I read an interesting article recently concerning our perception of risk, in relation to what we have experienced historically. Quite simply, if we have never dealt with risk, and risk has never been a major factor in our daily lives, then sudden exposure to it is going to be terrifying.
Consider past pandemics…
The 1918 Spanish flu pandemic infected around a third of the world’s population. The strain was new and novel for most who fell in the 20-40 age bracket, yet the death rate in that demographic was extremely high, making it different from other, usual flu infections. This was at a time when there were no vaccinations or treatments for flu, and no antibiotics to treat secondary infections. Life was also different. A war was underway and soldiers were carrying the virus all over the world, as well as risking their lives simply by the very nature of their job. Living conditions were more cramped and hygiene generally not as good. Essentially, there was a lot to be worried about. The risk of the virus spreading was high, and the ability to treat anyone who fell ill with it was low.
Had Covid-19 struck two years later, in 1920, would it have seemed all that bad? By then, people were used to living with risk, and it’s possible it would have been seen as just another pandemic.
Now consider Covid-19…
Catching this infection is not to be played down by any means, but the risk factors are different. We are not in the midst of a war and while global movement is still a factor, there was a long while where travel was barely happening at all – it’s easier to close borders now than it was 100 years ago. We are living in a world with better awareness of viruses and how they work, better medical treatment and better hygiene. In fact, medically we have probably never been in a stronger position to tackle a pandemic – but as we’ve had it so good, for so long, the psychological factor is a major issue. Put simply, the concept of a pandemic is terrifying, largely because it’s so foreign to us. What was tragic in the past was, until now, inconceivable in the present.
So what does this mean?
Well, it means that we are more aware of risk again. Had Covid-19 struck 100 years ago, there was so much else going on that it would probably have just been given a single page in the history books. In 2020 though, it will be a historically defining event that fundamentally changes how we think about risk.
This article does not constitute financial advice and should not be construed as such.
