Niall Ferguson on the Use of Historical Analogy in Thinking About COVID-19

21 05 2020

Niall Ferguson (the historian, not the more famous Imperial College academic) has published a working paper on the impact of COVID-19 in which he talks about how we should use historical analogy to think about the pandemic’s likely economic and political impact. I have considerable respect for much of what Niall Ferguson has written elsewhere, particularly his early academic work, but the working paper on COVID is deeply flawed because Ferguson did not take advantage of the considerable literature in psychology and behavioural strategy on the pitfalls of analogical reasoning before putting pen to paper. The Stanford working paper gives the impression that Ferguson is not familiar with the concept of analogical distance, does not engage with the rational thinking movement, and has not read the literature that gives managers and other reasoners guidance on how to use analogical reasoning more effectively.

Anyone who wants to use historical analogy to understand COVID-19 faces a fundamental choice about whether to use an analogy that is high in analogical distance or one that is low in analogical distance. Dunbar (1997) observed that analogies vary in their analogical distance “(e.g., an atom is similar to a solar system versus a washing machine is similar to a dishwasher).” In the context of using history to try to think about the likely socio-economic impact of COVID-19, forming a historical analogy using, say, the 1968 Hong Kong Flu or the 1957 Asian Flu pandemics would be an example of low-distance analogical reasoning, while an analogy that connects COVID-19 to an event in another domain, such as military history, involves higher analogical distance. It is sometimes totally legitimate to use a high-distance historical analogy, but you need to justify the high distance. Ferguson, who does not even mention the 1968 and 1957 pandemics in his paper (!), frequently relies on a particularly high-distance analogy (the outbreak of the First World War in 1914) to understand COVID. A cynic might note here that Ferguson’s PhD thesis was on the First World War and that he has chosen to use this analogy simply because economies on mental effort and the need to read the historical studies on the pandemics of the twentieth century. More importantly, Ferguson does not really try to justify the use of this analogy.  Consider the following passage:


That is not to say that geopolitical analogies are always invalid, however, or that only the study of other global pandemics can help us understand this one. The lessons of the Black Death for 2020 are few and far between, except perhaps that the less integrated the world economy is, the slower a pathogen can travel; that social distancing always makes sense in a pandemic; and that people fleeing contagion are usually spreading it. Rather, we need to think of COVID-19 as one of those rare catastrophes that befall humanity at irregular intervals in history. In addition to pandemics, these include major wars, volcanic eruptions or earthquakes and extreme climatic events. Historians tend to
gravitate towards the study of such extreme disasters. Yet they seldom reflect very deeply on their common properties.

At no point in his paper, does Ferguson explain why we need to think of COVID-19 “as one of those rare catastrophes that befall humanity at irregular intervals in history.” Ferguson has chosen an analogy that directs our attention to his own published research and which, as a side effect, contributes to an intellectual climate in which decision-makers may be dramatically over-estimating the likely economic impact of the virus.


We are living through the coronavirus crisis and perhaps that means that all of us are inclined to over-estimate the long-term impact of the virus on a wide range of matters. Some people have predicted that the virus will change absolutely everything in our society and economy and will thus be regarded by future generations as a turning point of history. The view that the virus will result in permanent and fundamental change to our corporate governance systems and other core social institutions may be correct. I don’t know for certain because I can’t see the future. However, for reasons that  linked to the concepts of path dependency and regression to the mean, I think the opposite is more likely and that in five years things will be pretty much like they were in 2019.

That was the idea expressed recently by the economist Scott Sumner. I’ve long been a fan of Sumner’s work and he has had very intelligent things to say about the crisis whilst expressing a suitable degree of intellectual humility. One of the other social scientists who have guided my thinking about the crisis is the great Philip Tetlock, a guy who spends a lot of time thinking about how we can predict the future. His ideas reinforce my view that many people are overestimating the impact of the virus on social institutions. Ferguson’s historical analogies are, in my view, not helpful in calibrating our responses to the crisis.

There are other, more minor problems with Ferguson’s paper. For instance, he asserts that the COVID crisis has not witnessed an upsurge in patriotism and nationalism. “One important difference is that today’s crisis is happening without the offsetting boost to morale provided by patriotism.”

