One possibility is to give priority to admitting those COVID sufferers to hospital who have the largest increase in the expected value of their lives if they recover from COVID as a result of being hospitalized. This can be formally analysed as follows: Let. A challenging moral and valuation issue is how to determine V i. Also, in many circumstances, the change in the probability of survival as a result of hospitalization can be uncertain. In some circumstances, hospitalization may actually increase the probability of death.
It is, therefore, best avoided in these cases. Several different possibilities exist for determining V i. One criterion for prioritizing health frequently used by health professionals is based on the quality of life years QALYS available to patients. This criterion is discussed in Tisdell , Ch. In order to apply this criterion to prioritizing COVID sufferers for hospitalization or for treatment of the disease , it is necessary to estimate the quality of life years each sufferer is likely to have left if the individual recovers from the disease.
This approach gives a reduced priority for hospital admissions to the elderly and to those with chronic conditions which are likely to reduce their life span. In addition, many belonging to these groups have a poor quality of life. Furthermore, they may have a smaller increase in the probability of recovery if admitted to hospital. This approach could discriminate against the elderly and those with chronic health conditions.
Chronic health problems are more prevalent in some ethnic minority communities also and so this criterion could also discriminate against these groups. It is necessary however, to bear in mind that categorizing individuals into broad groups for triage purposes has its limitations.
This is because not all individuals in these groups have an equal chance of recovery if they are provided with hospital care and the remaining QALYS of individuals of the same age can be difficult to determine and can vary considerably. Furthermore, it should be kept in mind that COVID victims belonging to some groups such as the young have a high chance of recovery without hospitalization or treatment and on average, hospitalization may do little to increase their probability of recovery.
Consequently, even though their V i -values are high, the change in their expected V i -values could be much lower than for those patients such as the elderly or those with underlying health problems who contract COVID This lowers their priority for hospitalization given expression Eq. Therefore, it is probably rational for doctors to monitor individual patients and to be more ready to recommend admission to hospital of those patients who are likely to have the greatest possibility of benefiting from hospitalization.
Possibly, elderly patients and those with underlying health problems should be admitted early when they contract this disease whereas others could be monitored with admission only being recommended when it becomes evident that they will succumb to this disease in the absence of hospitalization. If, however, hospital capacity is likely to be exceeded by this policy, further discrimination would be needed.
Another approach to prioritizing hospital admissions of those infected by COVID is to make these admissions dependent on their willingness and ability to pay.
Normally, willingness to pay is limited by the ability to do so. For example Giannadaki et al. Therefore, this approach discriminates against the poor, and other socially disadvantaged groups. Many socially disadvantaged groups are poor or comparatively poor, for example, many of those who are elderly and those belonging to particular ethnic groups.
They are also more likely than the remainder of the population to have chronic health problems. So there is a high probability that this economic criterion as well as the use of QALYS will disadvantage the elderly and some ethnic communities, or more generally the poorer members of society in gaining access to medicine and hospital services.
In addition, consideration should be given to the extent to which patients with health conditions other than COVID requiring hospital treatment should be prioritized for admission to hospital. When hospital capacity is exceeded, a trade-off problem exists between admitting COVID patients and other patients. In principle, the type of formula set out in Eq. Decisions also need to be made about the economics of expanding hospital capacity and the period for which this extra capacity is likely to be needed.
When a quick response is needed, temporary facilities for hospitalization are likely to be economic, such as the tents which were erected in Central Park in New York, the use of train carriages, as was done for holding COVID patients in India and France, and the conversion of convention centres as hospitals as was done in the UK.
Once COVID infections fall, then these facilities are easily dismantled or returned to their original use. As mentioned above, the shape of the curves shown in Fig. In the absence of mitigation measures, it is believed that the number of active cases of COVID rises initially at an exponential rate as a function of time but eventually reaches a maximum once a large proportion of the population has been infected.
It can then be expected to decline at a slower rate than in the upsurge of cases Anderson et al. Consequently, the curve of infections exhibits kurtosis. In the absence of mitigation, the initial exponential growth rate in the incidence of COVID is very high. The doubling time of infections is very short. If containment or mitigation is not started early after an initial outbreak, it is very hard to contain the virus because small numbers of infected persons rapidly infect a very large number of individuals, and tracing active cases becomes difficult.
This makes the disease very hard to manage socially. It is also the case, that early relaxation of mitigation measures can allow a rapid resurgence of the disease Anderson et al.
Control measures need to be kept in place to ensure that the basic reproduction rate of infections is less than unity if the number of infections is to be lowered. An infection rate of unity corresponds to an approximate stationary state.
