Covid-19 – Part 6: Expected Social Costs

Hi Everyone,

Considering the serious threat that Covid-19 poses to our physical health as well as our social, financial and economic health, I am putting together a series of posts that will investigate the impact this virus is having and will likely to have in the short, medium, and long run. I am not a medical doctor or a scientist. I am an economist. I will be using my economics background to analyse the expected impact this virus will have on our lives. This series of posts will cover the following.

In Part 1 of this series, I discussed Covid-19 and some of the actions taken by the Government to limit the spread of the virus. Covid-19 is a direct threat to our health (i.e. rapidly spreading virus, which poses a serious risk to some people) as well as an indirect threat (i.e. stress and fear of catching the virus or spreading it to loved ones). The actions taken by the Government to limit the spread of the virus is creating a wide range of other health and social costs. In Part 6 of this series, I will be focused on these social costs.

Social Impacts

There is a very wide range of possible social impacts. The Building Queensland Social Impact Evaluation Guide contains a comprehensive list of possible generic social impacts. Table 1 contains that list. The categories and sub-categories used in this list of social impacts have been used to guide this post.

Table 1: Social Impacts

Source: Building Queensland Social Impact Evaluation Guide

The terminology ‘impacts’ has been used instead of ‘costs’ because impacts can be positive, negative or neutral in nature. This post is focused on the costs, as Covid-19 is a virus and the responses to the virus are intended to mitigate the direct health cost rather than generate any positive impact. However, it is possible there could be some unintended positive impacts; these have been briefly discussed later in the post.

Social costs from the Covid-19 virus

In the absence of any Government action, Covid-19 will create social costs. Most of these social costs are likely to fall into the ‘Health and Social Wellbeing’, ‘Economic’, ‘Culture’ and ‘Family and Community’ categories. The extent of these social costs are influenced by the actions of the community. To reduce the cost to our physical health, people would need to incur other costs. For example, businesses could practice social distancing. This could reduce the output and/or the number of customers of the businesses, which would reduce the profits of the business (i.e. economic cost). The community could cancel social, cultural and religious events. This would also reduce the risk of spreading the virus but at the cost of the enjoyment derived from the cancelled events (i.e. culture cost). Families could choose to see less of each other and distance themselves from elderly members of the family. This would reduce the spread of the virus and provide elderly members of the family with more protection. This would also come at the cost of emotional support and comfort as well as the ability to offer physical help (i.e. family and community cost).

Social cost from Government action

Very few countries have left the handling of the response to Covid-19 in the hands of the community. As Covid-19 is a highly contagious virus, the spread of the virus is highly dependent on people’s actions. A coordinated response is likely to be more effective than depending on individuals to act based on their own initiative, which is dependent on their own opinions and knowledge. Therefore, Governments have intervened and set out measures and restrictions based on the professional advice they have sought.

The priority of many Governments have been to limit the physical health risk of the virus. In order to do that, many Governments have adopted an aggressive approach. Part 2 of the series explains the rationale for these measures and Part 4 describes the types of measures typically used. The aggressive approach adopted to reduce the physical health impact of the virus is creating many other social costs. I believe Governments' actions have created costs in six of the eight categorised described in the Building Queensland framework. These six categories are:

Health and Social Wellbeing
Economic
Culture
Family and Community
Quality of Living Environment
Institutional, Legal, Political, and Equity

Health and social wellbeing

We could argue that Government’s aggressive social distancing strategies are reducing the direct health impact of the Covid-19 virus. With the information and data currently available, the extent of this reduction cannot be reliably quantified. Even after the virus has run its course, it will be difficult to assess fully the effectiveness of the lockdowns. There are many factors, other than the lockdowns, that play a role in the spread of the virus. I discuss some of these factors in Part 2 of this series.

Aggressive social distancing strategies is likely to be the cause of many mental health problems. The World Health Organisation anticipates that the lockdowns and disruption to people’s regular activities will increase levels of loneliness, depression, harmful alcohol and drug use, and self-harm or suicidal behaviour. According to both the Daily Mail and the Independent, the number of mental health incidents have increased since the start of the lockdown. These mental health incidents include suicides and suicide attempts, domestic and family violence, and sex abuse.

The lockdown could cause some physical health problems as well. These problems could include:

malnutrition from restricted access to food
weight gain and possible obesity from fewer opportunities to be active
negative effect from delayed treatment of medical problems not relating to Covid-19
loss of health benefits from less fresh air and sunlight
negative physical health impacts caused by the negative mental health impacts

Economic

The extent of the economic impacts vary depending on numerous factors as well as the type of responses to the impacts. I have discussed and analysed the possible economic impacts in Parts 2 to 5 of this series. The likely economic impacts can be summarised as follows:

increased unemployment
reduced income
increased inflation
increased debt
reduced economic growth

Culture

The Covid-19 enforced measures will have an impact on culture and religion. The lockdown prevents social gatherings for any reasons. This includes religious gatherings, weddings, festivals, etc. For many cultures, particular social gatherings have significant importance. Missing these events would bring great disappointment to these communities.

