What can past pandemics teach economists about COVID-19?
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Economists are weighing in already with newly-published papers trying to better understand what the COVID-19 pandemic might do — to everything: investment returns, wages, working from home.
The research focuses on the economic history of pandemics. Economists are taking their models, trying to adapt them for additional insights during these times and using things like online surveys and Facebook activity to capture emerging trends.
Pandemics have had powerful economic effects through the ages. What sticks out as these economists survey the past?
One paper from the Federal Reserve Bank of San Francisco looks at the longer run economic consequences of pandemics. These scholars included in their study 15 major pandemics.
The takeaways? The death toll from pandemics: horrible. The economy takes a huge hit, of course.
“But they found that the long run economic results, they are somewhat more mixed,” Marketplace senior economics contributor Chris Farrell told “Marketplace Morning Report” host David Brancaccio. “And the effects, the reverberations, last for about 40 years, on average.”
For example, the inflation-adjusted rates of return on assets — so the real return on assets — were substantially depressed.
However, inflation-adjusted wages gradually increase. There could be a number of reasons behind that, but it’s probably because labor is scarce. That is, people are sick or people have died from disease, and that’s an awful way to squeeze the labor supply so that wages go up.
As far as social media goes and its usefulness as a gauge for what’s happening in real time, MIT researchers took a look at how many people have been able to successfully transition to working from home.
“One of the big divides in society right now is between people who can earn an income by working remotely at home and those who can’t,” Farrell said. “So there’s this MIT online survey, and they looked into teleworking. The survey ran from April 1 to April 5, 25,000 responses.”
“What they found is that of those employed four weeks earlier, more than one-third had converted from commuting to working from home. So if you take it all together, nearly half their survey sample is working from home.”
Click the audio player above to hear the full interview.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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