If less than an existing stationary state is desired because the number of existing infections is deemed to be too high , a hard lockdown may be needed to reduce the numbers infected, that is the adoption of a suppression strategy. The economic and psychiatric costs of this are likely to be high. Let us now consider aspects of the economic cost of the pandemic in relation to the severity of policy measures to control it.
Most global pandemics substantially lower global economic production and increase unemployment. In the case of COVID, government measures to stem the spread of this disease and mortality from it significantly reduced worldwide employment and economic activity. Given that unemployment rises and aggregate economic activity falls when social restrictions to reduce the occurrence of COVID are more stringent, governments have been faced with a difficult trade-off problem; namely how much reduction in employment and economic activity to accept 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 economic analysis. However, solving such a problem is difficult because of the uncertainty about many of the dimensions of a new pandemic Atkeson, , and the problem of devising a widely or universally acceptable social welfare function.
Again, our ability to solve the problem from a purely economic point of view, is hampered by the inability to measure in a universally acceptable way the significant costs and benefits of adopting alternative measures to control pandemics. A significant bounded rationality problem exists. This limits the scope for applying social cost—benefit analysis to the problem. Despite this, exploring the potential trade-offs and opportunity costs involved in such measures remains important as a basis for rational decision-making.
Social choice is also complicated by the fact that collective responses to new pandemics, such as COVID, are significantly influenced by prevailing political systems and by the diverse objectives of rulers.
In the case of COVID, this along with the uncertainty about the epidemiology of the virus and its impacts on public health and economic activity has resulted in noticeable disparities in the methods adopted by different governments to manage the occurrence of COVID infections and in the stringency of their precautionary social restrictions. Furthermore, especially in democratic countries, controls seem to be subject to political see-saw of public opinion.
When death rates are high, government action to adopt measures to reduce them become commonplace but once death rates fall, then there are usually strong demands to ease social restrictions. This can set off a new wave of infections with the process repeating itself once again. This process has been evident in several European countries, e.
Spain and France. The above discussion can be advanced conceptually by means of some theoretical modelling. It assumes that a vaccine is unavailable. Stringent controls result in a low level of economic activity due to the closure of many businesses and restrictions on the mobility of individuals.
Weak controls are also likely to depress production due to absences from work in those cases where production requires employees to be at a workplace. The model is a type of snapshot or static model. A theoretical illustration of social choice and the trade-off between a higher number of COVID cases less stringent social restrictions and the level of economic activity.
However a similar but not identical relationship has been independently assumed by a leading group of MIT economists Acemoglu et al. Their frontier relationship represents the trade-off between the loss in output GDP and the number of COVID deaths which in turn is related to the severity of social controls designed to limit the occurrence of the disease.
I assume, however, that it is not only deaths from COVID that reduce output but also the incidence of the disease. To be more specific, when m represents mortality from the disease and X indicates the number of COVID cases, it is supposed that. This relationship will vary from country to country and by social groups depending on the health care available and the healthiness of the different groups.
The relationship shown in Fig. Taking into account only the above-mentioned variables, it is rational to suppose that there is a social preference for fewer COVID cases and for a higher level of economic activity. The optimal choice will depend on the nature of the preference function adopted. Given the Bergson-type of preference function Bergson, represented in Fig. This function may alter during the course of the pandemic as political pressures change.
The governments of different states have displayed differences in their relevant preference functions and these have altered as the epidemic has progressed. In extreme cases, their indifference curves are almost horizontal and social restrictions are adjusted solely to maximize the level of predicted economic activity with no regard being given to the number of COVID cases and deaths. At the opposite end of the spectrum, their indifference curves are almost vertical. Furthermore, uncertainty exists about the nature of the type of trade-off function shown in Fig.
For example, it is not certain when this function reaches its maximum. It might reach its maximum when controls are very lax, but this appears to be unlikely.
However, governments having a high preference for increasing the level of economic activity and a belief that the trade-off curve in Fig. Acemoglu et al. They investigate the optimal targeted lockdown of social groups. Their modelling focuses on three age groups. These are those aged 20—49 years, 50—64 years and 65 and over which they describe respectively as young, middle-aged and elderly.
Why these particular years were chosen for the groupings is unclear. It can be doubted if those aged in the 50—64 group should be appropriately described as middle-aged.
They estimate that the corresponding fatality rates for each of these groups is 0. These figures are based on Ferguson et al. However, they are influenced by the availability of adequate hospital facilities, especially ICU facilities, for COVID victims requiring hospitalization.
The availability and standard of facilities in South Korea is relatively high. A higher death rate is likely in countries with poorer hospital facilities or with shortages of hospital places. The modelling of Acemoglu et al. This is a limitation of their technical analysis.