Art galleries, museums and theatres are forced to close. The temporary closure of these organisations plus reduction in donations will greatly reduce their revenue and could lead to more permanent closures (Future Learn).

Family and community

For many countries, lockdown measures require people working in non-essential jobs to remain home. For example in the United Kingdom, people are only permitted to leave home for exercise, shopping and other essential journeys (Metro). Even exercise is required to be within a short distance to home. Families living across different households are required not to visit each other during the lockdown. This is likely to result in some people becoming socially isolated. This will be particularly difficult for the elderly and those with disabilities. Social isolation can lead to physical and mental health problems such as heart disease, diabetes, anxiety, and depression (The Commonwealth Fund).

The lockdown can result in increased domestic and family abuse. People can no longer easily escape each other or easily obtain help and support. The number of calls to abuse helplines have increased in many of the countries with strict lockdowns (The Guardian).

Quality of Living Environment

The Covid-19 measures could be having quite a significant impact on the quality of life for many people. People are not allowed to enjoy many of things they could enjoy prior to the lockdown. Many forms of entertainment and leisure are no longer available.

Sports events have been cancelled.
Live entertainment venues are closed.
Restaurants, cafes and pubs are closed.
Parks, gardens and playgrounds are closed.
Shopping malls and department stores are closed
Traveling and vacations are no longer possible because of restrictions on travel and closure of hotels and accommodation.
Various services that are consider non-essential are no longer available.

Institutional, Legal, Political, and Equity

The lockdown measures taken by some countries has resulted in a significant loss of freedom. People cannot go out whenever they feel like it. People cannot go wherever they please. When people are out of the house, their actions have been greatly restricted. People cannot gather even in small groups of three or four. They cannot travel any significant distance from their home without risk of being stopped or questioned by police. Police have been given additional powers, which allows them to question people who are out of their homes. They can issue on-the-spot fines if they consider the travel as not essential (Sky).

Some countries are developing mobile applications that can monitor people’s movement and activities. In Hong Kong, new arrivals are required to download a Government application and wear a wristband, which can be used to track and monitor the person’s movement and activity (Al Jazeera). The European Union are also developing applications to trace and track people’s movements to combat the spread of Covid-19 (eHealth Network). A positive outcome of tracing applications is that they could help reduce the duration of the lockdown, which would reduce some of the other social costs discussed. Data from applications could be protected if anonymous identifiers are used instead of people’s actual identification.

The health risk of Covid-19 and the high costs of the lockdown has provided motivation for Governments and pharmaceutical companies to develop a quick vaccine. According to the (Telegraph), a vaccine could be ready for testing as soon as the end of 2020. To add some perspective to that timeframe, according to the History of Vaccines, a vaccine can take between 10 and 15 years to develop. There is a possibility that the new vaccine will be mandatory in some countries. Italy increased the number of compulsory vaccines after a large measles outbreak in 2017 (Eurosurveillance). It is quite possible they will take a similar approach considering how badly they are being affected by Covid-19. A mandatory requirement for people to have substances injected into their bodies is a huge violation of human rights.

Are there any positive social impacts?

Worldwide reduction in production has reduced the levels of pollution in the world (BBC). I would not regard this as a positive impact as it is mostly temporary and has been forced by worldwide lockdowns rather than any successful environmental initiative.

There are also some reports that overall crime rates are down (ITV). I would not consider reduced crime a positive social impart either as the reduction is also only likely to be temporary. Crimes such as shoplifting has been reduced because shops are closed. House break-ins are reduced because people are staying at home. Other crimes are reduced because of lack of activity. Once the lockdown ends, crime is likely to increase again. It could even become higher if more people are impoverished.

The price of crude oil has fallen dramatically from reduced activity caused by the lockdowns (BBC). If a significantly lower cost of crude oil translates into greatly reduced petrol and diesel prices, people and businesses will greatly benefit from significantly reduced costs. It is important to note that reduced demand is the main cause of the fall in crude oil. Once activity increases, oil prices will increase and the current lower prices will be of minimal benefit (The Guardian).

Final thoughts

In this post, I have outlined many likely social costs. As the lockdowns are still in progress and for many countries have only been implemented for several weeks, there is not sufficient data to determine the extent of the identified social costs. However, we can be confident that these costs will increase, the longer the lockdowns persist. Will the costs of preventing the spread of Covid-19 be greater than the health cost of the Covid-19 virus in the absence of lockdowns and other strict restrictions?

In Part 7 of this series, I will be predicting the likely winners and losers from Covid-19. At first glance, it would appear that Covid-19 is to the detriment of all. The health, economic and social costs affect the majority of people. However, they are some that will benefit from the misfortunes of others. These winners are likely to be big pharmaceutical companies, central banks, Governments, speculators, and some large companies. Part 7 will explain the logic as to how these groups could benefit.

If you want to read any of my other posts, you can click on the links below. These links will lead you to posts containing my collection of works. These posts will be updated frequently.