Whether it is the newspaper advertisements proclaiming: “Germs. Out in a second, around for hours,” or the posters urging lavatory users to “wet, soap, wash, rinse and dry,” few can have failed to notice the NHS’s campaign to save us from swine flu.

But regardless of whether you think it is the overreaction of a nanny state or reassurance from a caring one, it is the correct reaction for the economy, according to new research.

François Salanié and Nicolas Treich, of the Toulouse School of Economics, say in the latest edition of the Economic Journal that when people’s perceptions of a risk are likely to be distorted – either negatively or positively – then governments and other regulators are right to “overinvest” in the problem with safety campaigns such as the NHS’s on swine flu.

The value of a “paternalistic prevention effort” is warranted whenever the population is likely to over or underestimate risks, according to the researchers.

The pair say that citizens may make faulty choices because of their biased beliefs and that a regulator may rationally anticipate these choices and curb them – rather than basing their reaction solely on the risks as measured by the experts.

For instance, thousands of tourists cancel their travel plans after a plane crash, a terrorist attack or an outbreak of an infectious disease, and this has associated negative consequences for the economy.

In this case, the regulators should rationally respond to these events by increasing investments in safety in an effort to mitigate the negative consequences, the economists say.

Similarly, a regulator should raise food safety standards to prevent a drop in consumption after a food scare – such as mad cow disease or salmonella – to reassure and encourage those who overstate the risks to increase their consumption.

“But the most striking result,” they write, “is that a more stringent prevention policy may be always warranted, both in a society with pessimistic [where risks are overestimated] or in a society with optimistic citizens [who underestimate risks]. Indeed there are two effects: the ‘encouragement effect’ for excessively pessimistic citizens, and a ‘protection effect’ for excessively optimistic citizens.

“The protection effect allows the regulator to reduce risks when citizens are prone to take too much risk. Examples may include home safety prevention, compulsory seatbelts and tolerance standards for pollutants or food additives. The protection effect may overpower the encouragement effect when citizens are optimistic and vice versa when citizens are pessimistic.”

Whether politicians are motivated to respond to people’s concerns by political opportunism or because they have similarly distorted beliefs about the risks is irrelevant because it is the correct thing to do for the economy.

So rather than trying to undermine the Government’s calls for you to blow your nose and wash your hands with rational arguments about the number of deaths caused by influenza every winter, it would be better to think positively – the Government is bailing out the economy.

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