Saving the economy or saving lives: An unnecessary choice

With the decision made in the very early morning of 18 August to revert to the General Community Quarantine (GCQ) in Metro Manila, we are again seeing social media light up with polarized views on whether we should prioritize the health of citizens or the health of the economy.  Presented as a binary choice and wrapped in understandable emotion, it represents a conundrum of considerable significance to policy makers.  It may take more than the wisdom of Solomon to balance the legitimate concerns of exhausted health workers and those who are seeing their livelihoods vanish before their eyes.  But need it be so?  Can more rigorous analysis of at least the key numbers underlining an issue of such importance help make an informed decision?

As the first application of UNDP’s new Pintig (heartbeat in Filipino) data Lab, we worked with the Ateneo de Manila University Department of Economics’ FASSSTER socioeconomic modelling working group to take a closer look at the critical figures that could help resolve what we consider to be a false dichotomy between the economy and saving lives. We adopted a multivariate approach, combining health data with a socioeconomic analysis of estimated costs in terms of lives, livelihoods, and revenues. This data was then used to project the health and socioeconomic impacts on Metro Manila under different quarantine scenarios over the period of 4 to 31 August 2020. 

To account for the socioeconomic impact of different lockdown scenarios over this period, we broadly examined the health costs and economic losses associated with the different quarantine levels. Specifically, we zeroed-in on treatment costs for the infected and sick, and the additional personnel and equipment costs.  We also estimated the short- and long-term economic losses.  We derived our figures on COVID-19 cases and health system requirements from the FASSSTER Susceptible-Exposed- Infected-Recovered model for COVID-19. However, compared to reported cases for ‘deaths’, we assumed that projected ‘critical cases’ beyond maximum available ICU facilities for COVID- 19 patients among Metro Manila hospitals are likely to be added to the count of the deceased. Secondly, we estimated the share of displaced workers in Metro Manila for each community quarantine scenario from the Philippine Statistics Authority’s (PSA) Labor Force Surveys, and thereafter used these labor force displacement rates to estimate the lost economic output of different lockdown levels.

The findings suggest that the adoption of a Modified Enhanced Community Quarantine (MECQ) has only a temporary effect on containing the spread of the virus and will most certainly continue to devastate the economy.  A return to GCQ however can be more effective IF combined with significantly strengthened testing, tracing, isolation and treatment.   Compliance of the general public to health guidance is also critical.

While an MECQ applied over a month and based on current health facility capacity will have reduced COVID cases by around 28,722 persons by the end of August, it would have a scarring effect on the economy, with an additional 461,000 workers projected to be displaced. These labor losses, in turn, will cost the NCR economy approximately 10.7 billion pesos per day.  With an economy already contracting by 16.6 percent year-on year in the second quarter, these are numbers we cannot afford.  However, we equally do not need to put more lives at risk.

Currently, Metro Manila’s healthcare capacity in terms of testing, tracing, and isolation is operating at what FASSSTER have noted is 19% capacity. However, if this is increased to 33%, the number of days it takes to identify and isolate positive individuals improves from 5 days to 3 days; and if there was at least a 50% compliance with wearing face masks and face shields, this would make GCQ the least costly lockdown type.

From a health perspective, we see an immediate reduction in the transmission rate.  If we were to fast forward to 31 October 2020, we would see that a GCQ with a healthcare capacity at 33% and strong compliance with social distancing and wearing of facemasks and shields, can contribute to flattening the curve.  Metro Manila would then see only an increase in 661 cases between August 31 – October 31, as opposed to 51,480 with the capacity remaining at just 19%. From an economic perspective, losses would be reduced form 10.7 billion pesos per day to 9.5 billion pesos per day as at end of August. One could expect this number to reduce further as the virus transmission rate is arrested and the economy is allowed to open up further.

As indicated above, while an MECQ or ECQ can certainly slow down the rate of infection and deaths for the period that they are applied, our projections show that they are imperfect, devastatingly costly, and rather blunt policy instruments for stemming the COVID-19 surge in cases. Major gains in reducing the cost to the economy and health of the citizens could come from effective action related to enhanced testing, contact tracing, and isolation, coupled with compliance of the general public to health guidance. Success also hinges on proactiveness. This means acting quickly and in a very targeted way based on strong data, identifying emerging hotspots, and taking appropriate measures.

The modelling we have undertaken and the option we have suggested can in no way compensate for the immense pain and physical and emotional exhaustion felt by individuals and families as they confront the real tragedies of losing lives and losing jobs.  We know very well that there is a risk of appearing callous in trying to simplify complex problems to models and curves.  But robust data analysis can help us make difficult choices and help us avoid making unnecessary binary decisions about whether to drive the economy into the ground while saving thousands of lives or revive the economy while sacrificing thousands of lives.  There need not be an either-or trade-off; the numbers show that there is a possible middle way.

(The modelling above will be regularly updated by The PINTIG Lab and FASSSTER and provided to the IATF in the form of a policy note on a monthly basis. The findings from the next analysis is due in the last week of September and will be published on the UNDP Philippines website.)