COVID-19: what can we learn from pandemics?

Responsible researcher: Viviane Ribeiro

Paper Title: Economic, social and political issues raised by the COVID-19 pandemic

Authors: Clement A. Tisdell

Intervention Location: Global

Sample Size: Not specified

Big topic: Health

Variable of Main Interest: COVID-19

Type of Intervention : Analysis of the trade-offs of the COVID-19 pandemic

Methodology: Economic Models

The occurrence of pandemics is not new. Several factors facilitate the emergence and spread of highly infectious diseases, such as high population density, as well as high human mobility. Considering the general historical background of previous pandemics, Tisdell (2020) contributes to the evaluation of public policies to control the incidence of COVID-19 by providing a model that can be used to prioritize the admission of patients with COVID-19 to hospital and by specifying a second model to evaluate desirable social choices involving the trade-off between the severity of social restrictions and the level of economic activity.

Assessment Context

The emergence of highly infectious diseases that have become pandemics, such as COVID-19, have created serious health and economic problems due to the various global social and environmental transformations that have occurred as a result of economic development. The economic and social structure of contemporary societies facilitates the transmission of diseases that depend on human contact or presence, especially those that involve airborne germs or that persist on common surfaces. In this context, it is observed that several factors facilitate the emergence and spread of these infectious diseases, such as high population density in urban centers, as well as high human mobility in all geographic dimensions.

Greater economic specialization and a greater division of labor, accompanied by expanding markets and increasing economic globalization, increase the risk of individuals coming into contact with sources that facilitate the occurrence of highly contagious diseases, such as influenza and COVID-19. . The adverse economic consequences of new forms or types of these diseases can be serious, given the high degree of interdependence of economic activity in modern economies. For example, the absence of workers from work due to such infections, or the risks of these infections, may interrupt production in the workplace. Likewise, supply chains can be disrupted by these pandemics and, in addition, they generally have negative effects on aggregate demand for commodities. This is evident from the outbreak of COVID-19, which has resulted in a major global economic depression.

Intervention Details

Given the general historical background of previous pandemics and the economic and social problems associated with managing these pandemics, Tisdell (2020) seeks to provide his own insights into the economic issues raised by COVID-19. In this way, the author highlights the importance of evaluating the COVID-19 pandemic in relation to the historical context, impact and nature of previous pandemics. Initially, the study provides a brief overview of the history and nature of a variety of pandemics and compares them to the COVID-19 pandemic. Subsequently, choice issues involving available hospital capacity and the prioritization of admissions for those with COVID-19 are considered. Next, attention turns to considering social choice and economic trade-offs between the incidence of COVID-19 infections and the level of economic activity. Finally, a critical discussion is held on the desirability of isolating social groups in order to control the incidence of COVID-19 and possibly reduce the economic losses of the pandemic. The important question of the extent to which individuals should have freedom in relation to controlling COVID-19 is investigated and brief notes follow on factors that may impede economic recovery from COVID-19.

Methodology Details

The study carried out by Tisdell (2020) analyzes the types of trade-offs that must be considered and choices that must be made at different stages of the COVID-19 pandemic. This analysis was carried out using some simple economic models. Furthermore, factors that may hinder economic recovery after the period of socioeconomic hibernation (designed to limit the incidence of COVID-19) are identified and discussed. First, a brief historical and comparative overview of selected pandemics is presented, particularly in relation to the COVID-19 pandemic. Second, the study provides a simple original model that can be used to prioritize admission of COVID-19 patients to hospital (taking into account available hospital capacity). Third, a second model is specified to evaluate desired social choices involving the trade-off between the severity of social restrictions (taking into account their impact on the incidence of COVID-19) and the level of economic activity. Bergson-type welfare functions are used in the second model.

Also critically examined is the proposition that isolation of social groups is a desirable method of limiting the incidence of COVID 19. This leads to consideration of the extent to which freedom of personal choice (liberty) should be restricted in response to the COVID-19 pandemic. 19. Afterwards, a brief outline is presented that illustrates the factors that are likely to impede economic recovery from COVID-19. Special attention is paid to the moral and ethical issues raised by policies to control this pandemic.

