The Economics of Epidemic Diseases

Epidemic, infectious, diseases affect a large number of individuals across developing as well as developed countries. With reference to some very simple diffusion models, in this paper we consider how available economic resources could be optimally allocated by health authorities to mitigate, possibly eradicate, the disease. Optimality was defined as the minimization of the long run number of infected people. The main goal of the work has been to introduce a methodology for deciding if it would be best to concentrate resources to prevent contact between individuals and with an external source, or to develop a new treatment for curing the disease, or both. The analysis suggests that this depends on the cost functions, that is the available technology, for controlling the relevant parameters underlying the epidemics as well as on the available financial resources. In the case of the recent Ebola outbreak, the suggestions of the model have been consistent with the policies adopted.