a higher income. This was also relevant for my study: is there a correlation between health and more income such that higher health results in higher income? Bloom and Canning (2006) for instance point that good health boosts labor productivity. But there are more things good health promotes. For example, saving and investing. We can think about both of them in the following way: if an epidemic is likely to hit a country — and if it has already hit the country — then life expectancy is expected to be reduced. If it is reduced, it will not promote saving for retirement nor long-term investments. This will reduce the optimal output of the economy.

Finally, in this first post of a series of comments on my work on epidemics I must talk about the generational consequences due to its importance. Imagine some African country where unfortunately diseases are very spread. These countries present a few common characteristics: many of them can be considered as poor — its income per capita is very low when compared —, they do not have a proper or adequate health system — which makes things worse — and they do not have the knowhow — these last two are strongly related — to cure some diseases. If we consider these three (low income, poor health system, lack of knowhow) hold for country δ then it is likely that the generational consequences would be linked with the poverty trap — that would be even worse with this given epidemic. Indeed, studying the effects of epidemics on the output does not provide the same result when studying developing or developed countries. Poor people will remain poor or they could even be poorer —I will develop this point further in future posts because of its importance — and this is something that will be passed from parents to children and so on — they will be trapped in poverty somehow.

*(I started the project with a medicine student. Unfortunately, after some personal disagreements we decided to stop working together. His work trying to find databases to work with epidemics is greatly thanked and acknowledged)