RWI Position Paper #77, May 8, 2020
[Also available in German, Italian, French, Portuguese, Spanish]
Summary
Crisis management in this second phase of the pandemic must simultaneously address health, social, and economic considerations. Crisis teams on the federal and state levels should consequently set up and regularly update a compact „Dashboard.” This „RWI position“ identifies concrete indicators for the three areas of health, economy and social affairs. The indicators must be recorded with high frequency and accuracy and must be readily available in a timely manner. Experts from various disciplines can then use the indicators for advising politicians on how to responsibly weigh options.
1. Introduction: Crisis management in the second phase of the pandemic
Ongoing reporting on the development of the corona crisis and the resulting discussion of political options for action has so far mainly concentrated on a few epidemiological indicators, risking an overly reductionist approach. On the one hand, the incidence of infection is too complex to be condensed into a single indicator. On the other hand, the crisis and the political measures taken to avert the danger have a considerable impact on almost all facets of life.
Therefore, holistic reporting is necessary; it is by no means sufficient to focus solely on the development of the infection. Not even a reduction in the number of new infections would be unreservedly positive if great human suffering were to result from the containment measures in other areas of life. Nothing less than entire subsistences and future life concepts are at stake.
The aim of current crisis management must be to simultaneously ensure careful health protection and the cautious opening of social and economic life. Although the experience with the general lockdown in Germany in recent weeks has shown that it is an effective protection of health. Yet it has also illustrated that it creates immense collateral damage arising from a paralysis in social and economic life that cannot be sustained over a long period of time.
How much opening is possible without endangering public health is extremely uncertain, because there is no past experience to fall back on: The well-justified „hibernation“ of the economy imposed by the government in the first phase of the pandemic, coupled with the current question of how to introduce a new „responsible normality“ that entails social distancing, hygiene rules, and the continued prohibition of major events, is uncharted territory in many respects.
This inevitable uncertainty gives rise to requirements for managing a gradual opening, one that is continuously monitored and, if necessary, corrected: the process of opening must be designed from the outset as a learning process that collects evidence as quickly as possible - for example on the actual distance behaviour in schoolyards - and uses this evidence to adjust the state requirements.
To ensure the broad social acceptance of this difficult path of gradually opening up society, it is essential that the measures taken in this context are comprehensible by the public. Policymakers would therefore be well-advised to continuously monitor the development of the corona crisis with the help of a wider range of complementary and timely available indicators that are recorded on a „dashboard“. This tool could be used to manage the current second phase of the pandemic, which requires not only breaking infection dynamics, but also comprehensive consideration of trade-offs involving health, the economy, and social life. Policymakers could use the dashboard to regularly update their deliberations on future policy actions and justify them to the public.
Yet the collection of data for key indicators would merely be the starting point. Experts from various disciplines should then use the indicators for advising politicians on how to responsibly weigh options. By this discourse political decisionmakers will be provided with assessments on the possible advantages and disadvantages of current options for action. In this process it’s important to identify which empirical findings support a causal interpretation and thus can guide political action - and which cannot.
2. Establishment of a corona dashboard
The basis for the establishment of a comprehensive statistical reporting system is the insight that the multifaceted nature of life can only be understood through a rich compilation of key figures from different areas. The concrete design of such a set of indicators can draw inspiration from the efforts of recent years to establish holistic welfare reporting „beyond GDP“, which takes into account economic, social and ecological aspects of sustainability.²
Reporting on human welfare should aim to be holistic and, not least, to move the discourse closer to politicians and citizens. Reporting should in no way be summarized in a single key figure, not even within the individual dimensions, but should be based on the definition of the most balanced and substantiated set of indicators. The indicators must be considered as a bundle, because a further compression by a weighting scheme would implicitly invoke value judgements and should therefore be avoided at all costs.³
The first question is what this set of indicators should achieve.
Read the full Position Paper at Leibniz Institute for Economic Research [English]
Paper also available in German, French, Spanish, Italian, Portuguese