The economic lessons left by the Spanish flu

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History teaches that quarantines end up helping to reduce future social impact. The role of public policies in crises

Most people do not hesitate to label the idea of ​​putting a price on human life as morally repugnant. And yet, that is the position in which many political leaders apparently find themselves today.

In the face of the deadly Covid-19 pandemic, governments around the world must decide how much economic disruption to tolerate to suppress the disease, or at least to curb its spread.

United States President Donald Trump may have taken economic costs into account when he tweeted on March 23, “We cannot allow the cure to be worse than the problem itself.” After reflecting on the lifting of the blocks for Easter, since then he has decided to keep them until the end of April.

According to a new article by Sergio Correia and Stephan Luck of the Federal Reserve and Emil Verner of MIT, the notion that reducing deaths from a pandemic necessarily hurts the economy is false.

In their study, Correia and colleagues analyzed the United States’ experience of the 1918 flu pandemic, commonly known as the Spanish flu, which infected 500 million people worldwide and killed about 50 million. The 1918 flu especially affected young workers, The Economist said.

Like Covid-19, the Spanish flu reached different places at different times, with local governments offering different responses. And as now, the reactions of the different countries included the closing of schools, quarantines and restrictions on business hours.

Correia and colleagues found that the American cities that experienced the highest number of deaths from the flu pandemic also tended to suffer the greatest impacts on their economies (measured in terms of declining manufacturing output and employment).

The death rate depended heavily on public policy. The authors estimate that cities that imposed tougher-than-average restrictions suffered 560 deaths per 100,000 people, on average, compared to 730 per 100,000 elsewhere.

They also found that governments that implemented stricter policies, such as banning public gatherings and closing churches and schools, fared better than those that pushed for more lenient measures.

Model to follow

Officials and specialists in charge of designing the policies against the Covid-19 pandemic could consider that the experience of the Spanish flu, even in places that fought it relatively well, is not a proposal that should be tried to repeat. But economists tend to think that aggressive policies to combat these diseases are desirable.

A recent University of Chicago poll asked a group of prominent economists whether abandoning the U.S. blockade, at a time when infections could escalate again, would do more economic harm than maintaining restrictions.

41% of economists said they were “totally in agreement” with this premise and another 39% stated “in agreement”. Only 14% of the respondents said they were not sure with the results of this policy and 6% did not respond. Neither disagreed.

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