That’s not remotely true. The crisis has seen the sudden introduction of economic nationalist policies around the world (e.g. EU countries restricting exports of medical gear to other countries or the Canadian province of Quebec’s use of the crisis as an excuse for panier bleu economic nationalism). The crisis has also seen a surge in more benign forms of patriotism, at least here in the UK, where my street is still festooned with Union Jacks, England flags, and homemade signs that combined Union Jacks and rainbows and which salute “our N[ational] H[ealth] S[ervice]”. I could go on.

Instead of reading Nial Ferguson’s new working paper, busy decision-makers who want a historian to guide their thinking about the crisis should instead look at Going Viral, the excellent working paper by Dr Steve Davies that applies economic-history in thinking about this crisis. Steve isn’t a fellow of the Hoover Institution and thus doesn’t have the institutional prestige of a Niall Ferguson. Steve is also a committed classical liberal and is thus an adherent of a worldview that it is out of fashion right now. However, it is worth reading his paper, especially since Steve invested some time in learning about the pandemics of the twentieth century in the course of preparing his paper. Guess what, Steve talks about Hong Kong Flu, Asian Flu, and Spanish Flu.

During this crisis, I have been asked by several business people whether and how they should use economic history as a guide. My message to them is pretty much as follows:  if you hear someone using a historical analogy to try to predict the economic or political consequence of COVID, you need to set your bullsh*t detector to about 8 out of 10. Ask yourself about the incentive structure of the individual who is telling you this historical narrative. History can be a useful guide to what comes next, but be very critical of how people are using historical narrative ON you.

Guys, let’s think about the incentive structure of Niall Ferguson.




History Lessons for Managers Facing COVID-19

5 05 2020

Social scientists from different disciplines have used a wide variety of theoretical lenses and data sources to try to understand the COVID-19 crisis and to give actionable advice to policymakers, business leaders, and other decision-makers. In late March, an international committee of business historians organized a fast-response essay contest to see whether historical research could provide guidance at this time. Yesterday, they announced the winners of this contest.



The contest received forty-one papers. These papers were first reviewed by a sub-committee of the Scientific Committee to determine which were suitable for publication online. We have decided to publish just  seven of the papers that were submitted to the competition (see table below), plus one additional paper by two senior scholars who did not want to be considered for the cash prize. The papers we decided not to publish included some excellent studies that developed our understanding of political decisions but did not speak to the challenges now facing managers of firms. Some of the members of a separate sub-committee then ranked essays for the purposes of allocating the two prizes.

Below, I’ve written some thoughts about the papers that were published. My remarks aim to both summarise these papers and to present my own interpretation of what managers ought to take away from these papers.

In 1797, an influenza epidemic devastated the population of part of the territory that was important to the Hudson’s Bay Company, the London-based firm that then dominated the fur trade in the northern half of the North American continent. The Hudson’s Bay Company, it should be noted, is still in operation and has an archive that is open to researchers. In his paper, “Business Community Resilience while Fighting the Influenza Epidemic in the Fur Trade, 1797” Professor George Colpitts of the University of Calgary explores how inter-personal relationships between HBC officers and local people in small communities helped the company to cope with this crisis. Colpitts suggests that while in normal position, a firm’s sense of purpose and identity can be promoted by non-face-to-face communications in textual media, in periods of crisis, the inter-personal networks previously developed by employees can become crucial.  One possible managerial implication of this research is that in large firms faced with COVID, relationships between branch managers and local stakeholders will be particularly important. One lesson we derived from Colpitt’s paper is that large geographically dispersed organisations should preserve strong relations between employees and local communities by (temporarily) decentralizing authority to local managers for the duration of the crisis.

University of Toronto Professor Siobhan Nelson’s paper “Nursing Infectious Disease: a History with Three Lessons” will be of great interest to health care managers currently dealing with COVID. The three lessons she presents to such managers are: 1) re-learn basis and important hygiene practices 2) innovate to cope with risk, as blood-service managers did during the HIV-AIDS pandemic 3) prepare for staffing challenges similar to those that Britain’s National Health Service experienced in the aftermath of the Second World War.


