Swine Flu: An Investor's Overview

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"It's hard to know how to apply those numbers to this case because we don't know how quickly the swine flu will spread or how quickly it will respond [to treatment]," he says. Further complicating the comparison is the fact that the world is already in the middle of an economic crisis, he adds.

Hammond has done some modeling of the economic costs if hospital emergency rooms were hit by a flood of additional patients. "We found there isn't a lot of excess capacity in emergency rooms. It's expensive to maintain that kind of capacity when there isn't a pandemic," he says. "[It] would be hard to keep up with emergency room [traffic] from a viral pandemic where lots and lots of people would show up."

U.S. Farms: So Far, So Good

The potential economic toll on agriculture is equally hard to forecast, especially since there have not yet been reports of infected livestock in the U.S., and the safety of this country's pork industry has not yet been questioned. During the outbreak of a highly pathogenic strain of avian flu in Italy form August 2004 to October 2006, amid the appearance of 350 bird flu articles in European newspapers, fresh poultry sales in Italy, on average, were just under 80% of what they would have been if there had not been any bird flu news, according to a 2008 study by the U.S. Agriculture Dept.'s Economic Research Service.

White at the Stern School says he would expect the food industry to suffer an impact comparable to those seen when the British beef industry was hit by mad cow disease or when there was an e. coli bacterial scare in the U.S. spinach market.

In a sense, the abruptness and potential for contagion of a swine flu outbreak contains all the classic elements of thriller fiction, feeding the popular imagination and making its effects that much more frightening, says David Asch, Robert D. Eilers professor of health care management and economics at the Wharton School. Meanwhile, there's much less speculation or concern about the economic impact of slower-moving medical crises such as the explosion in diabetes and obesity in the U.S., he says.

Hammond at Brookings says there are good grounds for concern about those impacts, as demonstrated by a study that found that 9% of total U.S. medical expenditures in 1998 were for obesity-related medical expenses. That percentage is expected to have grown dramatically in the decade since, he adds.

Obesity has a wide range of economic effects, from the way clothing is manufactured to the size of airplane seats (BusinessWeek, Apr. 20) to the structure and focus of the agriculture and food industries, says Asch at Wharton. Yet diabetes and obesity aren't contagious and don't produce the fear-related effects that a flu epidemic does. "People fear things that are sudden and mysterious, and yet the monster is all around us," says Asch.

Bogoslaw is a reporter for BusinessWeek's Investing channel.

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