Our World in Data recently released an article titled "Which Countries have Protected Both Health and the Economy in the Pandemic?" Some people have claimed that during the COVID‑19 pandemic countries face a trade-off between protecting people’s health and protecting the economy. Joe Hasell, a Research Project Manager at the Oxford Martin School, considers the validity of the assumption in this article.
He does so by comparing countries' COVID-19 death rate with their latest GDP data. He finds there is no sign of a health-economy trade-off. Countries that have managed to protect their population’s health in the pandemic have generally also protected their economy.
He found that countries which suffered the most severe economic downturns were generally among the countries with the highest COVID-19 death rate. Conversely, countries where the economic impact has been modest managed to keep their death rate low. The United States is an outlier to these findings. It's rate of COVID-19 deaths per capita is between five to 10 times higher than countries with similar declines in GDP.
The dataset reviewed in the article included data for all countries which COVID-19 death rates and GDP. I believed a more relevant evaluation would how the United States performed compared to other countries with “advanced economies.”
The World Economic Outlook (“WEO”), a report presented by the International Monetary Fund, classifies countries into two groups – advanced economies, and emerging and developing economies. The criteria the WEO to classify the world by economic development “are (1) per capita income level, (2) export diversification, … and (3) degree of integration into the global financial system.”[1] Currently, the WEO classifies 40 countries as having advanced economies, including the United States, Australia, the United Kingdom, and South Korea.[2]
The chart above compares the COVID-19 death rate for countries with advanced economies to their economic performance in Q2 2020. The dataset considered in the article included 23 advanced economies.[3] Belgium, Sweden, and the United States are outliers. These countries have significantly higher number of COVID-19 deaths per capita as compared to countries with similar economic decline.
The trend line is the relationship between economic decline and COVID-19 deaths for 20 advanced economies, thus excluding the three outliers. The trendline’s correlation coefficient is .656. As a result, the inverse relationship between economic decline and deaths per capita from COVID-19 is high. The trend line’s standard error of estimate is 131.56.
The model estimates that the United States with a Q2 2020 GDP decline of 9.5% should have experienced about 116 deaths per million population as compared to an actual death rate of 552 per million population. The difference between the expected number of deaths and actual number of deaths in the United States is statistically significant. Based on data as of September 5, 2020, if the United States had implemented programs to contain the virus similar to countries like Japan, South Korea, Israel, and Germany, the United States would have experienced almost 152,000 fewer deaths from COVID-19 without any additional harm to the economy.[4]
[2]
A full list can be found in the table “Advanced Economies” in the World Economic Outlook – Frequently Asked Questions referenced in footnote 1 above.
[3]
Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Israel, Italy, Japan, Latvia, Lithuania, Norway, Portugal, Singapore, Slovakia, South Korea, Spain, Sweden, Taiwan,United Kingdom, and the United States.
[4]
Worldometers.info reports that as of 12:00 am GMT, September 6, 2020, the United States had 192,818 deaths from COVID-19. https://www.worldometers.info/coronavirus/country/us/,
retrieved September 6, 2020.
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