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 Flu), 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 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 Gandhi, 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. ...
Applying the flu death rates from the Great Influenza Epidemic to current population levels (about 7.5 billion worldwide in 2020) generates staggering mortality numbers. A death rate of 2.0 percent corresponds in 2020 to 150 million worldwide deaths. The number of deaths in the United States would be 6.5 million at the global death rate of 2.0 percent and 1.7 million at the U.S. death rate of 0.5 percent. However, these numbers likely represent the worst-case scenario today, particularly because public-health care and screening/quarantine procedures are more advanced than they were in 1918-1920.The main purpose of the Barro, Ursua and Weng paper is to estimate macroeconomic effects of the Great Influenza Outbreak. It should be noted that this is a working paper, subject to later revision. The broad approach is to look at how outbreaks of flu intensity varied across countries and over time, and to draw inferences about changes in economic output accordingly. (For example, not all countries that had outbreaks of flu were much involved in World War I.). But as the authors are quick to poiunt out, the quality of country-level data for this time period often isn't great. There is also the task of separating effects of flu from after-effects of World War I, including postwar depression and, in some countries, inflations on their way to becoming hyperinflations. Those with a taste for working through econometrics will certainly find other questions to raise.
Nonetheless, as an early take on events, the results caught my eye. By their calculations, the Great Influenza Outbreak was the fourth-worst global economic event since 1870, lagging behind only World War I, World War II, and the Great Depression. (Of course, Americans have a tendency to think of World War II as a time of rising economic output, but this was not the experience of the war across Europe and Asia). Barro, Ursua, and Weng conclude this way:
The implications of our findings from the Great Influenza Epidemic for the ongoing coronavirus epidemic are unsettling. As noted before, the flu death rate of 2.0 percent out of the total population in 1918-1920 translates into 150 million deaths worldwide when applied to the world’s population of around 7.5 billion in 2020. Further, this death rate corresponds in our regression analysis to declines in the typical country by 6 percent for GDP and 8 percent for consumption. These economic declines are comparable to those last seen during the global Great Recession of 2008-2009. The results also suggest substantial short-term declines in real returns on stocks and short-term government bills. Thus, the possibility exists not only for unprecedented numbers of deaths but also for major global economic dislocation. Although these outcomes for the coronavirus are only possibilities, corresponding to plausible worst-case scenarios, the large potential losses in lives and economic activity justify substantial outlays to attempt to limit the damage. However, extreme mitigation efforts—such as widespread cancellations of travel, meetings, and major events—will themselves contribute to the depressed economic activityA number of points here are worth reflection. For example, this kind of pandemic can be something that echoes over several years, not just a three-week or three-month event. The effects of a major outbreak will echo over time, both in terms of an effect on the lives of prominent people, but also through health effects that may not manifest themselves until decades later in life. At least so far, the mortality rate of coronavirus seems higher among the elderly and those with previous conditions, which is one of the several main reasons why this historical parallel is imperfect. Indeed, there is some argument--for example, expressed here by Nicholas Christakis--that COVID-19 may be closer to the quite 1957-8 outbreak of "Asian flu," rather than the 1918-1920 experience.
An overview from the CDC on the 1918 pandemic is available here.
Given the kerfuffle over whether to refer to viral outbreaks or diseases by using geographic names, I did find myself smiling at the comment from Barro, Ursua, and Weng about what I long-ago learned to call the "Spanish flu" of 1918-20:
Spain 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.