COVID-19 is everyone’s enemy because it kills and frightens people, and because it has forced communities around the world to try to defend themselves by “sheltering in place.”
COVID-19 is the retiree’s enemy because the fatality right for older people who are hospitalized with the disease is very hard.
And COVID-19 could be the retiree’s enemy because it could be terrible for fixed annuity issuers, annuity benefits guarantee providers, bond fund managers, and anyone counting on income from a portfolio of bonds or other fixed-income investments.
Three economists — Òscar Jordà, Sanjay R. Singh and Alan Taylor — talk about the threat COVID-19 could pose to fixed-income investors in a new working paper published on the National Bureau of Economic Research website.
- A copy of the pandemic consequences paper is available here.
- An article about the effects of the 1918 influenza pandemic is available here.
A working paper is a research paper that has not yet gone through a fully peer review process.
Jordà is an economic researcher at the Federal Reserve Bank of San Francisco and the University of California at Davis.
Singh and Taylor are both at the University of California at Davis.
They started their research by looking at financial records for the periods around 15 pandemics that are believed to have killed 100,000 or more people. The earliest pandemic in their paper was the Black Death pandemic, which started in 1347, ended in 1352, and is believed to have killed 75 million people.
The most recent pandemic in the research was the 2009 H1N1 pandemic, which killed 203,000 people.
Other recent pandemics in the paper include the 1918-1920 influenza pandemic, which killed 100 million people; the 1957-1958 flu pandemic, which killed 2 million people; and the 1968-1968 flu pandemic, which killed 1 million people.
The researchers used data from six countries that have centuries of detailed economic data: France, Germany, Italy, the Netherlands, Spain, and the United Kingdom.
Here are five things Jordà and his colleagues say in the new paper.
1. Past performance is no guarantee of future results.
Jordà and his colleagues note that the effects of COVID-19 could turn out to be different from the effects of earlier pandemics, both because the economy is different and because COVID-19 seems to deadlier to people who are already retired.
Many of the earlier pandemics were more dangerous to working-age people, or about as dangerous to working-age people as to older people.