COVID-19 and lessons for public health

Economist Hanming Fang of the School of Arts and Sciences weighs in on six public health lessons from the outbreak.

Person wearing full protective gear including latex gloves, goggles, hood and full protective medical gown.

As the coronavirus pandemic makes its way across the United States, officials are struggling to balance the economic effects with the health and safety of citizens.

Penn Today asked economist Hanming Fang, Class of 1965 Term Professor of Economics and professor of health care management in the School of Arts and Sciences, to weigh in on lessons for public health in the wake of the outbreak. He is an applied microeconomist whose research covers topics ranging from social economics and psychology and economics to welfare reform and health insurance markets.

He recently gave a “60-Second Lecture” discussing public policy tools during the pandemic, part of a special digital adaptation of the Penn Arts and Sciences’ 60-Second Lectures series, and his just-released working paper quantified the effects of the lockdown of the city of Wuhan on Jan. 23. It showed the lockdown played a crucial role in reducing cases of COVID-19 in other Chinese cities and halting the spread of the virus.

“We are probably too early to know all the lessons we can learn from the fight against COVID-19,” he says. “But we can start with the following early ones.”

Infection viruses know no national boundaries, thus international coordination and cooperation are essential.

In our tightly connected global economy, no country can stand on the sidelines watching other countries fight the virus. This means that countries need to share information and resources. Just like we need to move idle health care capacity from one state to another domestically to fight the spread the virus, such mutual assistance should occur among nations as well. A much better funded and staffed International Health Fund, akin to the International Monetary Fund, to coordinate global responses to public health crises should be on the agenda as humanity deals with the threats from pandemics.

Mandatory lockdowns and social distancing are effective in slowing down the spread of the virus infections.

Infection diseases grow exponentially at the initial stage of the outbreak. If unchecked, the rapid growth of infected patients is likely to overrun most of the health care system. Strategies aimed to delay the spread of the virus, including quarantining infected persons and their contacts, lockdowns and restrictions of human mobility, and social distancing such as prohibiting public gatherings and limiting public transportations, prove to be effective to flatten the infection curve, which can help spread out the burdens on the health care system.

Testing is key to slow down the spread of the virus, especially when people who contracted the virus can be asymptomatic yet infectious. 

Person wearing suit and tie stands in front of book case, smiling at camera
Hanming Fang.

Communities and countries that conducted mass testing or extensive testing of anyone who might have been exposed to the virus seem to do well in containing the spread of the virus. The small northern Italian town of Vo Enganeo was home to Italy’s first death from COVID-19 on Feb. 21; it was put on a lockdown and tested all 3,300 residents. This mass testing revealed that about 3% of residents were infected with the virus, and of these about half did not show any symptoms. The town isolated all of the infected and has not reported any new cases since March 13.

South Korea also did extensive testing and was able to flatten its infectious curve very effectively. In order for the U.S. economy to safely reopen, we must have quick, accurate, and readily available tests for the virus and antibody against the virus.

The tradeoff between health and economy is real and needs to be discussed front and center.

So far, the public face of the fight against COVID-19 is the public health experts and rightly so. However, as the nation progresses in the infection curve, economic consideration must be brought front and center. Mandatory lockdown measures come with severe negative impacts on the economy. Recent data show that the Chinese industrial value-added declined by about 25% in February 2020 relative to the same month last year. The lockdown measures implemented in the U.S. have already led to record number of unemployment claims. Just in three weeks since the COVID-19 pandemic ravaged the U.S., 17 million unemployment claims were filed as of the week of April 4. Economic indicators point toward a pandemic-induced recession; some even predict a depression deeper than the Great Depression. Social isolation during the lockdown and the economic depression from a prolonged lockdown have their own serious negative health consequences.

This tradeoff makes it all the more important to have readily available, quick, and accurate tests so that segments of the economy or regions can be reopened, while protecting vulnerable populations and continuing to engage in cautious voluntary social distancing.

The COVID-19 shock to the economy is unlike any other shocks in recent history. 

It is a demand shock, as large segments of the economy are shutdown, such as airlines, tourism, and most of the service sector. But the right public policy response is not to stimulate demand. It is a supply shock as workers are locked down at home, but supply-side stimulus is not the right policy response either because we need the outbreak to pass before getting workers back to their jobs. The economic policy to address this shock needs to put the economy into a “coma,” keeping all the vital organs of the economy intact so that it can spring back to life once the shock passes. It is a new challenge. On the positive side, this shock is exogenous, and policymakers do not have to worry about moral hazard in rewarding “bad behavior.” This differs from the Great Recession of 2007-2009.

Support scientific research, and stockpile the strategic medical supply reserves.

The value of science cannot be clearer in this pandemic, as vaccines and therapeutic cures are ultimately what will end the spread of the virus. So are the strategic medical supply reserves.