On the Economic Costs of the Spanish Flu Pandemic in Germany: An attempt at Assessing GNP Lost for 1918

Evidence on the economic costs of the Spanish flu pandemic between 1918 and 1920 in Germany is still scarce. An analysis of the second-largest German sickness fund at the time, which covered mineworkers in the Ruhr area, helps assess two types of short term costs to the German economy in 1918, the first, and worst, year of the pandemic: the direct monetary costs to the health insurance system arising from excess sick claims; and, by combining morbidity evidence on the fund’s membership with a distributional perspective, the loss in overall economic performance. For 1918, total excess health costs are estimated at 0.1 percent of gross national product (GNP). The estimated GNP loss due to flu-related excess sick leave in 1918 is 1 percent, which accounts for about one third of the overall decline in GNP by –2.7 percent. This estimate can serve as a historical benchmark for a pandemic’s impact on a large, developed economy when globalization effects are largely absent.