The problem we face is that the mix of people in the third and fourth category potentially depends critically on the ability of the healthcare system to manage their infections and resulting consequences. Economizing on this dimension is the focus of policymakers in minimizing the health costs associated with COVID-19.
There are two ways to achieve this. The first would be to ensure there was sufficient capacity in the healthcare system to handle cases when they are at their most intense. That will be the subject of chapter 3. The second is to reduce the intensity of critical COVID-19 cases at any point in time. In other words, that means taking actions to reduce R0.
Let’s consider ways of reducing R0 in terms of their costs. The least costly ways are good health practices. This includes thorough hand washing and regular cleaning of surfaces. These are the types of things that occur within hospitals that become of high value during a pandemic. There are also a related set of protocols for the operation of healthcare facilities themselves so as to protect healthcare workers. Not surprisingly, these were the first set of measures that were enacted in most countries.
The second set of actions was to limit the spread of the virus across national boundaries. The logic here is that, if the virus has not infected significant numbers of a country’s population (and in the case of COVID-19 that would have to be a very small number), then by limiting travel between countries, the virus might be kept out. Some countries, notably Taiwan, did this very quickly, while most others did it in a somewhat ad hoc way. For instance, the United States closed travel to any foreign nationals coming from China but not their own citizens. In March 2020, Israel took the unusual step, at the time, of requiring any person coming in to self-quarantine for two weeks and using cell phones to track infractions. At the time of writing, it is safe to say that the ability to contain the spread across national boundaries was limited. Obviously, restricting travel would start to impact negatively on certain industries, especially tourism, hotels, and airlines.
The third set of actions came under a catchall term of “social distancing.” Initially, this involved cancelling large gatherings. In Australia this was 500 people initially, while at a similar time Austria banned gatherings of more than five people (which might have given pause to households with four or more children). This, however, led to more extreme actions such as canceling school, college classes, instituting work-from-home practices, and eventually closing restaurants and bars. Finally, in some jurisdictions there were orders to “shelter in place” (including China, Italy, and parts of the United States).
The first two measures—hygiene and travel restrictions—are disruptive, potentially very disruptive. However, they pale in comparison to the costs associated with social distancing. To achieve social distancing in a manner that would prevent the healthcare system from exceeding capacity requires a reduction in economic activity that would plunge any economy into an immediate recession. This is why there is a reduction in economic activity if you choose to hold the line on health. How to handle that is the subject of chapter 4. Nonetheless, however you cut it, the costs are significant, perhaps of the order of 10 to 20 percent of GDP of any country. And this is just the economic cost. You are also asking much of the population to remain at home. Thanks to the Internet, in many places it has never been more comfortable to do this. Nonetheless, it is unknown just how long such social distancing can last.
So herein lies the basic trade-off. We want to reduce R0, as it is very costly to have a high number of sick people at one time. The reason we have to do this is because of the limited healthcare system capacity. If R0 is too high, healthcare capacity becomes quickly overwhelmed and doctors have to engage in triage, which in the context of COVID-19 often means choosing who will live and who will die. This outcome has to be balanced against the significant economic cost associated with spreading infections over time. To be effective, social distancing has to go the distance. But with every week or month of low economic activity, the costs rise.
If that weren’t a tough enough trade-off, it is actually worse than that. Whether or not people can develop immunity from COVID-19 is still an open scientific question, but let’s assume that it is more likely to be true than not. If you reduce R0 too far, initially, then most of the population does not become infected and that means that once you stop policies such as social distancing, the virus can emerge once more, and we all have to do this again. It is a reasonable assumption that we want to intervene only once.
The reason there is a cost to this is that you are actually more socially useful if you get the virus and recover and thus are no longer a possible carrier. That means that other people and society do not have to fear interactions with you. In other words, achieving “herd immunity” is an investment in the future. It is like a vaccine, but, alas, you have to actually get the virus rather than an injection. For an understandably short time, the British response to the pandemic, reflecting this idea, was to embrace the idea of “taking one for the team.” That said, a week in bed is one thing; dying is another. How you conduct this policy without getting significant people in the latter category is hard to see.
How Will I Know?
Thus, governments face a real quandary: When should social distancing be instituted and how intensive should it be? The problem is that there is uncertainty. When a virus first appears, we know soon after what its R0 is likely to be. But we don’t know immediately. In a situation like COVID-19 where many infected people are asymptomatic, that information can be even harder to get.
We also know that time can be of the essence. For COVID-19, wait a day to act and you might have 40 percent more cases 21 days later than if you acted immediately.15 As time goes on, that 40 percent becomes a very large number. The more limited your information, the harder it is to act and achieve results. So, for a country where the outbreak commences, choosing when to socially distance is a very difficult choice. Moreover, given that today’s travel possibilities can lead to transmission out of a country very quickly, placing the onus of that decision on the country of origin may not be enough. In the case of COVID-19, it was more than a month before China started to impose travel restrictions.16 In retrospect, the price to be paid by the world was very high. However, what we were asking China to do was to pay a price themselves. These types of decisions are rarely pursued optimally. Moreover, for countries that could observe outbreaks elsewhere and failed to act quickly, even in terms of their own self-interest, excuses could run out.
The point of this is to demonstrate just how hard it is to pull the trigger on measures to reduce R0 when an outbreak has just begun. There is uncertainty, and, moreover, the costs of actions are felt disproportionately. However, the notion that delaying a day or two will have much in the way of real benefits is a false comfort. If you choose to shut down your economy on Wednesday rather than Tuesday, a day’s work and economic activity is lost. But that is peanuts relative to the costs associated with a shutdown at all. The takeaway, therefore, is that if you know you are going to shut down the country eventually, there are huge returns to doing it quickly.
One reason to delay is to gather more information. If you will learn by Wednesday that you could safely keep schools open, you might do well to continue to keep them open on Tuesday. What is more, it may be that shutting down early causes you to miss that critical information altogether. Thus, while “the drift” told us that if we do not hold the line on health, we may take away options we could use, it is nonetheless true that we can learn about different ways of containing the virus based on the actions we take.17