In its latest advisory report ‘Met de kennis van straks’ (‘With the knowledge of later’), the Royal Netherlands Academy of Arts and Sciences (KNAW) maps out what Dutch science and society need to do in order to be well prepared – and thus ready – for future pandemics. However, the report pays scant attention to macro(economic) issues, which doesn’t do justice to this societal-medical problem, writes Peter van Bergeijk.

Introduction

If we have learned anything from the COVID-19 pandemic in the Netherlands, it is that it is almost impossible for economists to make clear what our field is about. In fact, debates on economics all but stopped in my home country (Van Bergeijk 2022) [1]. Important insights from economics therefore did not sufficiently feed into other fields of science and policy.

From an economic point of view, the most important question is how to deal with the scarcity that arises during a pandemic. This requires insight into the effects and effectiveness of measures that have been considered and taken. I want to illustrate this with three topics that also provide concrete recommendations for improvement.

Be transparent about intended measures

A macroeconomic analysis is indispensable both because of the pandemic, which involves a simultaneous loss of a large part of the labour force, and because of measures including business closures and restrictions on gathering and movement. That up-to-date analyses of a flu pandemic were not ready in the Netherlands is an omission of the major policy institutions (CPB Netherlands Bureau of Economic Analysis and the Dutch Central Bank DNB), because the risk was known. On the eve of the COVID-19 outbreak, the ‘Geïntegreerde risicoanalyse Nationale Veiligheid’ (‘Integrated National Security Risk Analysis’ – ANV 2019) for example reported that a flu pandemic in the near future was both likely (5-50%) and a major threat for society with a significant impact on population and the economy at large.

However, the econometricians at CPB and DNB cannot be blamed for not foreseeing the lockdowns that were suddenly conjured out of the medical top hat in 2020. None of the national and international roadmaps anticipated lockdowns (van Bergeijk 2021a). As a result, not only policy analysts, but also scientists could not anticipate that lockdown instruments would be used. A first important conclusion is therefore that realistic roadmaps should be drawn up – and published – as early on as possible so that analyses of concretely considered (combinations of) instruments can be made in advance without the time pressure of an unfolding pandemic.

International comparative macro-research is needed

The KNAW report focuses mainly on improved accessibility of micro data (for example health status and socio-economic characteristics of large groups of individuals). This requires linking medical data files with data on socio-economic characteristics, either by means of long-term panels or through CBS Statistics Netherlands. At face value, this focus on micro and the Netherlands is understandable, but at the same time, one might argue that this focus is too narrow. After all, a pandemic is not a national problem, the micro-macro paradox can lead to bias, and a third relevant problem is whether the vulnerable are (or will be) adequately represented in the data. A very obvious problem with Internet panels, for example, is the under-representation of both the elderly and the disadvantaged and marginally poor, who are both more vulnerable and inherently more difficult to survey.

It is unfortunate that the KNAW focuses so much on the Dutch context. Every national context is unique and findings are therefore strongly determined by the conditions of time and place. ‘Met de kennis van straks’ uses these differences in context to justify an essentially national research strategy. Learning, however, actually requires making to make good use of differences in national contexts. Where regional policy in the Netherlands has proved to be impossible, researchers will have to look beyond national borders for differences in policies, institutions, and behaviour. National navel-gazing can be expected to lead to opportunities and threats being overlooked. It is important to start asking what the optimal design of our society would be from the perspective of pandemic resilience, lest the costs become too high. The second conclusion is therefore that building resilience in an evidence-based way requires extensive investments and structural change, which in turns requires research on the influence of differences between national contexts.

Final research findings do not exist

The economic view of the impact of the COVID-19 pandemic will continue to change significantly in coming years. After all, definitive research findings do not exist. Consider, for example, the estimate for the growth rate of world GDP in the year 2020 provided by the IMF in its World Economic Outlook [2]. Figure 1 shows that successive estimates for 2021 and 2022 became slightly less negative each time. 2020 will never be a good year, of course, but the adjustments made to the historical data are not insignificant. It amounts to 0.3 percentage points, or 10 percent of the first estimate. The adjustments themselves moreover come as no surprise at all (van Bergeijk 2021b).

Figure 1. Adjustments made in four instances by the IMF to the 2020 world production growth estimates provided in its World Economic Outlook.

The medical impact of the pandemic will also take time to become clear. We know the number of people that got COVID-19 and whether they recovered or died due to infection, but we know neither the impact on the long run of the lockdowns on the health status of the population, nor the long-term effects of COVID-19 itself. This uncertainty does not mean that no general policy recommendations can be made. Cost-benefit analyses, for example, have shown that while short lockdowns may make a rational and cost-effective contribution during pandemic outbreaks, the same cannot be said of long-term lockdown policies. This is basically because at its core, a human life can only be saved once, while longer lockdowns continuously increase economic costs. So, whether such an insight is valid for the next pandemic is not the question. However, what is ‘short’ cannot be answered in advance. The third conclusion is that economics can play an important role in helping design macro trade-off frameworks to best fill in and adjust the parameters in the event of a breakout as soon as new insights become available.

Conclusion

Science pretends to know a lot and to be able to contribute much. In this regard, it is probably too big for its boots. Vaccines have been important, but if we can actually put the COVID-19 crisis behind us, it will be mostly thanks to the gift Mother Nature gave us, namely a less severe, more infectious variant that makes COVID-19 better socially manageable. It is human nature to draw some lessons after a pandemic has died out and then to forget them. It is remarkable that all the issues that came up during the previous pandemic, the Mexican Flu pandemic, remained unresolved and came back again during the COVID-19 pandemic. Science could and should play a much more important role here, not so much in research, but in education. It is actually strange that the report does not pay attention to the core task of science. Providing the knowledge about the previous pandemic requires a better place in the curricula of all fields of science. If not, our students, who will probably experience four to five more pandemics in their lifetime, will be not be prepared for the next one.

Footnotes

[1] Dutch readers may want to consult van Bergeijk 2021b.

[2] Another example is the resurgence of research on the economic impact of the Spanish Flu.

References

ANV, 2019, Geïntegreerde risicoanalyse Nationale Veiligheid, ANV Netherlands Network of Safety and Security Analysts http://www.rivm.nl/sites/default/files/2019-10/Geintegreerde%20risicoanalyse%20Nationale%20Veiligheid%202019.pdfhttp://www.rivm.nl/sites/default/files/2019-10/Geintegreerde%20risicoanalyse%20Nationale%20Veiligheid%202019.pdf

Bergeijk, P.A.G. van, 2021a, Pandemic Economics, Edward Elgar 2021.

Bergeijk, P.A.G. van, 2021b, De volgende pandemie: een deltaplan voor overleving, Walburg, 2021.

Bergeijk, P.A.G. van, 2022, The Political Economy of the Next Pandemic, Review of Economic Analysis, 14 (1), 27-49

KNAW, 2022, Met de Kennis van straks: De wetenschap goed voorbereid op pandemieën.

This article was originally published on MeJudice and has been republished with permission of the author and editors.

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