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March 30, 2020

Health effects of the coronavirus recession

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How will the current economic crisis affect overall health? The honest answer is that we do not yet know. We will have a much better sense in the next month or two, but at present we can only speculate. The key distinction is that this recession is caused by a health shock, which has not been the case in previous downturns for over a century. For instance, the 1973–1975 recession resulted from OPEC’s quadrupling of oil prices and the “Great Recession” of 2007–2009 from a financial crisis.

Consider the extreme case. In the “do-nothing” scenario (which has been avoided), there were projections of over two million US COVID-19 deaths this year, which approximately equals the number of deaths from all causes in a typical year. At the other extreme, some countries have successfully limited coronavirus deaths to modest amounts (at least so far), and some have argued that the virus-related mortality rates will be much lower than initially projected. The reality for the US, and many other countries, will probably lie somewhere in between.

What will happen to other sources of deaths? Here prior research provides useful guidance. Traffic fatalities will certainly fall, and by large amounts, as will deaths arising from air pollution. These reductions are potentially large enough to offset coronavirus deaths, if the latter end up at the modest end of projections.

The effects on other sources of mortality are less clear. Physical health improves during typical downturns, although by less than it used to (at least in the US), while mental health deteriorates. But the consequences for both may be more negative this time. While leisure-time physical activity generally increases in weak economies, that may be less true now, when gyms are closed and outside activities are discouraged in many areas. (On the other hand, more meals will be consumed at home, rather than restaurants, and home-cooked meals are generally healthier.) There is also evidence that staffing improvements in bad times reduced mortality rates for elderly nursing home residents, but these facilities appear particularly risky for coronavirus infections. And mental health may worsen more than in typical downturns as social isolation reduces the availability of many normal sources of support, raising the possibility of especially large increases in suicides and other deaths tied to stress and mental illness.

An important question is how quickly to resume economic activities. Some argue for doing so relatively rapidly because coronavirus deaths are currently modest compared to those from other causes (such as influenza). This risks confusing cause and effect. COVID-19 fatalities will hopefully remain limited but, if so, this will occur because of the very actions (e.g. social isolation) that depress economic activity. Stopping these practices too quickly will dramatically increase coronavirus deaths and, potentially, prolong the economic downturn. As mentioned, the virus might turn out to be less lethal than current estimates. But good public policy is “mistake-resistant” in that it overweighs the downside risks of events not going as planned. This argues for erring on the side of excessive caution. If we plan well, and are extremely lucky, there is the chance that total mortality rates might decline during this period of crisis, even while other huge economic costs remain.

© Christopher J. Ruhm

Christopher J. Ruhm is Professor of Public Policy & Economics at the University of Virginia, USA

Read more opinion pieces on the coronavirus crisis:
"Coronavirus and the labor market," by Daniel S. Hamermesh
"Fighting a coronavirus recession," by Daniel S. Hamermesh
"Pandemics and the labor market—Then and now," by Karen Clay
"Pricing the lives saved by coronavirus policies," by W. Kip Viscusi 

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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.