Measuring the Economic Risk of Epidemics

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.