In her paper, Professor Janice Traflet of Bucknell University drew on her earlier research on the history of the New York Stock Exchange. She explores the reasons why the so-called uptick rule was implemented in 1938 and why it was later repealed. She argues that to limit the potential negative impact of major crises, so-called “black swan” events,  stock exchanges would benefit by taking steps (such as possibly reinstating the 1938 uptick rule) to improve market fairness and orderliness, and in so doing, strengthen public trust and make exchanges more black-swan robust.


The Committee decided to publish the essay submitted by Joel N. E. Christoph, a graduate student on a joint degree course offered by Johns Hopkins and Tsinghua Universities. His paper, “What Lessons Can History Provide to Companies and Managers Currently Coping with the Impact of COVID-19?” is a work of synthesis based on a range of secondary sources.  From this paper, we learn about the response of businesses in New Haven to the 1918 pandemic and about the experience of Alibaba founder Jack Ma during the SARS epidemic. He observes that the 1918 epidemic caused tension between immigrant ethnic groups and Anglo-Saxon Americans and that local business leaders tried to defuse these tensions. On the basis of the historical cases he discussed, Christoph identifies several lessons for managers faced with the COVID pandemic. First, they should try to dampen any ethnic tensions that the pandemics have exacerbated. Second, they should fight the stigmatization of diseased individuals. We regard the first research finding as particularly important for managers in multicultural cities in North America and Australasia. In recent decades, the economies and cultures of these cities have been enriched by the arrival of large numbers of individuals of East Asian ethnicity. During the COVID-19 crisis, some nativist elements have “blamed” COVID-19 on Chinese migrants and have verbally attacked individuals who are perceived to be Chinese. Christoph’s research shows that it is very important for business leaders to now speak up against these nativist attacks.


Two distinguished Dutch business historians, Bram Bouwens and Keetie Slutyerman, sent us a paper that they wanted to have published on our website but did not want to be entered into the competition for the prize. Their paper “All stakeholders count: the Dutch beer industry during the First World War,” argues that managers now confronted with COVID should strongly consider collaborating with competitors, as Dutch brewing companies did the First World War. During that crisis, the Dutch brewers mitigated the uncertainties and scarcities of the war by reaching out towards their competitors and by engaging with all their stakeholders. Their paper suggests that while commercial competition is perfectly healthy in normal periods, competitors need to cooperate during crises. They also need to be seen to be serving the common good. In her paper in “Lessons From a Forgotten Pandemic,” a study of how business responded to the HIV-AIDS crisis, Valerie Mock presents recommendations to managers dealing with the impact of COVID. She shows that they need to embrace the facts and be data driven, build coalitions, and analyse the needs of stakeholders.



Japan is both an advanced economy and geologically active country with frequent earthquakes and infrequent but highly destructive tsunami.  In 2011, Japan’s elaborate, JIT supply chains were disrupted by a triple disaster of earthquake, tsunami, and nuclear meltdown. In their historical research paper on how Japanese retailers have recovered from this disaster, Professors Rika Fujioka and Tatsuro Watanabe argue that having a pre-prepared Business Continuity Plan can help firms to survive natural disasters that disrupt their supply chains. They also show that it is important for firms to show solidarity with others in their communities during crises because stakeholders have long memories. Their research suggests that firms that act prosocially during crises are more likely to survive and emerge from the crisis with enhanced reputations. In our view, managers dealing with the social impact of COVID should pay particular attention to this last research finding.

Somewhat similar managerial implications are presented by Thomas DeBerge, a PhD student University of Illinois, Urbana-Champaign, in his paper “Thrift in a time of war and influenza:  American mutual life insurance companies, 1917-1920.” He examines the strategies used by the managers of US life insurance companies during a period in which death rates unexpectedly surged due to US participation the First World War and then, the 1918-1919 influenza epidemic.  He argues that the firms that went into the crisis with large cash reserves survived because their organizational cultures had previously promoted the value of thrift.

