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Following the announcement of the reorganization of the National Task Force, Marius Brülhart, professor of economics at HEC Lausanne, gives an initial overview of his contribution as Chair of the Expert Group Economics. In this interview, he also presents other pandemic-related research projects in which he is currently involved.
5 min read
Set up in March 2020 to provide pandemic related advice to the Swiss government and composed of independent experts from the Swiss scientific world and from various disciplines, the Swiss National COVID Science Task Force has been running at full capacity for the past 12 months. Due to the current epidemiological evolution, the Task Force will be reorganized in June and its activities reduced.
This is an opportunity for Marius Brülhart, professor of economics at HEC Lausanne, to talk about his work with the Task Force. [Read also the article published in February 2021 “Prof. Marius Brülhart appointed chair of the Swiss COVID Science Task Force’s Economics expert group”. ]
What did the work of Expert Group Economics involve?
Periodically there are and were decisions to make on the coronavirus response – whether to relax, tighten or maintain measures. Should restaurants be able to open indoors or not, for example. We were asked to put numbers on the potential effects of these measures. We did cost-benefit analyses, working closely with the epidemiologal modellers, whose models might show for example that keeping restaurants closed for another month would save a certain number of lives and avoid a certain number of hospitalizations. What would be the money value of the health benefits?
Can you give some examples of Task Force related COVID work?
Initially the main issues that we worked on concerned how much the government should do to absorb the losses of income for workers and small businesses. There was a big discussion about the non-labor costs of closed or indirectly affected businesses. A restaurant may get a large chunk of its workers’ wages paid by the government but what about all the other nonwage fixed costs, such as the rent, that you have to pay if you are a business owner? There was some reticence from the government to compensate these losses.
In the paper written by a group of Lausanne economists under the banner of E4S early in the pandemic, there was already a central point about the need to compensate such nonwage costs. In the Task Force and beyond, throughout spring and summer, academic economists were pretty much unanimous in calling for such compensation payments to be made.
In early autumn, the government decided not to continue a loan scheme established in spring 2020, but to concentrate on a scheme compensating what they termed hardship cases – e.g. otherwise viable restaurants and hotels on the brink of going under. This was initially underfunded relative to the scale of the problem. So we reminded in the autumn that it had to be strengthened if we really wanted to avoid bankruptcies and unnecessary economic hardship. We conducted surveys among small businesses to get some sort of early indicators of where the stress points were. That helped as we were able to show that a significant proportion of small businesses impacted by government measures were really in danger of going under if the authorities didn’t offer them a financial compensation perspective.
Eventually, in December and January the government earmarked some CHF10 billion for such compensation payments. The cantons have now set up schemes to disburse those funds, and bankruptcies have not increased so far. It took political decision-makers some time to come round to this necessity, but in the end they recognized the importance of not having a wave of business failures in the middle of the pandemic. So that was one area that we worked on a lot and our voice was probably influential.
You have also looked at the economic implications of vaccination?
There was a major discussion around the concept of the health–economy trade-off. Unless the pandemic is exploding, and nobody dares to go out anyway, shutting businesses and other lockdown measures hurt the GDP. Alternatively, leaving things open benefits wealth, but you increase the risk of infection and the pandemic accelerating.
Vaccination does away with the health-economic activity trade-off because vaccinating quickly and widely is good for both public health and for the economy. We tried to put numbers on that blessing – a simple cost-benefit analysis of having rapid vaccination.
The headline number was that every day you can accelerate the vaccination program towards complete vaccination is worth about CHF 25 million in economic gain and another CHF 25 million in terms of health gain in terms of lives saved and hospitalizations avoided. So, about CHF 50 million in total per day.
The government used these calculations to help their decision making on issues such as how much to invest in setting up vaccination centers and trying to accelerate the vaccination roll-out. That was one piece of work they particularly appreciated and that seems to have reinforced their sense of urgency.
It seems that your work with the Task Force has made a real positive difference to people’s lives in Switzerland during this pandemic?
