Long Live COVID

Long Live COVID

I read the Financial Times article summary every day and most often chase down several articles. I do the same for the New York Times, Wall Street Journal and Washington Post, but no publication covers the world like the FT. That is particularly so in one of the areas of my greatest interest, the pension and retirement area. I suspect the reason for this is that while pensions matter to the other publications, the U.K. has a higher degree of focus on the issue of pensions as do most Anglo Saxon countries for some reason. Today I noted a special article about COVID and its impact on longevity, except that this particular article wasn’t available to regular subscribers like me. It required a premium membership. The cost was only an additional $214 annually and I have seen several other articles over the course of the year that required a premium membership, so I said what the hell. The longevity topic was screaming at me so I hit the bid and upgraded. The article was immediately available to me and I must admit that it was all and more than I had hoped for. I was so impressed with what it said that I have decided that I need to share the information with my readers.

Here’s the stunning bottom line: the actuarial gurus actually think that the COVID pandemic is likely to INCREASE longevity. Stop to think about that for a moment. An epidemic that attacks older, more vulnerable people in the population and cuts their lives short as it has caused the death of 459,000 people globally and 121,000 in the United States, will improve the longevity of the general population. How can that be? The forces that be in the dark sciences of the insurance actuarial world have, not unexpectedly, told their brethren to be cautious about reducing longevity estimates too severely. Even before COVID, the decades-long increases in longevity had stalled and one’s first reaction to something so catastrophically morbid as a pandemic would make one think that the longevity trend was likely to reverse.

A 10% reduction in global GDP is estimated to cause a rise in all the bad afflictions and generate an estimated half year reduction in global expected lifespan measured at birth. That now averages about 80 years with most European countries and Japan up in the 83-84 year zone. But despite that, the thinking is that the huge national emphasis on health care brought about by COVID will have knock-on benefits to overall health and well-being of the population. Besides the obvious benefits of fighting off this and other infectious diseases, the increased spending by countries and investment in disease control by big pharmaceutical companies is thought to refocus on preventable diseases in a manner that will, long-term, benefit longevity.

Supposedly there has been some concern that the lockdown and shelter-in-place requirements are wrecking havoc on eating habits in developed nations and causing a concomitant weight gain issue. You can’t prove that by me since I figure I have lost 12-15 pounds during the lockdown for some reason. It seems that the weight gain concern is being similarly assumed away by the professionals.

I think this news about longevity is more important to all of us than it is to just the actuaries, the life insurance companies and the pension companies. It tells us that in this time of great disruption and increasing pessimism, there is always a silver lining and often a very unexpected one at that. It is very hard in these difficult times for us natural optimists to not seem naive. The combination of the health news, the economic repercussions derived from that and the overlay of a challenging and divisive political situation, not just in the U.S. but all around the world, is very hard to overcome. Our fragile psyches are all the more on edge due to our extreme social distancing over a longer period of time than most of us have ever experienced. And now with the resurgence of the virus in half of the states that have been more optimistic about escaping the worst of it and the prognosis by epidemiologists of a strong second surge in the fall, it is likely that we will only slowly and minimally regain pour ability to socialize in the manner we all learned to socialize. So we should all pay attention to all the good news we can get our hands on, and this is decidedly good news about longevity.

Tonight we have watched two movies on DirectTV that just happened to come on. They were both favorites of ours. The first was Rudy, which is a story of the indomitable spirit of a young working class steel mill kid who wants to play football at Notre Dame. He has almost no chance of achieving that goal, but he perseveres with no loss of optimism (actually, he has a few moments, but overcomes them). In the end, the viewer goes away feeling uplifted and feeling that anything is possible. The second movie was Under the Tuscan Sun with Diane Lane playing a divorced woman who seeks a new life in a small town in Tuscany by buying an old villa in desperate need of renovation. She goes through the process looking for her new love and new life and comes up short. At her worst moment, her Italian friend reminds her that she has gotten everything she wanted, just not in the form that she had expected. This realization seems to free her to the possibilities and it is at that moment that she gets everything she dreamed.

It is interesting that these movies found their way to me on the same day that I saw this FT article. I have been very worried about the global economic environment in a post-COVID world. Given my concerns about the global pension crisis, that concern has also focused on the impact of the crisis on pensions. I have been hesitant to suggest that a reduction in longevity would be good for pensions because pensions are about people and its hard to suggest that what is bad for people is good for pensions and therefore good for people. The biggest immediate impact on pensions is clearly the reduction in asset values that will likely come with large reductions in economic activity. Its hard to prove that out on any day as the stock market alternates between fear and greed on a seemingly daily basis. Then there is the concern that reduced GDP will lead to less savings for retirement, which will just exacerbate the existing shortfall. But the other side of the coin is that lockdown and economic uncertainty is actually tending to increase savings during this time.

This bundle of good news and bad news is not in itself unusual, but the severity of the swings are so much greater that it is unnerving to most of us. What this says to me is that we must all stay calm and carry on with neither excess optimism nor excess pessimism. What will be will be and we must all find our peace with our changing circumstances. We cannot wish COVID away, but we can keep our balance and wish hard for the good things that can come from COVID.