Although it is too late for managers now dealing with COVID to go back in time and tell themselves to save more for this crisis, DeBerge’s research may be very useful for market actors who now need to predict which firms have the traits that suggest they are likely to survive the crisis. These actors include the lenders of last resort who now need to make tough judgement calls about which firms are worth trying to save. In the UK, and other countries, the government have ordered the large banks to give emergency loans to those SMEs that are, in the view of the bank’s employees, most likely to survive the COVID crisis. The successful execution of this policy will require the exercise of good judgement by so-called SME relationship managers in bank branches and regional offices.  These relationship managers will now need to draw on their knowledge of each firms and then make a judgement call about whether the firm has the traits needed to survive. These judgement calls will then inform the bank’s decision about whether to extend a bridging loan to the firm or let it fail.   DeBerge’s research suggests that the key traits SME relationship managers should be looking include the level of thriftiness that the firm’s organizational culture promoted before the crisis as well as the state of the firm’s balance sheet.



General observation: Four of the eight papers argued that companies that want to survive for the long term need to temporarily suspend the pursuit of profit during major social crises. That’s because stakeholders have long memories.  Taken together, the four papers suggest to us that organisations that act prosocially during crises are more likely to survive and emerge from the crisis with enhanced reputations than are organisations that continue to focus on the pre-crisis strategic objectives (e.g. maximizing profits for shareholders). The aggressive pursuit of profit is a legitimate objective during normal conditions, but during a major crisis such as once-in-a-century pandemic or a world war, managers concerned about the long-term viability of their firms should temporarily pursue other objectives.

From this point, another managerial implication follows. The COVID-19 crisis has generated considerable debate among the public and academics about so-called price gouging (e.g., toilet paper and PPE being sold at astronomical prices). Economic theory teaches that price gouging by firms can be socially efficient and can contribute to higher GDP at a time when GDP is rapidly contracting. However, the objective of most managers is not to maximize the value of their nation’s GDP. Instead, their objective is, quite properly, to ensure the long-term viability of their firm. In the case of a family firm, the objective of the manager is to ensure that they have a company they can pass to their children, grandchildren, and then more distant descendants. Managers with this objective should pay attention to the historical research showcased by our essay contest.


Authors Title of Paper What Managers Should Take Away From the Paper
Professors Rika Fujioka and Tatsuro Watanabe Lessons to Learn from Japanese Retailers Response to the 2011 Natural Disaster


(1)   create a Business Continuity Plan in advance of any natural disasters

(2)    use intermediaries to manage interrupted supply chains

(3)   show solidarity and support for communities


Mr Thomas DeBerge (PhD student, University of Illinois, Urbana Champaign) Second prize.


Thrift In a Time of War and Influenza:

American Mutual Life Insurance Companies, 1917-1920


1)      Maintain large cash reserves for use in emergencies

2)      Develop an organizational culture of thrift, as such a culture predicts survival during a crisis

George Colpitts (University of Calgary) Business Community Resilience while Fighting the Influence in the Fur Trade, 1797 1)      Large geographically dispersed organisations should preserve strong relations between employees and local communities by decentralizing authority to local managers
Professor Jan Traflet (Bucknell University) Protecting Investors in Tumultuous Times:

How Reinstituting the 1938 Uptick Rule

Can Make Markets Fairer and more “Black Swan Robust” in the face of COVID-19

1)      to limit the potential negative impact of major crises, so-called “black swan” events,  stock exchanges would benefit by taking steps (such as possibly reinstating the NYSE 1938 uptick rule) to improve market fairness and orderliness, and in so doing, strengthen public trust.


Professor Siobhan Nelson (University of Toronto). First prize. Nursing infectious disease: a history with three lessons 1) re-learn basis and important hygiene practices 2) innovate to cope with risk, as blood-service managers did during the HIV-AIDS pandemic

3) prepare for staffing challenges similar to those that Britain’s National Health Service experienced in the aftermath of the Second World War.


Mr Joel N. E. Christoph (Johns Hopkins-Tsinghua Joint Grad Program). What Lessons Can History Provide to Companies and Managers Currently Coping with the Social Impact of COVID-19 1)      managers should try to dampen any ethnic tensions that the pandemics have exacerbated, as they did in New Haven Connecticut in 1918, when the Spanish flu drove a wedge between Italian-American immigrants and Anglo-Saxon Americans.

2)      Managers should fight the stigmatization of diseased individuals.

