“wait and see”, especially if an announcement by the government might itself start a panic or provoke the kinds of severe trade and travel restrictions that were imposed on India during the 1994 Surat plague outbreak. Against these possible benefits must be set the increased risk of the outbreak turning into a full blown epidemic because of secrecy and delays in launching public health measures or in calling for international assistance.

Recent work that employs a game-theoretic framework to analyze the government’s choices helps clarify the conditions under which the government reports or hides information about a disease outbreak. An important finding is that the incentives to hide information decline when there is an increase in non-official sources of information about the outbreak, for example via cell phones or the internet, and a consequent increase in the probability that the country will be subjected to pre-emptive sanctions by other governments (or by its own public) despite its efforts at concealment. Indeed efforts to hide information may only undermine the government’s credibility with its own public and with international partners, fostering even greater uncertainty, panic and foreign sanctions. Even putting aside ethical considerations and using only a narrow cost-benefit calculus, it seems that the modern environment of easy mass communications within and between countries increasingly makes honesty the best policy in public risk communications. A transparent and credible public information strategy is likely to be the best way to minimize unwarranted panic and, indeed, to mobilize the public as a partner in controlling the disease outbreak. We briefly look at the information strategy adopted by Singapore as an example. Section 5 of the paper provides concluding remarks.

# **2.  Economic Costs of Disease – Questions from SARS and Surat**

In recent years a number of epidemic disease outbreaks have generated severe economic effects that do not easily fit into the standard approach to measuring the economic costs of disease. The outbreak of plague in 1994 in Surat, India and the 2003 SARS outbreak in East Asia are examples. To highlight the distinctiveness of these episodes this section first outlines the standard “cost of illness” approach to measuring the economic impact of disease. It then briefly reviews the Surat and SARS events, pointing to aspects for which the standard approach seems inadequate.

## **_The Cost of Illness approach_**

The cost of illness approach focuses on the opportunity cost of resources that are consumed or lost as a result of disease. These costs are of two types. Direct costs are resources used to treat or cope with the disease, for example expenditures for medical care and treatment, such as the costs of hospital care, physician services, nursing, drugs and so on. Indirect costs comprise the present and future costs to society from morbidity, disability and premature mortality, in particular losses of output caused by reduced productivity or death of workers.<sup>2</sup>

> 2 US EPA (1991-ongoing) and RTA International (2006) discuss the cost of illness methodology and provide empirical cost estimates for various diseases.  A different though related method is the Burden of Disease approach, which uses the Disability Adjusted Life Year (DALY) measure.  DALYs measure the

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