The Economic Hit From Coronavirus Is All in Your Mind

Hindsight can be an asset during an epidemic: Lessons from the past help steer public decision-making and avoid repeating mistakes. Unfortunately, rearview mirrors appear to be in short supply these days.

For all the stimulus measures that officials are rolling out to combat the economic impact of the coronavirus, lower interest rates and bigger budgets are unlikely to make people feel immune. And it’s consumer behavior that will influence the magnitude of any hit. The gap between how people perceive the risk of becoming ill and the likelihood of actually contracting the virus can be vast, driven wider by feelings from past experiences, vivid images or simply fright.

A study by the Asian Development Bank, published in October, pins a lot of the economic damage from severe acute respiratory syndrome on psychology. At the height of the 2003 outbreak, 23% of respondents to a public-opinion survey in Hong Kong thought they were either very likely or somewhat likely to be infected. The number of cases wound up at 1,755, according to the World Health Organization, which would have been roughly 0.026% of the population. In Taipei, 74% rated the likelihood of death following contraction of SARS at four or five on a five-point scale compared with an actual mortality rate of 11%.