June 30, 2020
By Mac McComas, 21CC Senior Program Manager and Riya Rana, 21CC Intern and JHU Economics, Sociology, & International Studies ’20
The COVID-19 pandemic has claimed countless lives around the world and caused an unprecedented disruption to the global economy. In response to the outbreak, researchers and policymakers have begun to analyze the health and economic consequences of the pandemic, using scientific data to document transmission rates and prevention strategies. However, this fast-growing body of research has not yet modeled the difference between government-mandated and self-imposed isolation prevention strategies. Recognizing this knowledge gap and the urgency of the crisis, Alessandro Rebucci, Associate Professor of Economics at Johns Hopkins Carey Business School and 21CC steering committee member, and co-authors examine the impact of such containment policies on both the pandemic and economic markets by comparing prevention strategy implementation across countries in a recently published SSRN paper.
The researchers use daily data from the Johns Hopkins University hub on Chinese provinces to chart a comprehensive history of the pandemic, accounting for errors in measurement such as under-reporting of infected and recovered cases. By considering both government-mandated social distancing policies and voluntary self-isolation, the researchers are able to analyze different types of mitigation strategies and their varying impacts on transmission rates and outcomes. The researchers further evaluate the short-term economic impact of the crisis by studying the different impacts that various social distancing policies had on employment. Lastly, the study provides critical estimates of area-specific recovery and exposure rates in China and a selected number of other countries, including Spain and Italy, in order to provide global analysis on effective policy responses.
The results of the study indicate that government-mandated policies can be very effective at flattening the epidemic curve, but costly in terms of employment loss. However, research also indicates that these employment losses may be partially reduced if mandated social distancing policies are targeted towards individuals most likely to spread the infection. In contrast, voluntary self-isolation is driven by individuals’ perceived risk of becoming infected, which must be very high to be acted upon. Because of this, self-isolation occurs too late to be effective. The need for very strict mandatory policies is further bolstered by comparing data from Chinese provinces to European countries. The results indicate that an inadequate and uncoordinated policy response in other countries resulted in exposure rates that were almost five times higher in Italy and Spain than those documented at the epicenter of the epidemic in China. As more reliable data becomes available, further research is needed to extend this empirical analysis to the United States as well as other countries worldwide. Further analysis must also deepen our understanding of other social distancing policy responses such as contact tracing and intensive testing and relate these factors to employment outcomes.
This study provides critical insight into the differential impacts of mandated and voluntary social distancing policies at a time of global contagion and widespread disruption. Effective strategies are critical to reducing transmission, improving economic outcomes, and saving lives. The results of this study indicate a dire need for policies that prioritize mandatory social distancing and offset economic losses through effective targeting. This research paves the way for further analysis that improves our understanding of prevention strategies and bolsters our global pandemic response.