17 Oct 2014

Word on the Street - Economic Cost of Fear

Economic Cost of Fear is the Damage Caused by the Indirect cost of public risk aversion which ends up being more than that of the  direct cost of healthcare outlays and other containment expenditures. This term came much into focus after the recent Ebola outbreak in many countries across the world.

The losses are found in the form of empty hotel rooms, declines in restaurant patronage, or in school closures that disrupt employees and parents’ work routines. Or they come from the blow to consumer confidence that accompanies widespread fear. 

Financial analysts and others have been trying to estimate the potential effect of Ebola on the global economy.

The World Bank predicts that as much as $32.6 billion, or 3.3%, will be shaved from the pan-West African economy if the crisis continues for two years, and spreads into neighboring countries” beyond Liberia, Guinea and Sierra Leone most of which it blames on “aversion behavior.”

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This Word is suggested by Vinita Jagannathan (PGDM 2013-15)

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