Professor Bram Bouwens (University of Utrecht) and Professor Keetie Slutyerman (University of Utrecht). NOT CONSIDERED FOR THE CASH PRIZE All stakeholders count: the Dutch beer industry during the First World War 1)      During a massive crisis, consider cooperating with the firms that are normally your competitors

2)      Engage with stakeholders and listen to their concerns even more so than during normal times

Dr Valerie Mock, Consultant, Atlanta Georgia. Lessons From a Forgotten Pandemic, Business Responses to HIV-AIDS 1) embrace the facts/be data driven

2) analyze what your company and its stakeholders need

3) determine what assistance is already available

4) build coalitions and educate




Vincent Geloso on Werner Troesken’s The Pox of Liberty

19 04 2020

The economic historian Vincent Geloso has published an excellent blog post on the EHS website in which he draws on the late Werner Troesken’s The Pox of Liberty:  How the Constitution Left Americans Rich, Free, and Prone to Infection to help us to think about the trade-offs we will collectively need to make in making policy decisions about how we quickly we lift the COVID lockdowns.

Speaking of historical research that is relevant to our current policy trade-offs, I would like to bring the attention of my readers to a series of papers in which the medical historian Howard Markel and colleagues attempted to assess the impact of the different policies that US cities adopted to fight the 1918-19 Spanish flu epidemic. The lesson I took away from these papers is that the policy of locking down early and hard is probably the best course of action from both a public health and economic point of view. In other words, if we want to minimise both the number of people who die or are permanently disabled by the virus and the overall economic impact, stringent lockdowns would seem to be the way to go.


Markel, Howard, Harvey B. Lipman, J. Alexander Navarro, Alexandra Sloan, Joseph R. Michalsen, Alexandra Minna Stern, and Martin S. Cetron. “Nonpharmaceutical interventions implemented by US cities during the 1918-1919 influenza pandemic.” Jama 298, no. 6 (2007): 644-654.


Essay Contest: What Lessons Can History Provide to Companies and Managers Currently Coping with the Impact of COVID-19?

30 03 2020
Centers for Disease Control and Prevention Alissa Eckert, MS; Dan Higgins, MAMS

Centers for Disease Control and Prevention Alissa Eckert, MS; Dan Higgins, MAMS Pubic Domain Image

AS: I am very pleased to announce the launch of a fast-reaction essay contest that is designed to repurpose existing historical knowledge for the use of the managers who are currently grappling with the impact of COVID-19. The essays are due on 21 April. Special thanks to the team in Frankfurt who created the IT infrastructure for the contest, to the donors on two continents who supplied the prizes, and the members of our distinguished Scientific Committee.

Full details of the contest can be found on the contest website.


Essay Contest Question

During crises, managers have special responsibilities to stakeholders. COVID-19 is clearly a major crisis. What lessons for today’s managers can we learn from studying how managers in the past responded to previous crises such as epidemics and pandemics as well as wars and natural disasters?

Contest Rules

  1. DEADLINE: All essays must be received by Tuesday 21 April by 11pm EST (New York time). The essays must be submitted before the deadline to
  1. TERMS:
  1. Participants are free to base their essays on either primary sources, secondary sources, or a mixture of the two but they must not break local self-isolation/social distancing guidelines in the course of preparing their essays.  No going to the library!!
  2. By submitting your essay, you declare that you are the author, is based on accurate historical data, and that you give us your consent to publish the essay.
  1. FORMAT:
    1. Essays must be fully referenced according according to a single consistent format such as APA or Chicago footnotes and should be between 4 and 5 pages (double spaced, Times New Roman, 12 point font) not including list of references at the end.
    2. We encourage authors to hyperlink to cited sources whenever possible.
    3. Each essay must begin with a one-paragraph practitioner summary that gives clear advice to managers.
    4. All submitted essays must be in English.
    5. Essays can summarise your own previously published research, and can draw on the existing secondary literature, or can be based on primary source you start doing now.
  2. ADJUDICATION: The submissions will be judged by jurors drawn from the Contest’s Scientific Committee, comprised of distinguished business historians who have relevant expertise and who have, in the past, made historical research findings relevant to managers (see below for the list of potential jurors.) The Committee’s findings will be final.
  3. PRIZES: The prize for the best essay is $500 U.S. The prize for the second best essay is £200.
  4. CRITERIA: In judging the essays, we will give equal weighting to two criteria: the utility of managers of the recommendations you provide based on your historical research and the reliability of your historical research findings. Your conclusions about what worked for managers in the past will be more convincing to the jury if they are based on solid historical research and analysis rather than a  cursory review of a couple of sources.





