Background
■"Balancing infectious disease control and socioeconomic activities" is one of the most important themes during the COVID-19 pandemic
■Strong measures of infectious disease control (state of emergency, closing schools, lockdowns, etc.) reduce the number of deaths from COVID-19 infections, but have a significant negative impact on society, the economy, culture, and education
■Increase in unemployment
■Decline in birth rate
■Increase in poverty
■Increase in suicides
■Negative impact on culture, arts, sports and education
■"Cumulative COVID-19 deaths and economic losses" varied among countries and regions
■Possibility that "environment and constraints" (medical system, economic policy, death rate, infectivity etc.) and "value judgment for balancing" varied among countries and regions
Countries (up to 2021 Q2)
*G7 + 5 other countries. Selected to convey a variety of outcomes (because presenting all countries would make the country names unreadable).
*Economic losses are a deviation from the GDP trend. The average GDP growth rate over the past 10 years was used to create the trend. GDP is from World Bank - Global Economic Monitor. The WHO COVID-19 Dashboard was used for the cumulative number of deaths.
Countries (other sample periods)
Up to 2020 Q4
Up to 2021 Q1
Up to 2021 Q2
*G7 + 5 other countries. Selected to convey a variety of outcomes (because presenting all countries would make the country names unreadable).
*Economic losses are a deviation from the GDP trend. The average GDP growth rate over the past 10 years was used to create the trend. GDP is from World Bank - Global Economic Monitor. The WHO COVID-19 Dashboard was used for the cumulative number of deaths.
Prefectures (up to 2021 M6)
*Selected 20 prefectures to convey a variety of outcomes (because presenting 47 prefectures would make the prefectures names unreadable).
*Economic losses are a deviation from the GDP trend. The average GDP growth rate over the past 5 years was used to create the trend. GDP is from Fujii-Nakata monthly GDP. The cumulative number of deaths is based on Ministry of Health, Labour and Welfare data.
Prefectures (other sample periods)
Up to 2020 M12
Up to 2021 M3
Up to 2021 M6
*Selected 20 prefectures to convey a variety of outcomes (because presenting 47 prefectures would make the prefectures names unreadable
*Economic losses are a deviation from the GDP trend. The average GDP growth rate over the past 5 years was used to create the trend. GDP is from Fujii-Nakata monthly GDP. The cumulative number of deaths is based on Ministry of Health, Labour and Welfare data.
Analysis
■Estimating epidemiological macro model parameters based on high frequency infection and economic data in each country/region
■Calculating "what if the economy was kept a little more under control or turned it around" in each country or region
■Calculating "conditional trade-off curves" that take into account differences in "constraints" among countries and regions
■The realization point of the "conditional trade-off curve" is interpreted to reflect (roughly) the value judgment of each country/region
■Application of the concept of "manifest preference" in economics
■The idea that "if a particular option is chosen out of many options, then the utility of that option must be greater than that of other options"
■Based on this idea, "the economic cost that each society pays to reduce the number of COVID-19 deaths by one person" was estimated
■Willingness-To-Pay (WTP)
■Analysis based on Beppu et al. (2021) 'Willingness-to-Pay to Avoid COVID-19 Death'
■Note that the results of the analysis are Preliminary
The concept of "manifest preference"
■Note that in the left figure, the budget constraint is a curve and the utility is a straight line, and in the right figure, the budget constraint is a straight line and the utility is a curve
■Note that in the left figure, the lower the left, the higher the utility, and in the right figure, the upper the right, the higher the utility
■A fundamental concept in economics (optimal consumption theory). Studied in introductory microeconomics classes in college
WTP
■What WTP captures (or tries to capture) is "the values of people and society" in a broad sense
■How much value is placed on extending life expectancy?
■Fear of an unknown virus
■Attitudes towards non-quantifiable risks
■Fear of aftereffects
■Peer pressure (e.g., even if a person is not personally afraid of COVID-19, peer pressure keeps that person from traveling)
■The desire to avoid the tragedy inherent to a COVID-19 death
■For example, to spend the rest of one’s life isolated from loved ones, suffering from breathing difficulties
WTP
■In calculating WTP, factors related to "environment, constraints and policy" in a broad sense were controlled
■Basic reproduction number (infectivity of the virus)
■Different infectivity in different regions (bowing or kissing/hugging, hand washing habits, population density, etc.)
■Death rate
■Different death rates in different regions (obesity rate, percentage of people with underlying health conditions, percentage of elderly)
■Medical system
■Economic policy
■Economic structure
■Percentage of occupations with high contact, percentage of occupations that are easy to do by telework, and percentage of service occupations that are easy to move online
■These "environment, constraint, and policy" factors are reflected in "infectivity parameters, death rate parameters, and the relationship between infection and human movement, human movement and economic activity, etc." which are estimated using high frequency data for each region
■On the contrary, WTP reflects everything that is not reflected in these parameters, etc.
WTP
■WTP is conceptually similar to VSL (Value of Statistical Life)
■VSL: Value of Statistical Life
■This has been used in policy for a long time
■Famous example: U.S. EPA (Environmental Protection Agency)
■Use of VSL based on environmental disaster risk for cost-benefit analysis of environmental policy
■Mostly "hundreds of millions of yen" in scale in developed countries
Results
■WTP differs greatly from country to country and region to region
■Not only differences in various "constraints" but also differences in value judgments contribute to differences in "the number of death and economic losses" between countries and regions
■Japan has a relatively high WTP
■Approx. 2 billion yen
■Many countries are under 100 million yen (USA: approx. 100 million yen, UK: approx. 50 million yen)
■There are other countries with higher WTP (Australia: approx. 1 billion yen, New Zealand: approx. 8 billion yen, Singapore: approx. 12 billion yen)
■WTP is very high in some areas of Japan
■Shimane: approx. 70 billion yen, Tottori: approx. 60 billion yen
■Tokyo / Osaka: approx. 500 million yen
■These estimates depend on the method of analysis. It's important not to take the numbers too seriously
■Creating an opportunity to relativize one's values. Brain exercises. Reference material for thinking about how to deal with COVID-19 risk in the future
Countries (Monthly Output)
■Figure and table are based on data up to 2020 M12
Countries (Quarterly Output)
■Figure and table are based on data up to 2020 Q4
Prefectures
■Figure and table are based on data up to 2021 M6
Prefectures
■The blue dot on the left is hypothetical deaths and economic losses in the U.S. "if Americans had the same values as Japanese" (up to 2020 Q4)
■The red dot on the right is hypothetical deaths and economic losses in Japan "if Japanese had the same values as Americans" (up to 2020 Q4)
■Figure is based on data up to 2020 M12
Implications of the Analysis Results for the Future
■Given the people's attitude toward the risk of COVID-19 infection, it is likely that we will continue to see (relative to other countries)
■The number of COVID-19 infections and deaths can be controlled
■Economic recovery will be delayed
