The Government Response Stringency Index

Having mentioned yesterday the Oxford Covid-19 Government Response Stringency Index, I was playing around with variants of this chart, tracing the responses of various governments through time.

stringency index

On this variant I’ve included the Anglo countries and most of the countries of western Europe.

It is only one index, and only as good as the presumptions about what mattered of those who put it together, but it is now quite widely used and cited.

In detail of course it is hard to read, but my main interest was in New Zealand relative to where the generality of other western countries were, and you can read the New Zealand line: throughout the “Level 4 lockdown” the compilers of the index judged our restrictions to be the most stringent of any of the countries, although as at the last updates –  and they aren’t updating every country every day – we had dropped a bit below Italy and France.   The Australia line is hard to see individually, but you can see from the listing at the right that as of now it has the third least stringent regime of any of the countries shown.

(Note that some countries –  including Australia and the United States –  are federal systems with differing degrees of restrictions in individual states: I presume the index is capturing some sort of representative degree of restrictiveness.)

Here is the same chart showing New Zealand, Australia and the east Asian advanced countries.

stringency 3

Singapore is, of course, the salutary case.

Those who read my post yesterday will have seen that I reckon it is plausible that GDP will fall by about 25 per cent in the June quarter, similar to the Bank of England expectation for the UK.  I was interested yesterday afternoon to see that the Reserve Bank of Australia is expecting “only” a 10 per cent fall in GDP in the June quarter.   Even our market economists are materially more pessimistic than that for New Zealand.

Now, as everyone recognises, big GDP losses were going to happen whatever governments did.  The data in the US indicate clearly, across states, how much economic activity had already fallen away before state or city governments imposed severe restrictions.  We saw signs of that here too – I recall going to Auckland a few days before the move to “Level 4” was announced and talking to taxi drivers who’d waited six hours for a single ride.    But, equally, there is little doubt that the extent of the restrictions has affected the extent of the loss of economic activity now (it is an open question whether there are large trade-offs re future losses of activity: only time and lots of research will tell fairly conclusively).   New Zealand’s near-term economic loss looks likely to have been larger than most –  a lot larger than Australia’s, at least if the RBA is to be taken seriously.

Perhaps some will think of this as just a perspective of hindsight.  But there is reason to think it shouldn’t be seen that way.

For example, my interest was piqued when I saw this this morning

I haven’t yet read the Ministry of Health paper referred to  (the pro-active release documents are all here), but I did watch the interview and James Shaw didn’t dispute that it was an accurate account of the Ministry’s advice, apparently on 21 March.

And one can add to the mix the paper Ian Harrison, of Tailrisk Economics, wrote several weeks ago casting doubt on the modelling that the Prime Minister has cited in defence of her government’s stance.

At very least, it should lead to some quite stringent questioning for the Prime Minister and other senior Cabinet ministers about the robustness of their advice and their decisionmaking.  I will look forward to tracking down, among the papers released, the cost-benefit work (formal or informal) that The Treasury and/or the Ministry of Health provided Cabinet before the decisions were made.   Perhaps if these papers had been released contemporaneously –  given that magnitude of the decisions involved –  not six weeks later, these questions might have been posed much earlier, when doing so might have made a difference to outcomes.  Of course, no one can know counterfactuals with any certainty –  partly because no one can also know quite what difference the marginal interventions themselves made – but that shouldn’t stop the scrutiny and challenge, even if it only highlights other failures in our systems that perhaps might have made such intense restrictions, such large near-term economic losses, more necessary or justifiable.