This is not an R1. We have a dearth of content and the moderator team would like to quality content be posted (not just R1s).

This post is simply some data visualization and commentary around Covid Deaths and GDP Growth.

The American Death Cult

Many conservative commentators in America stated that, while Covid-19 was bad, because Covid-19 primarily killed old people, we shouldn't "shut down" the economy ("shut down" here means closing non-essential businesses and having a shelter-in-place rule to stop the spread of Covid-19). The trade-offs were too high: many businesses would go bankrupt, people would be laid-off, schools would be shut down and federal debt would balloon. It would be preferable to let people die and not sacrifice GDP growth.

Dr. Anthony Fauci said at one point that America had only "50%" shut down. I don't know where that number came from, but I take his word that the US did not pursue the same kind of aggressive shut down policies as our peer nations.

So, in effect, America chose to not have as aggressive shut-down policies in order to encourage GDP growth, employment and allow Covid cases and deaths to be high. America also had a historic fiscal stimulus bill passed and incredibly accommodative monetary policy. In my opinion, however the lack of continued fiscal stimulus has been bad.

Peer Nations: the OECD

Since America's response has been to sacrifice lives in order to have better GDP growth, how do we compare to our peer countries on both accounts? Surely, every country has different responses and some countries might fare worse on Covid deaths due to the age distribution of their population. But I think it is a useful rule-of-thumb to ask "how are we doing compared to our peers?".

The data I show below is not causal. It is not a counterfactual for the United States - it is merely saying "where is the US relative to our peers?". It can tell us how we fared in our endeavors versus our peers.

The Data

The Covid-19 data used is Total Deaths Per Million for Covid-19 infections that I collected from "Our World In Data". CSV download here. While the United States has a staggering 120,000 deaths at the end of Q2 2020, we are a large country. Ergo, some kind of population adjustment should occur to do more "fair" cross-country comparisons (within country, of course, please be outraged at the fact that Covid-19 deaths were equivalent to forty 9/11s during Q2 2020).

The OECD Data I gathered straight from the OECD's website. There are many ways we can think about economic impacts of Covid-19 responses. I went with something simple and intuitive: Quarter over Quarter GDP Growth. What QoQ Growth captures is the immediate impact to GDP of a Covid-19 response.

Given the variation in Covid-19 reaching different regions, and the time-variant responses, I split the data into Q1 and Q2 2020. Some countries - like China and Korea - faced Covid in Q1, mainly, and less so in Q2 when things got under control. Other countries - such as Europe and the United States - only started to respond to Covid in Q2 2020 (America shut down in roughly the second week of March).

Edit: Code and data here.

Pretty Pictures

I apologize ahead of time - I am not a visualization guy so the graphs aren't great. But, the first two graphs are all the OECD Countries in Q1 and Q2 (separately) looking at QoQ Growth compared to the total deaths per million people. Full gallery here.

Graph 1 - Q1 2020.

In Q1 2020 we see that many countries didn't have a big dip in GDP. We can see that the worst off was Italy. As many probably know, Italy was the Covid-19 hotbed in Europe for a few weeks. It unfortunately did not scare American policymakers enough.

Graph 2 - Q2 2020.

In Q2 2020 everything changed. Belgium overtook everyone in Covid-19 deaths. America sits in the middle of the pack as far as GDP growth is concerned - yet is among the highest in deaths per million. While other countries are not a counterfactual, it is dismaying that the US's death rate is so high yet we are not doing the best economically.

I thought it would be helpful to do some peer country comparisons. I first looked at all the Anglophone countries - all former British colonies. Jacinda Ardern, the Prime Minister of New Zealand, has won praise from public health officials for her incredibly aggressive policies in stopping Covid-19. However, the economic impact was uncertain - though she and economic policymakers have claimed that a healthy population would help rebound the economy quickly. I await to see Q3 and Q4 data as I feel that that claim is correct.

ANZAC has done a remarkable job in stopping Covid-19 from killing their citizens. New Zealand saw -12% GDP growth QoQ versus the American -9% GDP Growth QoQ. So they fared economically worse than the USA - but with only 1% of the deaths per million that the USA had. Australia likewise performed well and I am surprised we have not seen more Australian praise in the news.

Boris Johnson nearly died of Covid-19 after repeatedly denying how dangerous it was. And the UK is faring even worse than America. I've really no commentary here beyond saying that it is heartbreaking to watch our English cousins fare even worse than us.

The G7 is a similar story. I am actually surprised to see how bad France is compared to the US.

OECD Europe continues the story we see: there doesn't seem to be a strong relationship between GDP growth and deaths. I think the likely story here is this: because many countries do take a strong response to Covid, neighboring countries also see a drop in GDP - even countries that do not have a strong response. So, inevitably, countries that do nothing will simultaneously have a recession and many deaths, not a strong economy and no deaths.

The Asia-Pacific experience is a demonstration of how a strong response to Covid-19 has lead to few deaths per million with similar economic performance as European countries that fared worse with deaths. That being said, I am skeptical of Chinese statistics.

Finally, we have the Nordic Countries. So far, I've been very, very tempted to make causal claims regarding Covid-19 responses and GDP growth (my claim is that there is no death-GDP tradeoff, so preventing deaths should be our main priority). I can't, because I don't know the counterfactual.

The Nordic experience, however, is a rough, quasi-experiment. Sweden took the same hands-off approach (specifically, a herd immunity approach) that the United States took, while its neighbors took an aggressive approach. Given the vast similarities in culture, political and economic institutions between Sweden and its neighbors (especially Norway and Denmark) a comparison of Sweden versus Norway or Sweden versus Denmark reduces the selection bias in other cross-country comparisons. What do we see? Sweden not only fared worse than its immediate neighbors economically, it also sacrificed multitudes more of its citizens to Covid-19. Iceland - a small island country - was the only country that did worse than Sweden among the Nordics.

Sacrifices

The data above shows that the US experience, compared to peers, is not great. Our "50% shut down" - the weak and inadequate public health response - still didn't put us above our peers on economic growth in Q2 2020 and ultimately made us one of the worst casualties of the Covid-19 pandemic. Our peers in the Asia-Pacific region showed us that an aggressive public health response didn't create much worse of a recession than what we experienced. While I do not have counterfactuals, my priors are strong that we could've likewise had an aggressive public health response without worse (or possibly even better) GDP outcomes. The Swedish example is a strong one. Of course, I will hedge all my claims here in saying that this is not a rigorously identified analysis of the data and am fully aware of that. However, it seems we could've taken a different route and had better public health outcomes with similar economic outcomes.