Dr Antonella Bancalari: A health economist’s view on government policy during the COVID-19 pandemic 

Dr Antonella Bancalari joined the University of St Andrews’ School of Economics and Finance as a lecturer in January 2021. An expert in Development, Public, and Health economics, Dr Bancalari is also a Research Associate at the Institute for Fiscal Studies (IFS) and the Inter-American Development Bank (IADB). 

In this interview, which took place in March 2021, Dr Bancalari discusses the COVID-19 pandemic with Isaac and Charlotte and offers key insights into the pandemic that has so drastically affected our lives over the last two years. 

The UK is thought to be a leader in global healthcare but has also been one of the countries hardest hit by COVID-19. What are the reasons for this?  

Firstly, the UK government was trying to maintain a balance between saving the economy and saving lives; not an easy trade-off to get right. Perhaps in this struggle, the UK government did not implement as strict policies as many other countries did. In addition, even though relatively strict policies were implemented later in the pandemic, they were not enforced as strictly compared to countries using the military for example. 

Secondly, having a good healthcare system could lead to negative consequences for how people behave in a pandemic by inducing moral hazard problems. Moral hazard is when an individual has a lack of incentive to guard against risk, as they are protected from its full consequence. The NHS, for example, provides every citizen with a good quality of healthcare which is free at the point of use. In a pandemic people react based on their risk perception. Individuals in the UK know that they will have access to a public health system which will protect them when they have COVID-19. This can lead to lower rates of compliance, and in turn lead to more COVID-19 deaths, compared to countries with less developed health systems. 

The third aspect is measurement. The number of reported cases and completed tests vary per country. Thus, while deaths per country are compared, the measurement methods are not. This can cause misleading figures, especially when comparing the UK to less developed economies. 

This is the first major pandemic that governments have faced in recent times; they lack experience of pandemics, and little was known about COVID-19 early on. Therefore, what theoretical ideas can governments utilise in responding to such a crisis, and dealing with problems such as moral hazard?

Moral hazard can be reduced by implementing stronger enforcement. For example, a military presence on the streets increases the risk perception to individuals and it can limit careless behaviour. However, perhaps the UK does not want to go to this extent of enforcement over their population. 

Governments do have other options for discouraging risky behaviour and reducing moral hazard. They can try to incentivize the population to follow government policies through large-scale public health campaigns. However, evidence on the effectiveness of such information campaigns is limited: while some campaigns were largely ineffective, some had a significant positive effect. I am currently working on a research project in India, which involves sending messages from renowned doctors to the Indian population via WhatsApp. Evidence so far suggests this has been highly effective at encouraging compliance. Studies such as this offer opportunities to governments in unprecedented times. Something similar could be tried in the UK, with more personalized messages offering a different angle to a public health campaign. 

Governments can also look at other major public health problems and assess how those have been dealt with. The use of graphic pictures during the public health campaign against smoking was thought to be effective at changing behaviour. Perhaps more aggressive public health messages alongside graphic pictures showing the effects of COVID-19 will shock people into following government guidance.  

You mentioned moral hazard as a possible contributing factor to why the UK has suffered relatively worse during the pandemic. Do you think this highlights a flaw with the NHS?

Careless behaviour and moral hazard problems in the health system is not British specific: it happens all over the world. Some people have complied with lockdowns and policy guidelines while others have ignored them. The NHS provides national healthcare free at the point of use, offering many benefits including equity. Moral hazard is the unavoidable downside of this. The NHS has done a great job in following scientific advice and has been a global leader in vaccine rollout. Therefore, the pandemic also highlighted a number of strengths of the NHS.

How do you think governments can decrease uncertainty during a pandemic among the population?

It is difficult to reduce uncertainty among the population. Communicating government policies more effectively with the population could potentially decrease some uncertainty. While communication improved over time during the pandemic, at the beginning of the pandemic governments themselves were uncertain. The details of different policies that were implemented were not clear. For example, in December 2020 the government announced that within three days people would not be able to move and see their family. The policy was not clear and had unintended consequences such as packed trains with people trying to travel to their families. 

Behavioural economics studies how psychological, cognitive, emotional, and social factors affect decision making, and highlights how humans do not always respond in a rational or optimal way. Now there is a deeper understanding of how populations respond to lockdowns etc., do you foresee a future where behavioural economists, health economists, and policy makers work more closely together when it comes to determining public policy during a pandemic?

It would be great to have a world in which academia and policy makers are working together. While there is a great deal of collaboration within academia, the communication between academics and policy makers is not always efficient. I think the UK does well compared to other countries when it comes to listening to academics and forming expert panels. However, there is still a lot of room for improvement in breeching academic advice and experts with policy implementers. Sometimes politics interferes with the opinions of experts and the advice does not happen – policy practitioners may think that academic experts do not understand the real word and only think about their models that are not feasible in reality. Furthermore, sometimes academics perform small-scale field experiments, and it is important to realize that the findings may not hold if it is executed across an entire country. Government-level policy practitioners face obstacles and political dynamics that academia does not care about. Both sides have a role to play in improving communication and collaboration to enhancing policy.

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The COVID-19 pandemic is often described as unprecedented; however, it is not the first pandemic to ever occur. Will academia and policy makers will be able to utilise and learn from the experience of COVID-19 for when the next pandemic comes around? Or is the fact that the next virus will be different, transmit differently, and circumstances changed enough to make the next pandemic as ‘unprecedented’ as the last, and so the suffering will not be reduced. 

No, we will probably not suffer as badly during future pandemics. There are many academic papers that evaluate different types of infectious diseases and try to learn from past experiences. The only major difference, if there is another pandemic in the future, is the population at risk, and policies should be adapted to that variable. The experience of COVID-19 means that governments are likely to be better prepared for any type of virus that appears in the future. The problem with COVID-19 was that the last large pandemic happened 100 years ago. The governments did not anticipate it. 

Importantly, viruses differ in how deadly and contagious they are. Very deadly viruses are less likely to spread widely as they quickly kill the host. On the other hand, a less deadly virus will spread more, as a living host will transmit more effectively. For example, Ebola was a much more deadly virus, which made it easier to control and contain. COVID-19 is much less deadly, but more contagious. Policy responses will depend significantly on where the virus sits on the scale of deadly to infectious.  

Thinking back to SARS in 2003, there was a lot of hype about a potential big pandemic and a similar thing happened when Ebola appeared in Africa. There was initially much fear about a large pandemic, but they quickly faded out. 

Do you think that these experiences led to complacency within governments and caused a delayed response when COVID-19 first appeared? Or do you think that because COVID-19 was the perfect combination of infectiousness and deadliness, and that governments were unlucky? 

Governments probably could have better anticipated it. However, there are several factors that you may not be able to change in the short run as a policy maker. For example, when the virus arrived in Peru on the 15th of March, the government quickly decided to close the borders the next day and to put the military on the streets. In the UK, the virus arrived a month prior, but did not begin to close the economy until round the same moment. In this view the UK had a delayed response. However, countries that became infected later had the advantage of knowing more about the virus at that point. 

Also, as a policy maker it may not be possible to change important factors, such as the composition of the population, level of poverty, or the quality of your health system in the short run. Thus, there are lots of structural problems in many countries that you won’t be able to solve after a pandemic appears. At least the UK had the advantage of a strong healthcare system in terms of the supply side. Though, the demand side of the UK health system sometimes has problems with moral hazard as discussed earlier. Thus, whether the governments could have anticipated and prepared what was to come depends on a number of factors that you may not be able to, as a policy maker, change in the short run.