The Cost of Being Unprepared or the Benefit of the Precautionary Principle? Comparing Cost-Benefit COVID-19 Policies and Outcomes in Scandinavia

Brooks Kaiser, Henning P. Joergensen (), Lucas Porto Echave-Sustaeta, Maarten Punt, Simon Soelvsten (), Chris Horbel () and Eva Roth ()
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Henning P. Joergensen: Department of Sociology, Environmental and Business Economics, University of Southern Denmark
Lucas Porto Echave-Sustaeta: Department of Sociology, Environmental and Business Economics, University of Southern Denmark
Simon Soelvsten: Department of Sociology, Environmental and Business Economics, University of Southern Denmark
Chris Horbel: Norwegian School of Sport Sciences and Department of Sociology, Environmental and Business Economics, University of Southern Denmark
Eva Roth: Department of Sociology, Environmental and Business Economics, University of Southern Denmark

No 4/20, Working Papers from University of Southern Denmark, Department of Sociology, Environmental and Business Economics

Abstract: The Scandinavian countries of Denmark, Iceland, Norway and Sweden have approached the first months of the 2020 novel coronavirus pandemic with a range of economic and health policies that have resulted in disparate outcomes. Though similar in behavioral norms and institutions, Denmark, Iceland and Norway chose a precautionary approach that formally shut down schools and businesses to protect human health, while Sweden took a Business-As-Usual (BAU) approach aimed at maintaining normal economic and social activities. Iceland and Denmark have further invested in testing, tracking and containing the disease. Economic costs of the pandemic and government fiscal and monetary interventions to reduce their impacts have been dramatic and similar across countries, while Sweden has had the most severe loss of life. Using a panel from the four countries since the beginning of the pandemic, we calculate lives saved from stricter interventions by estimating cases and deaths as functions of behavior and government interventions with a bioeconomic model, then estimating the additional lives lost if these interventions did not occur. Comparison of the countries reveals three important lessons for both policies aimed at the pandemic and broader goals with high uncertainty levels: (1) the precautionary approach can be lowest cost, while still expensive; (2) detection and monitoring (e.g. testing and tracking) are integral to a successful precautionary approach; and (3) expecting tradeoffs between economic activity and health creates a false dichotomy – they are complements not substitutes. Pandemic policy should focus on minimizing expected costs and damages rather than attempting to exchange health and safety for economic well-being.

Keywords: COVID-19 Pandemic; precautionary approach; Scandinavian policy responses to COVID-19 pandemic; Denmark; Iceland; Norway; Sweden; impacts of COVID-19 testing (search for similar items in EconPapers)
Pages: 38 pages
Date: 2020-08
New Economics Papers: this item is included in nep-hea
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