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In this paper, we explore how public health shocks alter preferences for public goods by analyzing how the influenza pandemic of 1918-1919 affected the provision of healthcare services. Using newly digitized U.S. city-level data on public expenditures and hospital construction, and combining them with existing data on pandemic mortality rates, we find that cities with higher levels of mortality during the Great Influenza subsequently expanded access to hospital care by more than less affected locations. This effect persisted to 1960, and was driven by growth in non-governmental facilities, suggesting that health shocks shift demand for income-elastic goods such as healthcare. Moreover, the magnitude of the effect differed according to city characteristics. Notably, cities with above-average Black populations built fewer hospitals. We do not find evidence that government-run hospitals or other types of city-level spending related to healthcare, such as sanitation, responded to pandemic intensity.
Rui Esteves is Professor in the International Economics and International History departments of the Geneva Graduate Institute. He specializes in monetary and financial history, straddling the fields of international finance, institutional economics and public finance. His research provides perspective on the globalization of finance, financial crises, sovereign debt, financial market architecture, exchange rate regimes, as well as rent-seeking and corruption in public office.