If the United Kingdom had adopted South Korean-style controls in response to the coronavirus pandemic, it would have saved about 65,000 lives through October 2020 and averted its worst economic decline in more than three centuries, according to a new study that modeled the countries’ coronavirus policies.
The authors argued that their paper, which is forthcoming in the February 2021 issue of the Journal of Public Economics, demonstrates that there is not a tradeoff between gross domestic product and public health. Rather, the two are inextricably linked.
“Everybody was shaping the whole discussion as health versus economy,” said co-author Yongseok Shin, a Washington University economist and a research fellow at the Federal Reserve Bank of St. Louis. “We thought that was a very myopic and very misleading statement.”
In order to compare the coronavirus responses of the governments in South Korea and the U.K., Shin and co-authors Tim Lee of Queen Mary University of London and Sangmin Aum of Myongji University in South Korea created a model that accounted for factors such as testing programs, lockdown enforcement and the ability of residents to work from home, either because they voluntarily chose to do so due to fears about infection or because they were forced to by their employers or by government authorities.
The so-called “fear factor,” which refers to individuals’ tendency to restrict their activities whether or not authorities force them to, means that introducing invasive restrictions to cut off infections may actually impede economic growth less than looser restrictions that let the virus circulate for longer.
“The fear factor — I think at the time it was very novel,” said Lee, who developed the concept alongside Shin and Aum back in April 2020. “I think a lot of people were ignoring it because they wanted to have a tradeoff between GDP and public health.”
In South Korea, government authorities digitally tracked quarantine compliance using data from cellphones, credit cards and closed-circuit television cameras. They also issued large fines for noncompliance, incentivizing citizens to comply. The nation has had less than 1,400 COVID-19 deaths so far, and sustained substantially less economic damage than the U.K.
By contrast, the U.K. has recently passed 100,000 coronavirus deaths — among the highest in the world on a per capita basis. The European nation has also had several different iterations of lockdowns that have battered its economy, and it is reportedly considering closing its borders. However, enforcement of quarantine rules in the U.K. was far less strict than in South Korea, according to the researchers.
If the U.K. had implemented similar controls to South Korea, the nation’s GDP would have contracted by 0.5% rather than by 11% in 2020 — the worst decline in more than three centuries. The U.K. would have also had fewer than 600 deaths by October 2020, in comparison to the more than 65,000 deaths the country actually sustained over the same period of time, the researchers found.
Lee said he became interested in examining South Korea’s response in April 2020 because the nation had dramatically low coronavirus infections and relatively robust economic performance.
“Their economy was doing OK, and they didn’t have very high infection rates either,” he said.
The researchers chose to compare South Korea to the U.K. rather than, say, the United States because the U.S.’s coronavirus response has varied significantly by state.
“It’s not like there’s one policy for the U.S.,” said Shin.
South Korea’s rapid and successful response to the coronavirus was partially due to past outbreaks in Asia such as Middle East respiratory syndrome, known as MERS, which the researchers said made governments more wary of disease and residents more willing to sacrifice privacy for safety.
“I don’t think Western democracies would accept that,” said Lee of governments tracking citizens using credit card data.
Prior to the coronavirus pandemic, Lee and Shin were working on research about economic inequality and how changes in the job market impact workers.
“When COVID struck and started to get more serious, we decided to see what COVID is doing through the lens of different occupations and different industries,” said Lee. “What kinds of jobs might disappear?”
The pandemic has hurt service workers the most, Lee and Shin said, as people avoid bars, restaurants and retail stores. As vaccines are distributed and the world economy recovers, the researchers are interested in examining changes to the job market.
“If you have your groceries delivered for a year, by now, you’re like, ‘Why should I go back to normal?’” said Shin.
The researchers are also interested in examining whether the benefits of the economic recovery are distributed across workers of different ethnic backgrounds. So far, they said the recovery has been relatively steady among ethnic groups when controlling for occupations and industries.
“Will that continue? We don’t know,” said Lee. “Toward the end of the year, we’ll have a better feeling about if this is going to change the trends or if this is going to be a recession blip.”
The paper, titled “Inequality of fear and self-quarantine: Is there a trade-off between GDP and public health?” is forthcoming in the February issue of the Journal of Public Economics. Its authors are Sangmin Aum of Myongji University in South Korea, Tim Lee of Queen Mary University of London and Yongseok Shin of Washington University and the Federal Reserve Bank of St. Louis. Aum is lead author.