They state p. However, the poor are more likely to have co-morbidities that make them more vulnerable to COVID than those that are well-off. Economically, the poor may not be able to survive a lockdown unless provided with financial support by the state. Morbidity tends to increase with poverty and chronic illness is also often a source of poverty. The possibility of group lockdown policies and the ethical implications of them need to be explicitly considered.
Lockdowns of social groups as proposed by Acemoglu et al. In the absence of government financial support , most of the poor have little option but to work if they can even if they have COVID or are awaiting the results of testing for it. They are also more likely than the well-off to be employed in occupations where they are unable to work from home, for example, in higher income countries, in cleaning or as taxi and bus drivers.
In fact, there is a case for government income support to be given for all those infected by COVID or those awaiting test results if they do not have sick leave entitlements.
Otherwise they may fail to remain in isolation or quarantine and spread the virus. Locking down everyone in particular social groups seems to be a very blunt way of reducing COVID deaths and the incidence of the disease. For example, not everyone of 65 and over is in poor health and highly vulnerable to the disease. Some also hold important positions in societies.
Several of the political leaders of nations are well over 65, for example, Mr. It would be unreasonable to expect these leaders to go into social isolation. Furthermore, many in the vulnerable social groups identified by Acemoglu et al. As well, they can avoid crowded places. However, special care is needed to avoid infections in aged care facilities given the vulnerability of residents and the closeness of contact, for example, with staff.
The same is true in hospitals. Moreover, it is not clear how the elderly living in extended families can be easily isolated. As for isolating those who have underlying health conditions which make them vulnerable to COVID, it is not clear how they are to be identified. Possibilities include isolating those in areas known to have a high incidence of co-morbidity, or to do likewise with those belonging to particular racial groups in which morbidity is high.
Such policies are likely to be viewed as blunt and too discriminating. Although the contribution by Acemoglu et al. It does not take account of alternative policies such as those mentioned above and fails to take account of many of the difficulties that arise when particular social groups are to be isolated. Some of these such as the costs of imposing isolation and the possibility of breaches of it are mentioned by Fenichel Furthermore, lockdowns are a major restriction on liberty.
Whether or not that is justified needs consideration. The theoretical modelling illustrated by Fig. If liberty is valued, then a choice to the right of point B and even beyond C such as that corresponding to point D might be made.
In the latter case, the government is prepared to forgo some economic activity and allow a higher number of COVID infections to occur than otherwise in order for individuals to have more freedom. The extent to which individuals should be able to decide the degree of risk they want to take in contracting the virus, and.
The ability of an individual to spread the occurrence of the virus, that is the negative external effects arising from the individual being permitted liberty. Although some restrictions on liberty may be defensible on social grounds, others could be difficult to defend. The latter include restrictions in cases where the behaviour of individuals poses little or no risk to others, but which heighten the risk of those granted greater liberty being infected with the virus. However, even in these cases, it might be argued that taking this extra risk could pose a burden to society if the individuals involved become infected with the virus.
If they need medical care or hospitalization as a result of being infected, this would put extra strain on the medical and hospital system. If the state subsidizes or provides free medical care or hospital services, this will add to the costs that have to be met by taxpayers. In addition, if the contacts of an infected person are quarantined for a time, this adds to external costs as does the cost of tracing their contacts. Furthermore, an extra economic burden can be placed on family members if one of its members is infected by COVID For example, they may be required to quarantine and they may have to meet the extra medical care and other costs incurred by the infected family member.
Every society faces the difficult task of determining how much personal liberty should be afforded to its citizens. Any society which allowed complete personal liberty would be lawless and lacking in order. This lack of law and order would have negative economic repercussions due to individuals being allowed to act without limitation in ways which have negative effects on others.
The negative effects of lack of law and order on the creation of economic wealth were already stressed by Adam Smith in Smith, A problem is how to determine what is the appropriate amount of personal liberty to allow. For example, some restrictions on the freedom of individuals involve little cost and loss of freedom, such as the wearing of masks in crowded places but the social benefits may be considerable.
These would be defensible. On the other hand, some types of blanket lockdowns involve a considerable restriction on personal freedom and the social gains might be small. These would, therefore be harder to defend from a libertarian perspective. The costs to individuals of restrictions on their liberty appear to vary with the social structure, nature of economies and the stages of their economic development. Higher income countries are in a better position to provide social safety nets to their citizens to support them if they are restricted in their ability to work as a result of COVID There is little scope for cushioning these effects in low-income countries such as India.
In these countries, stringent social measures to control COVID impose a heavy burden on the poor who need to work to earn enough income for their survival.
The choice of government policies to control COVID are significantly influenced by political pressures, the nature of which has altered with the duration of the pandemic.
