Economic Lessons from Past Pandemics


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One of the challenges of tracing the economic impact of epidemics and pandemics as you’ll
see in this episode is that these tragedies don’t occur in a vacuum.
Therefore it can sometimes be difficult to determine which changes are the result of
epidemics and which ones are the result of other social factors.
However, the research discussed in this episode attempts to trace the types of economic shifts
that can be tied directly to the outcomes of disease outbreaks.
Part One: 14th c.
“Black Death”
First up we’ll be discussing the plague of the 14th c, AKA “the black death.”
The start of the outbreak in Western Europe is traditionally dated to October of 1347
when 12 ships returning from the Black Sea docked in Messina, a Sicilian port.
Much to the surprise and horror of the people on shore, they discovered most of the sailors
had died and the ones who survived were deathly ill with black boils that leaked pus.
Although the ships were ordered back out to sea the resulting spread of disease proved
to be fatal.
In just a few short years approximately 20 million people in Europe died of the plague,
an estimated one third the population of the continent.
The epidemic went on until approximately the 1350s.
The disease wreaked havoc on the countries that were impacted.
Soon after the infected men–and fleas– arrived in Messina, similar outbreaks happened in
the port city of Marseilles in France and the port of Tunis in North Africa.
It soon spread through important trade centers like Rome and Florence.
It wasn’t until the 19th century (over 500 years later!) that biologist Alexandre Yersin
discovered the germ that causes the plague, Yersinia pestis.
Along with the devastating human toll of the disease, there were also unexpected economic
Historians and economists are still debating the impact of the original “black death”
on the economic systems of Europe.
But some argue that the spread of disease possibly led to the weakening and eventual
disappearance of the feudal system in places like England.
In the broadest possible terms, the feudal system was a medieval practice where peasants
were given plots of lands by their lords in exchange for various types of service and
These arrangements came in handy particularly when those pesky lords decided to fight wars
and needed men to join the front lines.
The plague greatly reduced the number of peasants and peasants were the backbone of feudalism.
And fewer peasants meant the whole system was a lot weaker.
According to an article in the Economist, the plague lead to an increase in real incomes
because there were fewer workers to farm the land, giving them more leverage.
This made the feudal system even weaker, and some argue, led to its demise in the same
Part two: the 17th Plague
The plague returned to Europe over the centuries, most famously in the 17th, and despite advancements
in science and society, it caused turmoil.
In the mid 17th century an estimated 10 percent of the population of England and Wales perished
from the resulting outbreak, while a whopping 40 percent of the population of some regions
of modern Italy were decimated by this new wave of the plague.
But although the plague spread throughout Europe the economic outcomes of the outbreaks
were not evenly distributed.
At least according to economist Guido Alfani’s article.
Alfani notes that, “ Interestingly, during the century, the fastest-growing areas were
those less affected by plague.”
His analysis shows that there may be a relationship between areas of Europe that were least impacted
by the plague and periods of increased economic growth.
He notes that England was hit considerably less intensely by the 17th c plague than areas
like Northern Italy.
As a result, England’s economy continued to thrive and trend upwards during the century
while Northern Italy’s stagnated.
So while many countries were impacted negatively by the reemergence of the plague in the 17th
century, the impact was also unevenly spread based on the severity of the outbreak.
Part three: Spanish Flu 1918
Although disease outbreaks continued around the world in the intervening years, the world
saw a major pandemic (or an epidemic that impacts multiple countries and regions worldwide)
with the Spanish Flu of 1918.
The flu killed an estimated 40 million people worldwide and an estimated 700,000 in the
US alone.
The first wave of the disease appeared mild, with symptoms including fever, chills and
As a result there was an initially low mortality rate.
But it wasn’t until the second wave of the Spanish Flu hit that doctors began to see
the mortality rate skyrocket.
According to “Almost 90 years later, in 2008, researchers
announced they’d discovered what made the 1918 flu so deadly: A group of three genes
enabled the virus to weaken a victim’s bronchial tubes and lungs and clear the way for bacterial
In the US the disease spread from east to west.
According to a 2003 book on the Spanish flu by historian Alfred W. Crosby:
“Spanish influenza moved across the United States in the same way as the pioneers had,
for it followed their trails which had become railroads…the pandemic started along the
axis from Massachusetts to Virginia…leaped the Appalachians…positioned along the inland
waterways…it jumped clear across the plains and the Rockies to Los Angeles, San Francisco,
and Seattle.
Then, with secure bases on both coasts…took its time to seep into every niche and corner
of America.”
Additionally the death toll was considerably higher than it could’ve been because it
struck during World War I.
But this pandemic had a few unexpected economic outcomes.
First, according to economists Elizabeth Brainerd and Mark V. Siegler, American states that
were more impacted by the disease tended to grow faster in the aftermath of the pandemic.
They found that higher rates of death were associated with an increase in average annual
growth of real income, although this undoubtedly came with great suffering.
In the report from the St. Louis Federal Reserve, the author Thomas Garrett notes that one of
the unique features of the Spanish Flu was that it was more likely to cause death in
people aged 18 to 40, and proved more fatal to men than women.
This was because, “In general, death was not caused by the influenza virus itself,
but by the body’s immunological reaction to the virus.
Individuals with the strongest immune systems were more likely to die than individuals with
weaker immune systems.”
He goes on to note that of the 272,500 US men who died of influenza in 1918, 49 percent
of them were between the ages of 20 and 39.
As a result: “The fact that males aged 18 to 40 were the hardest hit by the influenza
had serious economic consequences for the families that had lost their primary breadwinner…the
significant loss of prime working-age employees also had economic consequences for businesses.”
So while some individuals and families may have seen a spike in income due to the reduced
number of workers, others suffered because they had lost primary breadwinners and family
members who could contribute to the household.
Part 4: Modern Implications
Today, as we struggle through the challenges of COVID 19, it’s impossible to say what
the lasting economic outcome and human toll of this moment will be.
And perhaps that’s what makes it so frightening.
But in the last decade, many different groups have tried to predict when the next pandemic
would strike and how that would affect our economy.
When Garrett wrote his report, he attempted to estimate the impact of a pandemic on contemporary
“The World Bank estimates that a global influenza pandemic would cost the world economy
$800 billion and kill tens-of-millions of people.
Researchers at the U.S. Centers for Disease Control and Prevention calculate that deaths
in the United States could reach 207,000 and the initial cost to the economy could approach
$166 billion, or roughly 1.5 percent of the GDP.
Longrun costs are expected to be much greater.
The U.S. Department of Health and Human Services paints a more dire picture—up to 1.9 million
dead in the United States and initial economic costs near $200 billion.”
However a 2006 report from the European Commission (a branch of the European Union) estimated
that a potential pandemic at that time would not have a lasting effect on the European
The researchers note that, “…although a pandemic would take a huge toll in human
suffering, it would most likely not be a severe threat to the European macroeconomy.”
But both of these studies were conducted in the mid aughts based on predictions and economic
That does not mean that, like any research, the results are infallible.
Today we’re watching as the stock market fluctuates wildly and businesses across the
country and the world grind to a halt.
However the thing that can’t be predicted is the human response to a crisis, which can
have the greatest impact on the outcome of any given situation.
Government stimulus packages, human actions, and a slew of other factors may ultimately
serve a greater role in determining the outcome of our current economic crisis than we can
even predict.



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