Swine Flu Economics

Today on my way to school I heard an interesting statistic. over 30,000 people die each year from the flu. Not this new hot exciting Swine flu thing but the normal flu. Up to this point one person has died of the swine flu. It brought me to a very important economic concept that I addressed with my classes today.

I believe I saw where the Obama administration is going to promise some $1.5 billion to fight this new flu "epidemic". Which brings up a very interesting rarely asked question: Where does this money come from? More importantly, what are the alternative cost of doing this? In other words what is not getting $1.5 billion because the government is spending it on this new hot issue? Economics is the efficient allocation of scare resources which have alternative uses. When resources are used in one area they are not in another. Is that $1.5 billion better used to fight this disease that is according to most experts somewhat contained and is not that serious yet? Or could it have been spent in a better place? What if it was used to do more research on cancer? Or what if it was to be used to build better and newer roads and bridges that are safer and save more lives than it will fighting Swine Flu.

In the early 1980's a small incident on a airport runway led to the death of an infant that was on the plane in his or her mom's lap. The small collision caused the baby to fly out of its mom's hands and was killed on impact. The government along with the airlines pledged to fix the problem and required special seats to be used for small children. This device saved one child every eight years according to a group of economist. But those same economist estimated that it killed 8 other people. You say how? The cost of this law or new policy was that the parent had to purchase an extra plane ticket. Instead they might not purchase it if they now think it is cheaper to drive instead. Now how many of those trips would result in wrecks and how many of those wrecks would result in casualties? Those economist estimated about 8 people died over the next eight years after the new policy was passed.

How many people could die because of some headline news story disease is getting politicians to move resources from important big problems that effect many people to try and fix this small problem that happens to be newsworthy. I'm not saying I disagree with the Obama decision I have not researched it. I am saying that we need to hesitate and think about these things before getting excited about trying to fix a problem. Remember there are cost and benefits to decisions not just benefits.