Initially, many governments were slow to impose social restrictions to limit the occurrence of COVID As infections and the death rate rose, political pressure to impose social restrictions to limit the occurrence of the disease mounted. However, political pressure subsequently intensified to ease these restrictions in order to reduce the economic cost of the virus. As a result, many governments responded by altering their Bergson-type preference functions to take account of these political pressures.
In addition, with better knowledge about COVID and of the means to treat it, greater hospital capacity and the occurrence of fewer cases, shifts in the trade-off function ABCDE favoured less stringent control measures in some countries. As is well known, the extent of economic recovery from COVID depends upon medical treatments to prevent COVID occurring, for example, the discovery and mass production of an effective vaccine, or finding means to reduce the severity of infections.
However, it is unlikely that this disease will be eliminated, and like influenza, it may change its form mutate with the passage of time. The speed and nature of recovery from the pandemic will be hampered both by supply-side and demand-side factors.
On the supply-side, many manufacturers and other businesses depend on international supply chains for sustaining their economic activity. This raises a synchronization problem. Nations that are ready to and want to resume production of commodities 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 continuing closures or because of their reduced output as a consequence of COVID International deliveries may also be limited by disruption in transport services, e.
In the recent past, China has exhibited a high degree of dependence on imported components used in manufacturing its goods Tisdell, It was, therefore, quite exposed to supply-side disruptions. Many nations have international demand and supply-side constraints on their level of economic activity and its recovery given the presence of COVID Australian farmers have, for example, faced delays in the supply of spare parts for agricultural machinery and in the supply of agrochemicals, such as weedicides due to transport delays or supply shortages.
The disruption of supply chains, however, appears to have been more severe in the earlier stages of the pandemic than later. Just-in-time international supply chains have had to be replaced by others or by increases in domestic production.
On the demand-side, aggregate consumer expenditure is likely to recover slowly due to lower disposable incomes and because consumers do not purchase commodities that increase their risk of contracting COVID or purchase lots of these commodities.
Even when government restrictions on international travel and even national travel are lifted, many individuals will not be inclined to undertake this travel especially by means that heighten their chances of contracting COVID, such as forms of collective transport, e. Similarly, many individuals will continue to avoid activities for some time that involve mass gatherings.
Demand is only likely to recover slowly for the commodities produced by those industries that sell discretionary commodities and for which their purchasers face increased risks of contracting COVID Consequently, the economic recovery of some industries will be constrained by both of these factors, that is, by reduced discretionary buying and by risk-avoidance in purchasing commodities. Of course, those industries that recover slowly after the end of the period of socio-economic hibernation designed to control COVID will also retard the recovery of those industries with which they have a high degree of economic interdependence.
Inter-industry analysis e. A dangerous international situation now exists. Many nations may begin to adopt protectionist policies to counteract a reduction in their level of economic activity and employment brought about by the COVID pandemic.
This could delay global economic recovery. It will disadvantage countries such as Australia and Germany which depend heavily on exports to generate their level of economic activity and employment.
The effects of COVID on mortality raise difficult moral and ethical questions about how human life should be valued as well as significant economic dilemmas. Some of these matters have already been mentioned but some additional ones are worth noting, albeit briefly. The modelling by Acemoglu et al. This results in the lives of the elderly and those of low-income earners the poor being ascribed a low value compared to the lives of others. This approach would also give a low value to the lives of women as a group who on average earn less market-related income than do men.
It also ignores the value of the unpaid work of women within the household and their usual roles as the main carers in a family Tisdell, Ch. Also how should one value the lives of those who do unpaid or under paid charitable work?
It was also found that the QALYS and the willingness to pay approaches tend to assign a lower value of life to the elderly, and possibly to those who are poor and have serious morbidity problems.
However, the lives of those individuals may have value for others. Should that be ignored? It is known that individuals are often prepared to pay to save others from death, particularly children. While sometimes this may be because of a material benefit to the donor, it may also be motivated purely or partly by sympathy or altruism. Furthermore, in the case of the elderly, should their earlier contribution to the welfare of others be ignored in considering the value of their lives?
We must be careful not to smother our economic analysis in technicalities that cause us to lose sight of ethical issues of this kind. I am not suggesting that technical analysis is not of value, but its ethical implications and limitations should be made clear and debated. The occurrence and consequences of epidemics and pandemics depend on the nature and stages of economic development.
The economic and social structure of contemporary societies facilitates the transmission of those diseases which depend on human contact or presence, especially those that involve air-borne germs or which persist on surfaces that are commonly used. The latter characteristics have facilitated the rapid spread of COVID and left little time to respond to it. The challenge at the end of the case is how to roll out replicate the intervention into other divisions of a large multinational.
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