The Prize for the best essay of 500USD has been generously donated by Professor Dimitry Anastakis, L.R. Wilson/R.J. Currie Chair in Canadian Business History at the Rotman School and the Department of History at the University of Toronto.

The Prize for the second-best essay of 200GBP has been generously provided by Dr Nicholas Wong, of Newcastle Business School, Northumbria University.

Many thanks to the leadership and IT staff Gesellschaft für Unternehmensgeschichte for hosting the website associated with this conference.


Other Notes


All essays deemed by this jury to be of sufficient quality will be published online at under a Creative Commons 4.0 licence. The essays will contain a disclaimer saying they have not gone through peer review and should not be construed as investment advice for individuals.

Essays must be signed with the real names of the author or authors.

The contest organisers reserve the right to lightly edit essays for style and English expression prior to their publication on the website. We do not expect contestants who are not native speakers to submit essays that are linguistically perfect in all respects, especially are you are working under a tight deadline. However, we do not have the resources to engage in extensive editing so please ensure your writing is reasonably clear before you submit.

The contest is open to everyone: academics, students (graduate, MBA, undergraduates), practitioners, independent scholars.


Source: “Longer-Run Economic Consequences of Pandemics” San Francisco Fed Working Paper (2020)

We define history as the study of episodes in the past. You are free, therefore, to distil lessons for today’s managers from relatively recent historical events (such as the SARS outbreak, the 2011 earthquake the disrupted supply chains in Japan) as well as more distant ones, such as Hong Kong Flu in 1968, Asian Flu pandemic in 1957, and the Spanish Flu in 1918. If you can derive lessons for today’s managers from even earlier epidemics, such the cholera epidemics of the nineteenth century or even the Black Death, go for it.  However, we expect that the findings presented in the essays will be derived from the systemic study of historical sources rather than personal recollections. An executive’s recollection of how he or she dealt with the impact of SARS on a supply chain would not, in our view, be considered truly historical and would be unlikely to win the prize. However, we would encourage managers who have such experience to share advice with other managers in other online forums. Similarly, while we would encourage managers in China who successful coped with the local peak of the epidemic at the start of the 2020 to share advice with their counterparts in other countries, our essay contest is not the forum to do so as the managerial experience being shared is not historical.

In judging the essays, we will give equal weighting to two criteria: the utility of managers of the recommendations you provide based on your historical research and the reliability of your historical research findings. Your conclusions about what worked for managers in the past will be more convincing to the jury if they are based on solid historical research and analysis rather than a very limited and cursory review of a couple of primary sources.  The jury’s understanding of what constitutes reliable sources of historical information will likely be informed by some of the principles outlined in Lipartito (2014).

Lipartito, K. (2014). Historical sources and data. In Bucheli, M., & Wadhwani, R. D. (Eds.). (2014). Organizations in time: History, theory, methods. Oxford University Press. pages 284-304.

Scientific Committee:

Alfred Reckendrees, Copenhagen Business School

Andrea H. Schneider-Braunberger, Gesellschaft für Unternehmensgeschichte GUG e.V., Frankfurt-am-Main

Aparajith Ramnath, Amrut Mody School of Management, Ahmedabad University

Catherine Casson, University of Manchester

Charles Harvey, Newcastle University Business School

Chris McKenna, Saïd Business School and Brasenose College, Oxford

Dimitry Anastakis, Wilson-Currie Chair in Business History, University of Toronto

Greig Mordue, ArcelorMittal Chair in Advanced Manufacturing Policy, McMaster University

Hubert Bonin, Université de Bordeaux

Jan Ottosson, Professor of Economic History Uppsala University

John Wilson, Newcastle Business School

Kenneth Lipartito,  Florida International University

Laurence B. Mussio, PhD, SIERC, Inc.; Co-Founder, Long Run Initiative (LRI).

