Is it rational to be optimistic in a world with ongoing crises?

Despite recent crises, such as the pandemic and the war in Ukraine, there are empirical reasons to be optimistic about the future.

Looking at long-lasting trends in modern societies – the rise in life expectancy and economic prosperity – the odds are high that a lot of these trends will persist. For example, despite the fallout from the Covid-19 pandemic, life expectancy and economic prosperity are recovering and are on track to resume their long-term positive trend.

The data going back to the middle of the 16th century reveals how precarious the situation was a few hundred years ago. The main reasons for setbacks in life expectancy over the past 120 years have been wars and epidemics.

With the start of the era of industrialisation and its medical breakthroughs, life expectancy took off sustainably and approached 80 years at the end of the 20th century. With time, the setbacks in life expectancy get smaller but are still linked to epidemics. The toll of the First World War was amplified in 1918 by the Spanish flu, which cost more lives overall than the four previous years of fighting. Thereafter, the setbacks in life expectancy grew smaller but were still linked to epidemics, mainly the flu epidemics in the 1950s and 1960s, as well as the Aids epidemic in the 1980s. Yet as opposed to previous centuries, diseases were only brief interruptions amidst a stunning rise in life expectancy overall.

Evidence also shows that more income has been generated over the past 200 years than ever before. For instance, in the UK statistics, there was impressive economic improvement in the middle of the 19th century. This is often referred to as the era when industrialisation really took off. Before that, economic prosperity had fluctuated due to the cyclicality of agricultural harvests, and it was sometimes exacerbated by higher taxes due to wars. Economic prosperity took about 400 years to grow from the low levels of economic output per person in the early 14th century to the higher levels of the early 18th century. Thereafter, it grew by a factor of 18 in the subsequent 300 years until today.

In more concrete terms, economic prosperity grew from $2,000 per capita to over $36,000 in 300 years. In terms of wealth growth, it may once again sound unspectacular. However, there has notably been a continuous growth of more than 1 per cent year after year over the past three centuries, which is what the success of an advanced economy is all about.

Now that we have outlined the long-standing trends in longevity and wealth growth, let's examine whether these trends have been stopped or reversed by recent crises.

Let us first take a look at longevity. We outlined above the patterns in modern history that point to infections as one of the main reasons for a fall in life expectancy. The same can be said of the Covid-19 pandemic, which, according to the statistics, has shortened life expectancy as well. Perhaps the drop in life expectancy due to Covid-19 has been more severe than during any epidemic that came after the flu epidemics of the 1960s and 1970s.

With regard to the wealth effects, the picture is slightly more nuanced. The latest available data that is comparable to the historical timelines was compiled before the pandemic. But we should be able to approximately gauge the effects by taking the latest output numbers (such as gross domestic product) and dividing them by the number of people in the economy (which tends not to change that much in modern society). So, in wealth terms, there are some discrepancies between countries.

On the one hand, China, the US, Switzerland and some Asian economies surpassed their pre-crisis output numbers about 12 to 18 months after the start of the pandemic. This means their per capita output has increased as well, given only moderate population growth. In contrast to those countries that have managed to move towards pre-crisis output levels, there are stagnant economies, such as Japan, the UK, and Italy, where output levels have not yet reached pre-crisis levels.

Putting it into historical context, it seems that shocks, such as the pandemic and the war in Ukraine, tend to have, by far, less long-term negative consequences on a global scale than one might expect them to have.

In fact, from what we can see today, it seems that modern economies have overcome most of the pandemic-related burdens by now.

Memories of the pandemic may still be a burden to many, and people may still be traumatised by their experiences during that time. Yet overall, the odds are good that some of the improvements that humankind has experienced over the past 200 years will continue to make life better – or at least less burdensome as compared to previous generations – in the years ahead.

Despite the crises in the world today, there are good reasons to remain optimistic – or even better, a rational optimist.