Results

The results obtained by Tisdell (2020) show that it is still recent to determine how COVID-19 will eventually compare with previous pandemics. However, like the “Spanish” flu, it has become a global pandemic. It was first reported in Wuhan in November 2019 and in March 2020, the World Health Organization (WHO) declared it a pandemic. It didn't take long for individuals in most nations to become infected. Like Severe Acute Respiratory Syndrome (SARS) and the "Spanish" flu, it is transmitted mainly by droplets and sneezes. Although it is less deadly than the “Spanish” flu, it has already resulted in an alarming number of deaths worldwide. Furthermore, it has significantly reduced (and disrupted) economic and social activity. However, its negative effects have been mitigated (to a notable extent) by advances in Information and Communication Technologies (ICT). This allowed many people to work from home, as well as helping to maintain social connectivity.

The study noted that most global pandemics substantially reduce global economic output and increase unemployment. In the case of COVID-19, government measures to contain the spread of this disease and the mortality it generates have significantly reduced employment and economic activity around the world. Given that unemployment rises and aggregate economic activity declines in the presence of more severe social restrictions, governments face a difficult compensation problem; that is, how much reduction in employment and economic activity should be accepted as a result of allowing more liberal opportunities for social interaction. This type of choice involves an opportunity cost and a trade-off problem and, conceptually, can be subjected to an economic analysis. However, resolving this problem is difficult because of uncertainty about many of the dimensions of a new pandemic and the problem of devising a broadly or universally acceptable social welfare function.

The costs of restrictions appear to vary according to the social structure of individuals, the nature of economies, and the stages of their economic development. Developed countries are best placed to provide social safety nets to their citizens and support them if their ability to work is restricted as a result of COVID-19. On the other hand, in underdeveloped countries, strict social measures to control COVID-19 impose a heavy burden on the most economically vulnerable population who need income from work for basic needs.

The choice of government policies to control COVID-19 is significantly influenced by political pressures, the nature of which has changed over the duration of the pandemic. Initially, many governments were slow to impose social restrictions to limit the occurrence of COVID-19. As infections and the death rate increased, so did political pressure to impose social restrictions to limit the occurrence of the disease. However, political pressure subsequently intensified to ease these restrictions in order to reduce the economic cost of the virus. As a result, many governments have responded by altering their Bergson-type preference functions to take these political pressures into account. Furthermore, with better knowledge of COVID-19 and the means to treat it, greater hospital capacity and fewer cases, changes in the ABCDE trade-off function favored less stringent control measures in some countries.

Public Policy Lessons

Contagious diseases capable of becoming pandemics can take a variety of forms, and therefore the appropriate policies to control them are often different. Determining appropriate economic policies to respond to the outbreak and spread of COVID-19 among humans has proven to be extremely challenging because key measures to contain the level of infections and death rates from the disease involve a high economic cost in terms of income levels and economic production. These control measures include isolation of individuals, restrictions on gatherings and travel. They were seen as necessary (especially in the early stages of mass COVID-19 infections) to flatten the upward trend in the infection curve and reduce the rise in deaths, and to allow hospitals to increase their capacity to care for patients who needed care. hospitalization.

The speed and nature of recovery from the pandemic may be hampered by supply- and demand-side factors. On the supply side, many manufacturers and other companies rely on international supply chains to sustain their economic activities. This raises a synchronization issue. Nations that are ready and want to resume commodity production (but rely on international supply chains for their production) may find that their ability to do so is restricted because their international suppliers cannot meet their demands due to ongoing closures or by due to its reduction in production as a result of COVID-19. International deliveries may also be limited by the interruption of transport services, for example air services.

On the demand side, aggregate consumption is likely to recover slowly due to lower disposable income and consumers may prefer not to purchase commodities that increase the risk of contracting COVID-19. Even when government restrictions on international travel are lifted, many individuals may be unwilling to undertake such travel, especially by means that increase their chances of contracting COVID-19. Likewise, many individuals will continue to avoid activities (for some time) that involve mass gatherings.

Industries that recover slowly after the end of the socioeconomic hibernation period designed to control COVID-19 will also slow the recovery of industries with which they have a high degree of economic interdependence. Cross-industry analysis (e.g., input and output analysis) can be used to help evaluate these flow-on effects. Furthermore, a dangerous international situation may arise. Many nations may begin to adopt protectionist policies to counteract the reduction in their level of economic activity and employment caused by the COVID-19 pandemic. This could delay the global economic recovery, harming countries that rely heavily on exports to generate their level of economic activity and employment.

References

Tisdell, C. A. (2020). Economic, social and political issues raised by the COVID-19 pandemic. Economic analysis and policy , 68 , 17-28.