I certainly hope so, though one shouldn’t overestimate our influence. Ours was one voice among many. I try to take on board the strong belief at HEC Lausanne that, as a business school, while we want to do cutting-edge research, it is also important for us to have a positive influence on society. The Task Force was a once-in-a-lifetime opportunity to contribute to that aim.
I think one area where we made a difference, for example, was in not relaxing measures prematurely in January and February this year. There was a huge discussion and massive pressure from business lobbies to open quickly. But it was at the same time that the B117 mutation was taking over which is more infectious.
We did cost-benefit calculations weighing the health benefits against the economic costs from not relaxing the measures yet. It was fairly clear that, while some business were hurt, it was beneficial overall to continue to keep things closed for another couple of weeks to forestall a third wave. We submitted those calculations to the government, and I think that was an important factor in the decision not to rush into large openings while still only a small fraction of the population was vaccinated.
There was also the work on small businesses last summer with my HEC colleague and former Task Force member Rafael Lalive, assisted by a doctoral student, Jeremias Klaeui, and in collaboration with a colleague at ETH Zurich. We conducted a survey of small business owners asking them about their concerns and the problems that they faced. How much turnover were they losing? Why were they losing it? How well were they financially resourced in order to get through the crisis? How much longer would they be able to survive given the restrictions that were in place? Trying to gauge the resilience of the small business sector, it became clear that the financial support these businesses were getting would become insufficient and that more would need to be done.
A slowdown and reorganization of the Task Force’s activities was announced in the press at the end of May. Could the Task Force disappear soon? And what are the major issues it will still have to deal with?
Well first I ought to say that one of the main goals of the Task Force has to be to make its existence redundant, by accelerating the defeat of COVID-19. So, the hope is that we might not have to remain in existence for too much longer because thanks to vaccination we can see light at the end of the COVID tunnel now.
At the same time the experts say COVID will not just go away. It will probably remain a concern, more mutations may occur and the protection that is afforded to us now may wane over time, so we will need booster vaccinations. Economically there is an issue as to how we, very rapidly, secure the supply of these vaccines if boosters are needed. How can we ramp up production if necessary? Should the state invest in production capacity for vaccines in the future? This is one issue that poses some economically relevant questions in the near to mid-term.
Another issue for economists is how to deal with the public debt that has been accumulated because of COVID. This is not necessarily for the Task Force, but as an economist I can see that it is one of the after-effects of the crisis that will raise some interesting questions.
What COVID related research projects have you been involved worth outside the Task Force?
One project that comes to mind is a project that I have worked on with Rafael Lalive, my colleague at HEC Lausanne, and now also with some colleagues in Germany, where we are just about to submit a paper.
Early on in the pandemic it became clear that there was a bit of a statistical blind spot with regard to the social and psychological implications of the pandemic. The health and economic aspects were fairly well covered by the epidemiologists, biologists and economists. But there was very little data on a third dimension, the mental health aspect – the psychological state of the population. A lot of concerns were being voiced, at the beginning of the lockdown last spring. How badly were people suffering? Were suicides increasing? Was domestic violence increasing? People opposed to lockdown measures were predicting that stringent measures would lead to an increase in alcoholism and suicides, for example. Conversely, supporters of lockdown measures tended to point to the pandemic itself as the main source of psychological suffering. But the lack of data left the field wide open for people to make whatever claims fitted with their preconceived notions.
We came up with the idea to use data from telephone helpline services that exist in many countries. Calls to helplines could be seen as an indicator of social problems that figure neither in economic statistics nor in the health data related to COVID. We have now been able to get such data covering 19 countries. Basically we found that helpline calls increased by about a third in the early stages of the pandemic. But the main drivers of the increase were worries directly linked to the pandemic, mainly people calling because they were afraid of being infected, or because they were increasingly lonely because of lockdowns, for example. Calls relating to substance abuse, domestic violence or people being suicidal accounted for a smaller share of calls compared to before COVID.
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