Edgar Morgenroth: Covid-19 decisions don't count true costs

Covid restriction choices may work in the short-term, but could have long-lasting costs

Moving to Level-5 restrictions throughout the country constitutes a failure of the approach used to control the pandemic.

It comes with significant economic and wider societal costs. In particular, it compounds the impact on businesses that had already suffered more during the first ‘lockdown’.

Worse than that, it also compounds the wider societal and personal impacts, such as in relation to domestic violence, mental health, delayed medical treatments, and more generally life satisfaction.

The costs are there to see. Calls to a domestic violence helpline were reported to have increased by 43% between March and June compared to the same period in 2019. Hospital waiting lists increased.

The unemployment rate has increased from 4.9% in February to 14.7% once those on the Pandemic Unemployment Payment (PUP) are included. Gross value added in the arts, entertainment, and other services sectors was down to a third of the 2019 level by the second quarter of 2020.

While there are good reasons for restrictions that reduce the Covid infection rate, given the costs imposed on society, it is important to ask if there are less costly ways to deal with this pandemic.

Data from the European Centre for Disease Control (ECDC) shows that the deaths of those infected with Covid, as a share of the population, are about three times higher in Ireland than in Austria, Denmark, and Germany.

This is all the more troubling given the fact that Ireland has had a more restrictive regime than those three countries, and suggests that there is significant scope for improvement. 

The Government response to Covid-19 should be assessed using the same approach one would use with all public policy.

While there was no time to do extensive analysis back in March, at this point, six months on, a different standard should be applied. The aim should be to find the most effective and efficient measures and to implement them at the right time.

Effectiveness relates to whether measures actually contribute to the control of the virus, while efficiency relates to the costs associated with that measure. 

So how do Level 5 restrictions measure up?

While the broad thrust is correctly to reduce the number of contacts that people have, which undoubtedly will reduce the infection rate, the set of measures has not been supported by any evidence of effectiveness or efficiency. There are significant inconsistencies.

For example, it is hard to justify why you cannot stand in your garden with someone not from your household, while it is okay to walk with them past your house. Does the virus spread more in gardens? 

What is the difference between a walk in the park and playing a round of golf in terms of the spread of the virus? 

Likewise, it is hard to explain the 5 kilometre limit. 

Evidence from Germany suggests that internal travel is responsible for very few infections, and the sense of being contained in an area is likely to have a big mental health impact. 

Similarly, there are lots of inconsistencies in relation to retail and personal services that have not been backed up by evidence. How come grocery stores can sell books but apparently selling books in a book shop is too dangerous?

Would it not have been simpler to ask people not to have any indoor visits except in a small number of exceptional circumstances, as is part of Level 5, and to keep a two-metre distance between any outdoor contacts?

Likewise for retail, would it not have been simpler - and just as effective - to apply rules around how businesses operate.

Edgar Morgenroth

While the timing of the recommendation for Level 5 received a lot of attention in relation to the return of the Chief Medical Officer to work, the issue of appropriate timing of measures was not discussed.

Yet, we now appear to see some effects of the Level 3 restrictions that were imposed on October 6.

Getting the set of restrictions right is far from an academic exercise. Illogical and inconsistent restrictions are a lot less likely to be adhered to. Importantly, getting the response right is also going to reduce the overall cost on society.

In this respect, one is often reminded of the bank guarantee during the financial crisis, which has left the Irish people with much bigger debt than was necessary. Again, choices are being made that have huge long-run costs, which appear to be secondary in the decision-making.

• Edgar Morgenroth is Professor of Economics at Dublin City University Business School.