Bird Flu Reaches Chicago
At a time when avian influenza is spreading in numerous countries, the recent research of Malani* and Laxminarayan** has struck my particular interest. The paper was presented at the University of Chicago Law and Economics Workshop and examines the incentives of countries to invest in disease surveillance and to report possible outbreaks of diseases using a game-theoretic model. It also evaluates the different policy instruments the World Health Organization (WHO) uses to encourage countries to detect and report the outbreak of diseases.
The policy instruments of the WHO that are discussed include subsidies for surveillance, medical assistance to control outbreaks, and trade sanctions for failure to report outbreaks. In addition, the paper considers the possibility of conditioning surveillance subsidies on the WHO’s right to audit a country’s surveillance measures.
The countries’ incentives to disclose an outbreak of a disease are conflicting. On the one hand, international assistance in coping with a disease and preventing an epidemic can be of great economic value. On the other hand, reporting an outbreak can inflict great economic costs by triggering trade sanctions and embargos by other countries. Through backward induction, these incentives also influence the country’s decision on whether and how much to invest in surveillance. Only if reporting the outbreak seems desirable, a country will consider it in its interest to detect the disease by investing in surveillance. And if reporting seems harmful, limited surveillance could be desired.
