Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu

Abstract

Do non-pharmaceutical interventions (NPIs) aimed at reducing mortality during a pandemic necessarily have adverse economic effects? We use variation in the timing and intensity of NPIs across U.S. cities during the 1918 Flu Pandemic to examine their economic impact. While the pandemic itself was associated with economic disruptions in the short run, we find these disruptions were similar across cities with strict and lenient NPIs. In the medium run, we find suggestive evidence that, if anything, NPIs are associated with better economic outcomes. Our findings indicate that NPIs can reduce disease transmission without necessarily further depressing economic activity.

Keywords: 1918 Flu Pandemic, non-pharmaceutical interventions (NPI), real economy

JEL Classification: I10, I18, E32, H1