Pavement sign advising social distancing

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Simplistic restrictions – or their easing – can put both public health and the economy at risk  

Debates about how policymakers should respond to the coronavirus (COVID-19) pandemic can all too easily become couched in the simplistic terms of human life versus the economy. But this is a false dichotomy. To pitch one against the other is to ignore the interplay between innumerable different factors – not least that fears about health can have serious economic repercussions.  

Policymakers must take a measured, targeted approach to the implementation of both public health and economic measures; blanket lockdown measures, or their abrupt/premature lifting, put both at risk. 

Use the unprecedented amount of data 

The pandemic and attendant recession are taking place against a backdrop of unprecedented quantities of data concerning our lives – the first such major events of their kind to do so.  

Consumer spending, financial transactions and geolocation data, in combination with epidemiological data, would give us deep insight into behaviour at an extremely localised level. We could better understand how people move and interact with each other, getting a firmer grasp of how the virus spreads through communities, in support of the track and trace system.

Such data would give policymakers a sound basis on which to implement any local restrictions, which could allow us to pre-empt as well as react to outbreaks. We could also better understand the types of establishment and even times at which the risk of infection might be greater. 

Tight targeting and clear justification of further lockdowns would help to ensure public acceptance and goodwill. Both have been severely tested over the course of this year, so this is important. 

Target interventions to redress economic imbalances 

Data on spending and financial transactions would also give us a real-time snapshot of the economic situation and allow us to make targeted interventions accordingly. It could show us which sectors, types of worker, or individual businesses are the most adversely affected, and how different industries interact with each other in this context.  

Such data would also give us a deeper understanding of how governmental measures and announcements, or news in the media, affect consumer confidence. We could look at industries, localities, and even specific products.  

We could then make certain non-pharmaceutical interventions to mitigate the worst economic effects. Potential measures could include a flexible furlough scheme, as well as reviews of statutory sick pay and unemployment support. Such measures would go some way to counterbalancing the uneven effects of the pandemic, which have disproportionately hit lower income individuals and families.  

Such measures would also offer advantages in terms of public health. Adequate support would empower those in precarious situations to stay off work when they are sick, or to not seek employment with higher risk of exposure when without work.  

Find a way to work with large financial institutions   

Everything mentioned in the last section turns on gaining access to up-to-date information from financial institutions. But we face obstacles to gaining access to this information in the UK, where larger financial institutions tend to be less willing to work with policymakers or academics, citing concerns related to GDPR.  

While data privacy is certainly a legitimate concern, across Europe larger financial institutions are a lot more willing to cooperate in a GDPR-compliant manner, seeing the public good. Indeed, many have their own internal economists ready to collaborate on large-scale projects.  

One solution that has been employed in an academic context is to leverage fintech startups as an intermediary. Many of these work with larger financial organisations who will supply them with certain data which could be used to map key trends. You are less likely to be met by a wall of lawyers at such organisations, which also stand to benefit from the publicity. The UK is a fintech hub, so this would be a credible solution.    

Open public data  

In Spain, as well as several other European nations, mobile service providers have worked with policymakers to help track people’s movements (again, in a GDPR-compliant fashion). Such geolocation data is crucial in mapping the spread of a pandemic. The ICO approved this in the UK in March, but it is unclear whether it has been implemented in the same fashion. 

Indeed, we do seem to be faced with a certain lack of openness in comparison with other European nations. While there are indications the UK government is working with some private organisations to collect data, it isn’t done very openly. This means we don’t have a clear picture of from where the data is coming, nor what it tells us. This lack of transparency could be argued to have certain democratic implications.  

The coronavirus pandemic will eventually fade into memory, but by exploring the potential of data-led, targeted interventions now, we can set a precedent as to how to most effectively mitigate the effects of any such event in the future: both in terms of protecting our health, and minimising the economic harm to those who can least afford to bear it. 

A greater of degree of openness might allow us to better achieve this. 

This article draws on findings from “Economic Aspects of the COVID-19 Crisis in the UK” by the DELVE Initiative. 

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Stephen Hansen

About Stephen Hansen

Associate Professor of Economics
Most of Stephen's research focuses on organisational economics and monetary policy. Increasingly, he draws on unstructured data sources and machine learning methods to address questions in these areas. Before joining Imperial, Stephen held associate professorships at the University of Oxford, and Pompeu Fabra University in Barcelona.

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