Ludovic Cailluet, EDHEC Business School, Paris and Lille

Marcelo Bucheli, Gies College of Business, University of Illinois at Urbana-Champaign

Nicholas Wong, Newcastle Business School

Peter Miskell, Henley Business School

Pierre-Yves Donzé, Osaka University, Graduate School of Economics

Rika Fujioka, Faculty of Commerce, Kansai University

Robert E. Wright, Rudy and Marilyn Nef Family Chair of Political Economy at Augustana University

Rowena Olegario, Oxford Centre for Global History

Tom Buckley, University of Sheffield Management School


Longer-run Economic Consequences of Pandemics

30 03 2020

Our colleagues who work in the field of economic history have started to publish research that applies historical data in trying to think about the likely macro-economic impact of coronavirus (see paper details below). Historically-informed finance practitioners such as the excellent Jamie Catherwood (aka Investor Amnesia) have also been using the past as a guide. I see all of these efforts as entirely complementary to the ongoing efforts of business historians around the world to study how firms responded to similar pandemics in the past and thus provide actionable advice to managers who are currently trying to cope with the crisis.


Longer-Run Economic Consequences of Pandemics

Òscar Jordà, Federal Reserve Bank of San Francisco and University of California, Davis

Sanjay R. Singh, University of California, Davis

Alan M. Taylor, University of California, Davis

Federal Reserve Bank of San Francisco Working Paper2020-09

Paper Abstract:

How do major pandemics affect economic activity in the medium to longer term?
Is it consistent with what economic theory prescribes? Since these are rare events,
historical evidence over many centuries is required. We study rates of return on assets
using a dataset stretching back to the 14th century, focusing on 12 major pandemics
where more than 100,000 people died. In addition, we include major armed conflicts
resulting in a similarly large death toll. Significant macroeconomic after-effects of the
pandemics persist for about 40 years, with real rates of return substantially depressed.
In contrast, we find that wars have no such effect, indeed the opposite. This is consistent
with the destruction of capital that happens in wars, but not in pandemics. Using
more sparse data, we find real wages somewhat elevated following pandemics. The
findings are consistent with pandemics inducing labor scarcity and/or a shift to greater
precautionary savings.



Full paper available here.

Can We Blame Globalization For COVID-19?

24 03 2020


Many economic nationalists, right-wing populists, and other individuals who have long disliked globalization have jumped to the conclusion that globalization caused the crisis and/or is doomed by the crisis.  Some on the globalization-hostile part of the left have echoed this idea. (By globalization, everyone in this conversation appears to mean falling barriers to the movement of goods, capital, ideas, and crucially the movement of human beings). I’m very glad to see that there is now push back against this narrative (for valuable contributions to this debate see here, here, and here).


The University of Western Ontario economic historian Vincent Geloso has published an important blog post in which he draws on historical data about past pandemics (e.g., Spanish Flu in 1918, Asian Flu in 1957-8, Hong Kong flu in 1968) to argue persuasively that globalization (falling trade barriers, lots of people zooming around on long-haul flights) can’t be blamed for COVID-19.

Vincent identifies a number of causal mechanisms by which globalization reduces the likelihood and severity of epidemics. One of them is increasing living standards in the countries that have historically been the source of many zoonotic pathogens.


 In particularly poor countries, income gains brought by globalization translate as improvements in net nutrition which reduces vulnerability to a great range of diseases. Enrichment thanks to globalization can also enable investments in health products and services that were previously unavailable. As a result, the quality of care increases in a way that offsets some of the increased risks of contagion. 


I would take this argument further than Vincent has. Enrichment due to globalization has allowed people in developing countries such as China to distance themselves more from animals. Much more importantly, this enrichment means that brilliant young minds that previously would have been wasted on routine agricultural labour can be redirected into scientific research that can help all human beings to fight its common enemy, the COVID virus. As we speak, there are doctors and scientists in China working on COVID. I’m certain that if you looked at what their parents and grandparents were doing circa 1978, when China began to participate (once again) in globalization, few if any of them were doing any sort of creative work. Some of the best universities in China were founded in the Treaty Port period, when during the pre-1914 heyday of globalization.  Moreover, the technologies and social institutions associated with globalization (the internet, publishing scientific papers in English, and so forth) make it easier for scientists and medical professionals of different nationalities to exchange valuable knowledge.


