Study suggests lockdowns do less economic damage than the alternative

How lockdowns could also flatten the ‘economic damage curve’: Study shows cities that cracked down harder during 1918 Spanish Flu pandemic recovered quicker financially than those that didn’t

• Working paper by economists examines aftermath of the 1918 pandemic
• Suggests that cities with tougher lockdowns fared better economically
• Coronavirus lockdown has wreaked havok on the US economy in recent weeks
• Many fear the damage to jobs could last much longer than the outbreak itself
• The study suggests unchecked virus may do even more economic damage
• Authors cite several caveats and say the data from 1918 is partial and complex 
• Learn more about how to help people impacted by COVID

By Keith Griffith For Dailymail.com

Published: 19:52 BST, 11 April 2020 | Updated: 22:53 BST, 11 April 2020

A new study claims to show a positive correlation between the severity of city lockdowns in the 1918 Spanish Flu pandemic and their subsequent economic recovery.

The working paper from economists at the Federal Reserve and MIT examines the impact of 1918 pandemic and what they call ‘non-pharmaceutical interventions’ on real economic activity.

Non-pharmaceutical interventions (NPI) are measures that include social distancing, shutting down non-essential businesses, and telling the population to stay at home. 

The authors found that the pandemic itself had a sharp effect on the economy, regardless of lockdowns, as people feared going out and changed their spending and working habits.

Members of the Red Cross Motor Corps, all wearing masks against the further spread of the influenza epidemic, carry a patient on a stretcher into their ambulance, Saint Louis in 1918

Charts show cities in 1918 plotted by growth of employment and intensity of lockdowns

 Charts show cities in 1918 plotted by growth of employment and speed of the lockdowns

They also found that cities with faster or more stringent lockdowns did not experience worse economic downturns following the pandemic. 

‘In contrast, evidence on manufacturing activity and bank assets suggests that the economy performed better in areas with more aggressive NPIs after the pandemic,’ the authors wrote.

The study offers several caveats to the findings. The first is that the U.S. economic situation in 1918 was overall very different than it is today, as the country was just emerging from World War I.

As well, they add: ‘The complex nature of modern global supply chains, the larger role of services, and improvements in communication technology are mechanisms we cannot capture in our analysis, but these are important factors for understanding the macroeconomic effects of COVID-19.’

And as Ars Technica reporter Cathleen O’Grady notes, cities that responded faster in 1918 tended to be farther west, and had warning as they watched the outbreak unfold on the East Coast. 

‘But this also meant that places that shut down sooner had economies that were relatively agriculture-based,’ O’Grady writes. ‘This means that there were two simultaneous differences between groups of cities, making it difficult to tell which difference was more important.’ 

The 1918 strain had a massive mortality rate compared to influenza in other years

Charts show cities in 1918 plotted by their national bank assets versus the intensity (left) and speed (right) of the their lockdown measures

The authors attempted to control for this difference by accounting for the relative importance of agriculture compared to manufacturing in local economies. 

‘Altogether, our evidence implies that pandemics are highly disruptive for economic activity,’ the authors write. 

‘However, timely measures that mitigate the severity of the pandemic may also reduce the severity of the persistent economic downturn. That is, NPIs can reduce mortality while at the same time being economically beneficial,’ they continue. 

Manufacturing employment increased by 6.5 per cent in cities that imposed restrictions for an additional 50 days after the pandemic arrived, according to the study.

The researchers appear to be contradicting claims made by President Trump and several other Republicans who fear that the ‘cure may be worse than the disease’ and that ways should be found to reopen the economy while trying to contain the coronavirus.

Regardless, the lockdowns have had a devastating short-term effect on the U.S. economy, with more than 16 million. 

WHAT WAS SPANISH FLU?

The 1918 flu pandemic was unusually deadly and the first of two involving the H1N1 influenza virus.

It infected 500 million people globally, more than one-third of the world’s population, including people on remote Pacific islands and in the Arctic.

It resulted in the deaths of an estimated three to five per cent of the world’s population, making it one of the deadliest natural disasters in human history.

Spanish Flu resulted in the deaths of an estimated three to five per cent of the world’s population, making it one of the deadliest natural disasters in human history. This image shows soldiers from Fort Riley, Kansas, ill with the virus

Within months it had killed three times as many as World War I and did it more quickly than any other illness in recorded history.

Most influenza outbreaks disproportionately kill juvenile, elderly, or already weakened patients.

By contrast, the 1918 pandemic predominantly killed previously healthy young adults.

To maintain morale, wartime censors minimised early reports of illness and mortality in Germany, Britain, France, and the United States.

However, newspapers were free to report the epidemic’s effects in Spain.

This created a false impression of Spain as being especially hard hit, leading to the pandemic’s nickname Spanish flu.

The close quarters and massive troop movements of World War I hastened the pandemic and probably both increased transmission and augmented mutation, researchers believe.

The true global mortality rate from the pandemic is not known, but an estimated 10 per cent to 20 per cent of those who were infected died.

This would lead to a death toll of between 50 to 100 million people.

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