How South Korea Limited COVID-19 Deaths and Economic Damage
- June 12, 2020
- CBR - Economics
To limit the spread of COVID-19, responsible for more than 100,000 deaths in the United States by the end of May, many areas have imposed stay-at-home orders, causing severe economic damage and putting millions out of work. Voters and policy makers are now wrestling with how to balance saving lives with saving livelihoods.
That’s not a choice that had to be made in South Korea, however, which has had no lockdowns and fewer than 300 deaths by the end of May. There was a different cost, however—people had to give up their privacy, notes an analysis by Penn State’s David Argente, Chicago Booth’s Chang-Tai Hsieh, and University of California at San Diego’s Munseob Lee, which examined the country’s virus-containment plan and compared results with those of other possible approaches.
While many countries, starting with China, used lockdowns to fight the virus, the South Korean government took a different tack that included widespread testing, and then quarantining only people who tested positive for the virus.
But beyond that, it created a robust contact-tracing program, detailing the places virus-infected patients had visited prior to receiving a positive test. To do this, it accessed and combed through credit-card data and cell-phone records, and then shared location information with the public via text messages and websites, allowing people to determine the best ways to protect themselves.
South Korea’s containment strategy worked, the researchers find, noting that residents of Seoul used the information to strategically alter their commuting and social habits. Using cell-phone tracking data, they demonstrate that people over 60, who are most susceptible to the virus, tended to work from home and curtailed social activities.
Younger South Koreans rerouted their commutes away from districts with more infections. They also often managed to change their routes but not their purchasing behaviors. For example, some might have avoided a coffee shop that had recently had several positive patients in it, but they still bought coffee. They simply went to other shops where there was a lower risk of catching the virus.
The researchers compared South Korea’s strategy with other actions it could have taken. According to their model, Seoul, a densely packed city of 10 million people, will see 925,000 cases, 17,000 deaths, and a 1.2 percent loss of GDP over two years if the country maintains current procedures. In all other scenarios they modeled, infections, deaths, and damage to the economy climbed. If the country were to eliminate its contact-tracing program and stop disseminating information, and instead implement lockdowns, it would see about 1.3 million COVID-19 cases and more than 30,000 deaths over two years, according to the model’s estimates. The more stringent the lockdown, the harder the hit to the economy.
“We find that compared to a scenario without disclosure, public disclosure reduces the number of COVID-19 cases by 400 thousand and deaths by 13 thousand in Seoul over 2 years,” write Argente, Hsieh, and Lee. “And compared to a lockdown that results in about the same number of cases as the full disclosure strategy, the latter results in economic losses that are 50 percent lower.”
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Similar public disclosures cannot currently happen in the US because of the 1996 Health Insurance Portability and Accountability Act (HIPPA), which protects patient data and privacy. Beyond that, government collection and dissemination of such data would likely be extremely unpopular. But is privacy a lesser cost than deaths and economic destruction?
Hsieh suggests that Americans might at some point want to consider legal modifications that could mitigate both high infection rates and the economic fallout from strict lockdowns if this pandemic has further waves or another one strikes.
“How much are these laws costing us?” he asks. “In South Korea, which had previous experience with a pandemic, the government gained the power to get this information and share it, and that’s been hugely important for them.”
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