Ebola as an Externality

The ebola outbreak in West Africa has caused a social disturbance worldwide. Countries like Guinea, Sierra Leone, and Liberia’s GDPs were efficiently increasing until the outbreak. These countries will be handed a significantly large bill that will affect their population and economy. The Worldwide Bank estimates in 2015 that if the plague spreads and is not contained, then Guinea will have to invest 2.3% of its GDP or $142 million to treat and contain ebola victims. Sierra Leone is estimated to lose 8.9% of its GDP to the crisis, but as of now the cost of contaminated equipment and gear, medication, and facilities has stacked the bill up to $163 million. Liberia, on the other hand, has a ridiculously projected cost of $234 million, or 12% GDP (World Bank). The lost of GDP may also be due to other countries not trading with these countries.

Cost of Ebola in 2015

Cost of Ebola in 2015

I think the outbreak is an externality to the world’s economy. It has caused economists to estimate that countries will undergo incomprehensible debt, aside from fatalities. Currently it is reported that 9 of out 10 diagnosed ebola patients died in Liberia (Forbes). Although ebola may not necessarily be a transaction of some good or service from a consumer, it affects the economy. The self interest of consumers will adversely affect the market externally, because it is one’s self-interest to keep oneself away from the afflicted. For example one resident from Liberia might want to travel away from Liberia to the U.S., and unknowingly with him goes the virus. His self interest puts others at risk, because he will infect others and that will cost a significant amount of money to contain.

IV's are used to keep the patient hydrated.

IV’s are used to keep the patient hydrated.

Monday night I was texting my sister and  she stated Arizona health care centers are reportedly taking precautions and training their staff to treat patients diagnosed with  ebola. Sometimes the  budget isn’t enough for other health care centers to prepare for the worst. Hospitals in the Lower Hudson Valley met with U.S. Representative Nita Lowey stating they are prepared to treat an ebolian infected patient, but need additional funds. Specially the price tag of treating one patients adds up to about $250,000 to $500,000 (Bloomberg) . The panic caused from this outbreak is affecting people to prepare for an outbreak that hasn’t happened, and that is causing more consumers to focus on the health care budget. Ebola is causing all this chaos which defines it as an externality–the economic cost of ebola is affecting consumers’ self interest.

The private benefits of a health care is costly affected by ebola. The economic spectrum of health care ebola adversely affects the treatment from health care centers. On the other end of the spectrum, it can be argued that the private benefit of living is also affected by ebola. Ebola certainly impacts goods in the market. For instance, the price of cassava, a root vegetable in Liberians diet, shot up in the Redlights Market in Monrovia. There is no known cure for ebola, which in terms of externalities it will cause a market failure because it is in no one’s interest, until now, to try and solve this crisis.



John C. Goodman, “What Economics Can Teach Us About Ebola,” Forbes, 10/17/2014, http://www.forbes.com/sites/johngoodman/2014/10/17/what-economics-can-teach-us-about-ebola/

Alex Wayne, “Bill for Ebola Adds Up as Care Cost $1,000 an Hour,” Bloomberg, 10/08/2014 http://www.bloomberg.com/news/2014-10-07/bill-for-ebola-adds-up-as-care-costs-1-000-an-hour.html

Ivana Kattasova, “World Bank: Cost of Ebola Could Top $32 Billion,” CNN, 10/09/2014 http://edition.cnn.com/2014/09/24/business/ebola-cost-warning/

Jane Lerner, “Lower Hudson Valley: Ebola Preparations Costly,” Poughkeepsie Journal, 10/20/2014 http://www.poughkeepsiejournal.com/story/news/local/2014/10/20/ebola-lower-hudson-prep/17642689/


One thought on “Ebola as an Externality

  1. johnsona2014 says:

    Ebola is clearly the economic devil. Even if a cure were to come around, it would have such a high demand and most likely a limited supply, causing it to have a massive price which is probably out of the question for a lot of patients. After reading this post, my concern for Ebola has grown immensely, leaving me with some questions. How far has Ebola spread? Is it still only in the south, or has it made its way to the Northwest?


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