3 years of the Covid pandemic

Reflections on the NZ experience

The Great 2020s Covid-19 pandemic? Or how about the 2019-23 Global Pandemic? Or (and let’s hope not) the First Coronavirus Pandemic? History will decide what to call it. It will also decide the dates on which it started and finished. Until then, we can choose for ourselves.

For me, the pandemic started 3 years ago today. On 24 January 2020 I read Pandemics and the economy by New Zealand economist and prolific blogger Michael Reddell. He posted:

Who knows quite what will happen with the current coronavirus.  But experts in such matters seem pretty confident (resigned?) that one day there will be [a] virus that really takes hold and causes significant infection, disruption, and probably loss of life across a wide range of countries …

The prime focus in much discussion around pandemics is (understandably) on the potential loss of life, but in a modern economy a serious pandemic could have major economic consequences, less because of the loss of life itself … than because of the disruption, the fear, and the voluntary or semi-compulsory social distancing that would be put in place to try to minimise the risk of the virus spreading or of particular individuals contracting it.

I’d heard about an unusual flu in Wuhan, China, before reading Michael’s post. But mentally I’d put it in the same category as SARS, MERS, etc. — tragic for those involved, but pretty much irrelevant at the global scale. Michael’s post was the first hint, for me, that this event could conceivably be a big one. So a big shout-out to Michael for prescience, and also for his early identification of the (now obvious) fact that a global health crisis would inevitably be accompanied by a global economic crisis.

Jackson Peaks, Fiordland National Park, NZ. Dave Heatley

On 28 February, just one month after Michael’s post, NZ had its first case of Wuhan Flu, now officially designated “COVID-19”. One month after that, on 25 March, NZ went into “lockdown” — a new term for all of us, at least as applied to a country.

It was not until two-and-a-half years later (in September 2022), that the regulatory framework supporting lockdowns was dismantled, and most remaining behavioural and movement restrictions were lifted. Covid persists, as can be seen in these graphs, but it is now treated (from a policy perspective) as just one of many viral diseases.

NZ’s experience of Covid to date. Source: ourworldindata.org

Covid will keep researchers busy for decades

Covid will keep researchers, including economists, busy for decades. Even those working on non-Covid research projects will face tricky data management issues — just what to do with those weird datapoints from the early 2020s?

But in the shorter term, I think that the 3-year mark, and the return of something like 2019 “normality” to most of our lives, is a great point to reflect on the pandemic.

In this post I’d like to offer some reflections on the pandemic, and what I think we — as humans, New Zealanders, and as economists, have learned.¹ Though perhaps that's too high a bar, given the degree to which opinions about Covid are personal, political and strongly held. So, rather, these thoughts are more what I think we should have learnt.

Please feel free to submit your own reflections to Asymmetric Information. You could draft a post (email the editor), or write a comment on this post.

Also note that the NZAE published a Covid-specific volume of New Zealand Economic Papers in 2022 — COVID-19: Economic Implications for New Zealand and the Pacific.

Vaccine tech development was very impressive

It remains extraordinary that the world could “discover” a new virus and have an effective vaccine in mass production within a year. As at 17 January 2023:

• 69.2% of the world population has received at least one dose of a COVID-19 vaccine.

• 13.21 billion doses have been administered globally, and 1.94 million are now administered each day.

• 25.9% of people in low-income countries have received at least one dose.²

In the public policy sphere, a significant contribution to this extraordinary feat was Operation Warp Speed. Vaccines were an under-developed aspect health technology, largely due to a tricky combination of market and government failures.³ Operation Warp Speed used government pre-commitments to overcome these failures, with impressive results.

The best strategy is always obvious in retrospect

Hindsight is 20/20. Knowing what we know now, the best playbook to emerge from Covid with a low death toll would seem to be:

• live on a island;

• secure the borders before the virus becomes well established;

• place just enough restrictions on the populace to control disease spread (i.e. manage the reproduction rate down to below 1);

• quickly get new outbreaks under control (e.g. from failures of border control);

• use the available time to build up capacity in the health system, especially ICU capacity for treating respiratory disease;

• keep all the above in place until an effective vaccine is available, then quickly vaccinate the (willing) population; and

• once the vaccination campaign reaches diminishing returns, re-open the borders and deal with the resulting “wave” of infections as best as possible.

NZ followed parts of the above playbook. Generally speaking, it performed better at the items towards the top of the list, and less well on those further down.

