Just how much poorer we will be after the crisis is difficult to estimate. There are many factors at play. Premature deaths reduce the size of the labour force, and illness lowers productivity. Resources that could have been used productively will now flow to treatment and control measures. Attempts to reduce the spread of the disease, like travel bans and self-isolation, can further disrupt economic activity. Some industries will feel the effects immediately, like logistics and tourism, but all will eventually suffer, from mining to manufacturing to insurance.
It is not only the costs of lost income that matters, though. The intrinsic value of lives prematurely lost – as economists unemotionally label the human suffering attached to losing loved ones – may be far greater than a mere decline in GDP. Put differently: People care much more about the psychological pain and anxiety of pandemics than they care about a fall in their standard of living.
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2 April 2020