The Coronavirus and the Great Influenza Epidemic - CESifo

8166 2020

March 2020

The Coronavirus and the Great Influenza Epidemic

Lessons from the "Spanish Flu" for the Coronavirus's Potential Effects on Mortality and Economic Activity

Robert J. Barro, Jos? F. Ursua, Joanna Weng

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CESifo Working Papers ISSN 2364-1428 (electronic version) Publisher and distributor: Munich Society for the Promotion of Economic Research - CESifo GmbH The international platform of Ludwigs-Maximilians University's Center for Economic Studies and the ifo Institute Poschingerstr. 5, 81679 Munich, Germany Telephone +49 (0)89 2180-2740, Telefax +49 (0)89 2180-17845, email office@cesifo.de Editor: Clemens Fuest

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CESifo Working Paper No. 8166

The Coronavirus and the Great Influenza Epidemic

Lessons from the "Spanish Flu" for the Coronavirus's Potential Effects on Mortality and Economic Activity

Abstract

Mortality and economic contraction during the 1918-1920 Great Influenza Epidemic provide plausible upper bounds for outcomes under the coronavirus (COVID-19). Data for 43 countries imply flu-related deaths in 1918-1920 of 39 million, 2.0 percent of world population, implying 150 million deaths when applied to current population. Regressions with annual information on flu deaths 1918-1920 and war deaths during WWI imply flu-generated economic declines for GDP and consumption in the typical country of 6 and 8 percent, respectively. There is also some evidence that higher flu death rates decreased realized real returns on stocks and, especially, on short-term government bills.

Robert J. Barro Department of Economics

Harvard University 1805 Cambridge Street USA - Cambridge MA 02138-3001 rbarro@harvard.edu

Jos? F. Ursua Dodge & Cox San Francisco / CA / USA

Joanna Weng EverLife

New York / NY / USA

The spread of the new coronavirus (COVID-19) in early 2020 led worldwide to declines in stock prices, increases in stock-price volatility, decreases in nominal interest rates, and likely to contractions of real economic activity, as reflected in real GDP. A great deal of uncertainty attaches to the eventual scale of the epidemic, gauged by the number of persons ultimately infected and killed. Also uncertain are the full global economic implications of the epidemic.

The Great Influenza Epidemic A reasonable upper bound for the coronavirus's mortality and economic effects can be

derived from the world's experience with the Great Influenza Epidemic (popularly and unfairly known as the Spanish Flu1), which began and peaked in 1918 and persisted through 1920. Our estimate, based on data discussed later on flu-related death rates for 43 individual countries, is that this epidemic killed around 39 million people worldwide, corresponding to 2.0 percent of the world's population at the time. These numbers likely represent the highest worldwide mortality from a "natural disaster" in modern times, though the impact of the plague during the black death in the 14th century was much greater as a share of the population.

The Great Influenza Epidemic arose in three main waves, the first in spring 1918, the second and most deadly from September 1918 to January 1919, and the third from February 1919 through the remainder of the year (with a fourth wave applying in some countries in 1920). This airborne infection was based on the Influenza A virus subtype H1N1. The coincidence of the two initial waves with the final year of World War I (1918) encouraged the spread of the

1Spain was not special in terms of the severity or date of onset of the disease but, because of its neutral status in World War I, did have a freer press than most other countries. The greater attention in news reports likely explains why the flu was called "Spanish." In terms of mortality rates and total persons killed, it would be more appropriate to label the epidemic as the Indian Flu, although the highest mortality rate out of the total population, above 20 percent, may have been in Western Samoa. There is controversy about the origin point of the epidemic, with candidates including France, Kansas, and China.

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infection, due to crowding of troops in transport, including large-scale movements across countries. An unusual feature was the high mortality among young adults without existing medical conditions. This pattern implies greater economic effects than for a disease with comparable mortality that applied mostly to the old and very young.

The epidemic killed a number of famous people, including the sociologist Max Weber, the artist Gustav Klimt, the child saints Francisco and Jacinta Marto, and Frederick Trump, the grandfather of the current U.S. President. Many more famous people were survivors, including Mahatma Ghandi, Friedrich Hayek, General Pershing, Walt Disney, Mary Pickford, and the leaders of France and the United Kingdom at the end of World War I, Georges Clemenceau and David Lloyd George. The disease severely impacted U.S. President Woodrow Wilson, whose impairment likely had a major negative effect on the negotiations of the Versailles Treaty in 1919. Thus, if the harsh terms imposed on Germany by this treaty led eventually to World War II, then the Great Influenza Epidemic may have indirectly caused World War II.

Table 1 shows our estimates of excess mortality rates from the Great Influenza Epidemic. These rates are expressed relative to the total population for 43 countries for each year from 1918 to 1920.2 These data come from numerous sources, detailed in Ursua (2009) and Weng (2016, Appendix). References include Johnson and Mueller (2002), Murray, et al. (2006), Mitchell (2007), the Human Mortality Database, and an array of sources for individual countries. Notably, the Murray study used all vital registration data available worldwide from 1915 to 1923. For countries with annual statistics on death tolls from the flu and flu-related deaths such as pneumonia, these direct numbers are used to measure excess mortality rates for 1918-1920. For some other countries, we followed Murray, et al. (2006) to calculate the annual all-cause

2Chile is the only country to record a positive excess mortality rate for 1921.

