According to a recent Gallup poll, nearly a quarter of Americans are worried about catching Ebola, despite the fact that their chances of actually getting it are vanishingly small at this point. A recent Washington Post-ABC News poll indicated that two-thirds of Americans were worried about an Ebola epidemic in the US.
When people start freaking out about something like Ebola, predictable things happen. They start doing what social researchers call “cocooning.” They don’t travel or go on vacation. They don’t go out to restaurants as much. They may disrupt their work routine or insist that schools be closed.
The fear may be wildly out of proportion to the actual threat of the disease, certainly here in the U.S., but fear comes with its own threat, and Ebola panic is worse than that of past pandemic concerns. So far, it looks like American consumer sentiment has not been affected, and October reports show that excitement over cheap gasoline is trumping Ebola panic. But that could change. If you look at what happened in Hong Kong during the SARS outbreak in 2003, you find that retail sales plunged 10 percent. All told, SARS cost Hong Kong an estimated 2.6 percentage points in terms of GDP. In places like Lagos, Nigeria, shopping centers have already seen a drop of up to 40 percent in sales, even though Ebola has been contained so far in that country.
If you own any stocks, Ebola has likely already hit you in the wallet. Shares of airline stocks like United and American have dropped as investors get nervous about the possibility of travel bans for airlines from West Africa to Europe and the U.S.
The World Bank estimates that the global economic impact could reach more than $30 billion by the end of next year unless the virus keeps going. Over the weekend, Christine Lagarde, head of the International Monetary Fund, issued warnings about the spread of panic and the importance of not isolating countries. Fear can be even more expensive than medical costs.
Marcelo Giugale, one of the authors of the World Bank report on Ebola, made this point very clearly: “What makes all this very interesting is that the final economic toll of Ebola will not be driven by the direct costs of the disease itself — expensive drugs, sick employees and busy caregivers. It will be driven by how much those who are not infected trust their governments.”
Irresponsible media outlets are ratcheting up anxiety with headlines like “Does Your Travel Seatmate Have Ebola?” Meanwhile, Internet survivalist groups are issuing warnings to people to avoid public spaces and public transportation.
All of which will only make the economy sick.