Inter-country comparisons are tricky, and not necessarily fair. Not all countries were lucky enough to be islands (either geographic islands like NZ, Iceland or Taiwan, or functional islands like South Korea). And many had significant Covid incursions before it was clear that border closures might be necessary or worthwhile (e.g. the UK, Italy). Such countries had fewer options, and their best-available playbook differs. It remains an open question, for example, whether the much-maligned “Swedish experiment" ended up better or worse than that of surrounding countries.

Uncertainty started very high, then reduced over time

Uncertainty was very high in the early phases of the pandemic. For me this has four implications:

• There was significant value in actions that keep future options open.⁴ (Of course, there was also uncertainty about which actions met that criterion.)

• It is best to be generous to those who made decisions under high degrees of uncertainty. Hindsight bias makes it very difficult to forget what we now know, but they didn’t at the time.

• There is no single source of wisdom. Over the medium-to-long term, plurality of analysis & advice from those in a wide range of professional and academic disciplines, refined by contest and cooperation, finds the best solutions to complex problems.

• Early decisions, approaches and messages should never be set in stone. Even if they appear to have worked at the time, they can almost certainly be improved upon as more information comes to light.

Authorities in many countries (not just NZ) appeared to prioritise messaging consistency and simplicity in over plurality of debate. They were dealing with a real fear — that the public might start to distrust them and thus not comply with public health instructions and restrictions on behaviour. But this prioritisation risked groupthink and policy stasis.

Isolation has its own costs

In apparent defiance of Michael Reddell’s observation that a pandemic would be both a health and an economic crisis, NZ’s response was driven by epidemiologists. NZ economists were largely absent from the decision-making process, and left to making observations from the sidelines. Those observations were not always welcomed.

The epidemiologists asserted that their preferred policies would lead to lowest Covid-related health costs, and this would automatically lead to the lowest economic costs. Those assertions were not backed up with argument or credible analysis.

Some of the costs of Covid policies were predictable at the time, others are just becoming clear now. Cost-benefit analysis was, and remains, the best tool for disciplined decision making that most fully accounts for costs alongside benefits. It’s early and comprehensive rejection by NZ decision makers during Covid is difficult to excuse.

The final global pandemic?

Next time will be different. This pandemic — the worst since the "Spanish Flu” a hundred years earlier — occurred at an interesting juncture in human history. Cheap, widespread PCR testing, a technology unavailable during previous pandemics, made it very easy to determine who was, and who wasn’t, actually infected with Covid.

But, while technology had developed to the point we could easily detect Covid, we were limited to disease-control measures that had advanced little from those used in Milan, Italy in the 1370s. And this situation was only partially remediated by Covid vaccines and Covid-specific treatments (e.g. Paxlovid).

My prediction? Next time a previously unknown human pathogen emerges, biotechnology will have advanced to the point that vaccine development and production will occur in weeks. It will be little more than a blip, cut off well before it spreads far enough to be considered a pandemic.

By Dave Heatley

Isolation, NZ style. Cameron Glacier, Arrowsmith Range. Dave Heatley

1. As an aside, I was blogging about the pandemic during 2020, while at the NZ Productivity Commission. The Pandemic Economics blog recently disappeared from the Commission’s website, but you can still view it via the Internet Archive’s Wayback Machine. You can view my posts here, and make your own judgement on my 2020 self’s prescience (or lack of it).

2. Edouard Mathieu, Hannah Ritchie, Lucas Rodés-Guirao, Cameron Appel, Charlie Giattino, Joe Hasell, Bobbie Macdonald, Saloni Dattani, Diana Beltekian, Esteban Ortiz-Ospina, & Max Roser (2020). Coronavirus Pandemic (COVID-19). Published online at OurWorldInData.org.

3. These failures manifested as private companies avoiding investment in vaccine development. They did this because they were unsure of (1) whether the disease would arise or not; and (2) whether, in the event of an actual pandemic, governments would (a) confiscate the intellectual and commercial property private companies had developed; and/or (b) use regulation or monopsony power to force prices below those necessary to recover the cost of vaccine development, production and stockpiling, plus the cost of unsuccessful development.

4. A topic explored in Benjamin Davies & Arthur Grimes (2022). COVID-19, lockdown and two-sided uncertainty, New Zealand Economic Papers, 56:1, 49-54, DOI: 10.1080/00779954.2020.1806340