Bottom line, we can’t blame globalization for this mess. I remain convinced that the world needs more globalization, not less.


Coronavirus: Driving Increased Demand for Financial Historical Knowledge?

2 03 2020

I’ve long suspected that investors draw on their stock of  historical information to try understand the present, especially during crises, when the risk and uncertainty are at elevated levels. During crises, many investors seem to conclude that the standard ways of valuing assets and making decisions don’t seem to be working that well. All it takes for the financial newspapers to be filled with historical contents about Tulipmania, 1929, Smoot-Hawley, deglobalization, and the origins of the First World War is some sort of “black-swan” event that upsets normal business conditions. Back during the Global Financial Crisis, my fellow business historians were excited when people in finance started paying more attention to business history in the search for guidance in uncertain times. Bloomberg established its short-lived Echoes column during that crisis to supply finance people with historical insight.



By Mikael Häggström, M.D.- Author info- Reusing images – Own work, CC0,

In the last decade, I’ve developed my understanding of the literature in psychology and economics that helps us to understand when investors are most likely to have recourse to historical knowledge. A great starting point for thinking about this issue is Barry Eichengreen (2016)’s book-length study of how historical knowledge was used by central bankers during the Global Financial Crisis. Eichengreen grounds his study by the dual-process model of cognition that practitioners are most likely to associate with Danny Kahneman’s  scholarly papers and his best-selling departure lounge business book Thinking Fast and Slow. Kahneman’s research strongly suggests to me  that historical thinking is especially influential during crises rather than in normal conditions, when individuals make greater use of “System 2” thinking. Research by other psychologists future supports the idea that individuals would greater recourse to the cognitive tool of “historical analogy” during periods of uncertainty (see Chan and Paletz, 2019).

Right now, markets are in chaos as investors who have no specialized training in epidemiology are struggling to figure out how they should respond to coronavirus (see here, here, and here). Some observers have debated whether the SARS epidemic of early 2000s is a reliable guide for thinking about the likely impact of coronavirus on firms and markets. As Covid-19 began to disrupt global supply chains, many investors drew on an analogy with SARS to make sense of what was going to happen next. For examples of people using a historical analogy with SARS to try to think about the likely impact of coronavirus, see here, here, and here. Bank of America economist Ethan Harris has recently said that “unfortunately, the analogy doesn’t work.” Nicholas Colas of DataTrek Research opposed the use of the historical analogy, saying that it is “useless to compare how US/global equities fared under SARS in 2003 to the coronavirus today.” See here. One can totally understand why these observers are wary of using this historical analogy. Global supply chains have changed a lot since 2002, especially since China is a much more important economy today than it was at the time of SARS.


By russellstreet – 1918 Influenza Epidemic Site, CC BY-SA 2.0,

For a while, I’ve been following the excellent blog of Jamie Catherwood, a young finance practitioner who shares my conviction that historical knowledge, particularly the knowledge of the history of financial markets is potentially quite useful to investors.


Image from Jamie Catherwood’s Twitter Account


Catherwood’s day job is as as a  Client Portfolio Associate at O’Shaughnessy Asset Management, a long-equity investment firm in Connecticut. Catherwood’s blog, Investor Amnesia, appears to have something of a cult following in financial circles, as it is has inspired reader meet-ups in different North American cities (see list here). Anyway, in a blog post yesterday (1 March), Jamie wrote:

I can honestly say that since I started doing my financial history shtick online in June 2018,  I have never received so many questions and requests for historical context than I did with the coronavirus this week. It was this week that many Americans witnessed a previously distant and global problem become a serious concern at home as more cases of coronavirus in the United States were reported. In response, stocks tanked as investors panicked over how the global pandemic would impact markets and supply chains.


The blog post has lots of interesting information about historical pandemics, but to me the most interesting passage in it is the sentence that I have quoted above. Jamie’s observation is another data point that supports my theory that investors are more likely to reach for history when there is a war on.