Above the Crowd

Swine Flu: Overreaction More Costly Than the Virus Itself?

May 2, 2009:

It is reassuring to see the press take a more modulated view of the swine-flu risks, especially as it becomes clear that both deaths and incidents have been overstated in the past week.  Our “instant on” media has an insatiable appetite for the scintillating story.  These days, you can actually sense the disappointment in the news anchor when a category four hurricane is downgraded to a category three.  album-def-leppard-hysteria

Some people rationalize that this hysteria serves a noble purpose, in that it prepares us for the worse.  This, however, ignores the fact that there are tremendous real economic costs to overreaction, and that sometimes overreaction has far reaching negative impacts which can be many times greater than than that of the original problem.  In the case of swine-flu, schools and universities are closing, countries are unnecessarily slaughtering animals, and travel and entertainment are being constrained in an already fragile world economy.  For Mexico, which already has enormous political and economic issues, overreaction is remarkably painful, virtually inihiliating all tourism – the third largest sector of it’s economy.

As participants in the economic life of Silicon Valley, we are all aware of positive effects of viral meme propagation.  But not all viral meme propagation has positive results, especially when it relates to this form of hysterical overreaction. One of the most critical examples of this is the U.S. reaction to Three Mile Island, and our country’s decision to eliminate all nuclear energy expansion for the past thirty years. Now, as greenhouse gasses are at the top of the agenda, everyone wishes we could rewind the clock and make this decision again. Instead, we remain ten years away from any substantial increase now that we have shelved this option for so long. All choices have consequences, regardless of (and perhaps at odds with) the intention behind those choices.  

The late Michael Crichton wrote a fascinating essay on this topic that looks at the far ranging ramifications of hysteria-driven decisions, especially in highly complex environments.  I highly recommend it.

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