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excess mortality rate for 1918-1920, measuring deaths that were above the average mortality rate from three years before and after the 1918-1920 period. Comparisons of direct yearly estimates of death rates from influenza/pneumonia with all-cause excess mortality rates for countries with both types of data indicate a close correspondence for the two methods. For the few countries for which there is little or no detail on the annual flu breakdown, we used the time distribution of deaths in neighboring countries as an approximation. The 43 countries covered (42 of which have GDP data for the relevant timeframe) constitute 89 percent of estimated world population in 1918.3 These 43 countries would represent a much larger share of world GDP at the time.

The numbers in Table 1, combined with information on country population, correspond to total flu deaths for the 43 countries of 23.5 million in 1918, 8.4 million in 1919, and 2.8 million in 1920, for a total of 34.6 million. When inflated to the world's population (assuming comparable flu death rates in the uncovered places), the numbers are 26.4 million in 1918, 9.4 million in 1919, and 3.1 million in 1920, for a world total of flu deaths of 39.0 million cumulated over 1918-1920. The estimated aggregate flu death rates for the 43 countries were 1.38 percent for 1918, 0.49 percent for 1919, and 0.16 percent for 1920; the sum of these death rates is 2.0 percent.

Table 1 shows that the flu mortality rate varied greatly across countries and years. Some observations are zero; for example, because of a swift quarantine response, Australia avoided the epidemic during 1918. The highest rate by far among countries in our sample is for India, with 4.1 percent in 1918 and a cumulative value of 5.2 percent. Because of its high population

3Our main source of long-term population data is McEvedy and Jones (1978), who provide estimates for most countries for 1900 and 1925. The population estimates for each country between these benchmark dates are interpolations. Therefore, the annual numbers do not pick up sharp changes, such as those due to World War I or the Great Influenza Epidemic. However, these errors in annual population sizes would not materially affect the subsequent regression analysis. The total population for the 43 countries that we consider falls short of the estimated world population of 1.9 billion in 1918 by around 200 million, of which more than half is in Africa.

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(around 320 million), India accounted in 1918-1920 for 16.7 million flu deaths out of the world total of 39.0 million; that is, 43 percent of the total. The next highest death rates were for South Africa (cumulative value of 3.4 percent) and Indonesia (3.0 percent). China's death rate was not nearly as high, but because of its large population (about 570 million), its 8.1 million deaths (21 percent of the world total) were second highest across the countries. Spain is not special, with a cumulative death rate of 1.4 percent and a corresponding number of deaths of 300 thousand. The United States had a cumulative death rate of 0.5 percent, with an associated number of deaths of 550 thousand.

The mortality rates shown in Table 1 apply to total populations. The underlying data here are for numbers of deaths and populations. Mortality rates based on numbers infected are much less reliable because they depend on counts of infections, which are less accurately measured than deaths and tend to have selectivity biases related to which people are chosen to be sampled. A commonly quoted figure is that roughly one-third of the world's population was infected by the H1N1 virus during the Great Influenza Epidemic. If this number were accurate, a mortality rate of 2 percent for the overall population would translate into a mortality rate of 6 percent for the infected population.

The one-third number for the world infection rate seems to come from Taubenberger and Morens (2006, p. 15),4 who cite Frost (1920) and Burnet and Clark (1942).5 Frost's evidence for the United States derives from surveys of 130,000 people in 11 U.S. cities and rural areas carried out in 1919 by the U.S. Public Health Service. Excluding Louisville, which had a truncated

4This study appears in a journal, Emerging Infectious Diseases, that is published by the U.S. Centers for Disease Control and Prevention (CDC). 5However, Burnet and Clark (1942) rely mainly on Frost (1920). The only addition concerning morbidity is an unsupported comment that "A similar age distribution of attacks by the second wave was found in England (Leicester and Manchester) and in Copenhagen and this wave can be considered equivalent to the main American epidemic from which Frost's figures were derived." (Burnet and Clark [1942, p. 81].)

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survey, the morbidity rates had a wide range, from 18.5 percent in New London to 53.5 percent in San Antonio, with an overall infection rate of 29.3 percent (computed from the numbers given in Frost [1920, table on p. 588 and map on p. 585]).

Frost (pp. 584-586) notes that the underlying canvases were carried out intelligently and on reasonable size samples. Moreover, there is reason to think that the choices of whom to survey were essentially random, unrelated to apparent illness or demographic characteristics. According to Frost (p. 584): "It was necessary to limit the studies for the most part to communities in which the Public Health Service was at the time maintaining previously established organizations prepared to collect the requisite data reliably and efficiently ... In each locality these inspectors made a house-to-house canvas in 10 or more enumeration districts, so chosen as to give, presumably, a fair sample of the general population." Despite these attractive features of the surveys, Frost observes (p. 597) that the numbers on morbidity are unreliable even for the whole of the United States: "As to the value of the statistics ... they represent so few localities and such a small number of observations ... that ... they contribute little towards giving a picture of the epidemic in the country at large." For other countries, there seems to be no reliable information on numbers of infections during the Great Influenza Epidemic. Therefore, the estimated global infection rate of one-third and the resulting infected mortality rate of 6 percent have to be regarded as highly speculative. On much firmer ground is the estimated mortality rate of 2 percent out of the total population. The regressions implemented below use the estimated mortality rates out of the total population in each country, as shown in Table 1.

The present analysis focuses on the impact of a country's flu death rate on its economic outcomes, not on possible reverse effects of economic conditions on the death rate. However, it

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