Economic Epidemiology & Infectious Diseases

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Abstract
Infectious disease is currently the main cause of mortality in the world and has been even more important historically. This paper reviews recent research in economic epidemiology. Specifically, it examines the occurrence of infectious diseases and the effects of public health interventions designed to control them. Several key points include: differences in the predictions regarding short- and long-run disease occurrence between rational and epidemiological epidemics, the nonstandard effects of interventions when epidemics are rational, and the desirability and possibility of eradicating infectious diseases. A central feed-back issue of rational epidemics is that not only is the extent of the disease affected by the demand for prevention, but the demand for prevention depends on the extent of the disease. This induces a self-limiting effect on the growth of an infectious disease, but also makes it unlikely that disease will be completely eradicated since as it disappears, incentives for further prevention decrease. These incentives have profound and largely unrecognized consequences on the effectiveness of public interventions. In particular, as the public sector undertakes actions to reduce the prevalence of a disease, private prevention efforts will be reduced. Thus government interventions may be offset by private actions and be incapable of achieving complete elimination of a given disease. In addition to these difficulties, a monopoly vaccine provider lacks a strong profit motive to achieve eradication as well, since doing so eliminates continued future demand for the vaccine.

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