The Economic Importance of Words

The WHO declared an H1N1 influenza pandemic last week--on Thursday June 11. Did anyone take notice?

Why did they declare a pandemic? It is not a measure of severity. It is a measure of ease of spread. If it spreads easily it may affect a lot of people. If it spreads easily but is not very severe, then there will be a lot of sick people but not many deaths. Still a big economic consequence.

How well do we understand it? Enough that several manufacturers have the raw materials to begin production of the vaccine, but that they are not sure it will be ready for the fall. So, at least some possibility of limiting the economic consequence, although a vaccination program is not without its own economic costs.

How well do we understand its consequences? Not terribly well as we are still trying to figure out why the severity in different locations has varied so much. Perhaps despite all the current complaints about how expensive our health care system is, having an overabundant system in which people can get at least urgent care fairly readily does have its advantages.

Yet, all in all, it does not seem to many average observers that it poses much of a threat. I can't say why the pandemic announcement didn't seem to get so much attention, but maybe it is an issue of words really mattering. Kids yell across the playground (or at least YELLED across the playground 35 years ago when I was one of them), "Sticks and stones may break by bones, but names will never hurt me." And yet, we all know that words do matter in some pretty important ways.

The words that first introduced us to so called "swine flu" several months ago made people behave very differently. We heard all the dire predictions We had school districts closing their doors and telling parents to keep children at home. At a professional conference I attended, we were missing almost everyone from one country. It seemed like a problem when we heard about it all the time.

The word pandemic, without supporting information to put it in context, can make people behave very differently. As far as economidw is concerned, it is not necessarily irrational behavior--that would be behavior that doesn't make sense in light of good information. Instead, the issue is whether people have the right information on which to make a decision in the first place. The Centers for Disease Control and Prevention in the United States have tried to provide information. I will be the first to admit that keeping up with all the information that may become available is a non-trivial, time consuming, and somewhat daunting task. Yet, if we do not do it, our behavior may end up seeming irrational and having some of the same consequences as purely irrational behavior if we don't get the information we need. I am certainly not immune to this--although if anything I could be described as taking the whole thing too lightly.