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Covid Economics 16, 11 May 2020: 1-22 Covid Economics COVID ECONOMICS VETTED AND REAL-TIME PAPERS ISSUE 16 11 MAY 2020 SWEDEN VS OTHERS: A DRAW Benjamin Born, Alexander M. Dietrich and Gernot J. Müller GENDER (IN)EQUALITY Renée B. Adams HERD IMMUNITY CONFLICTS WORLDWIDE Christian Gollier Nicolas Berman, Mathieu Couttenier, STRATEGIC BEHAVIOUR Nathalie Monnet and Rohit Ticku David McAdams GETTING PEOPLE BACK THE ROLE OF TRUST AND NORMS INTO WORK Toker Doganoglu and Emre Ozdenoren Monica Costa Dias, Christine Farquharson, Rachel Griffith, Robert Joyce and MEASUREMENT WITHOUT TESTING Peter Levell Oscar Dimdore-Miles and David Miles Covid Economics Vetted and Real-Time Papers Covid Economics, Vetted and Real-Time Papers, from CEPR, brings together formal investigations on the economic issues emanating from the Covid outbreak, based on explicit theory and/or empirical evidence, to improve the knowledge base. Founder: Beatrice Weder di Mauro, President of CEPR Editor: Charles Wyplosz, Graduate Institute Geneva and CEPR Contact: Submissions should be made at https://portal.cepr.org/call-papers- covid-economics-real-time-journal-cej. Other queries should be sent to [email protected]. Copyright for the papers appearing in this issue of Covid Economics: Vetted and Real-Time Papers is held by the individual authors. The Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research (CEPR) is a network of over 1,500 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Trustees of the Centre do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR. Chair of the Board Sir Charlie Bean Founder and Honorary President Richard Portes President Beatrice Weder di Mauro Vice Presidents Maristella Botticini Ugo Panizza Philippe Martin Hélène Rey Chief Executive Officer Tessa Ogden Editorial Board Beatrice Weder di Mauro, CEPR Ethan Ilzetzki, London School of Charles Wyplosz, Graduate Institute Economics and CEPR Geneva and CEPR Beata Javorcik, EBRD and CEPR Viral V. Acharya, Stern School of Sebnem Kalemli-Ozcan, University Business, NYU and CEPR of Maryland and CEPR Rik Frehen Abi Adams-Prassl, University of Tom Kompas, University of Oxford and CEPR Melbourne and CEBRA Jérôme Adda, Bocconi University Per Krusell, Stockholm University and CEPR and CEPR Guido Alfani, Bocconi University and Philippe Martin, Sciences Po and CEPR CEPR Franklin Allen, Imperial College Warwick McKibbin, ANU College of Business School and CEPR Asia and the Pacific Oriana Bandiera, London School of Kevin Hjortshøj O’Rourke, NYU Economics and CEPR Abu Dhabi and CEPR David Bloom, Harvard T.H. Chan Evi Pappa, European University School of Public Health Institute and CEPR Tito Boeri, Bocconi University and Barbara Petrongolo, Queen Mary CEPR University, London, LSE and CEPR Markus K Brunnermeier, Princeton Richard Portes, London Business University and CEPR School and CEPR Michael C Burda, Humboldt Carol Propper, Imperial College Universitaet zu Berlin and CEPR London and CEPR Paola Conconi, ECARES, Universite Lucrezia Reichlin, London Business Libre de Bruxelles and CEPR School and CEPR Giancarlo Corsetti, University of Ricardo Reis, London School of Cambridge and CEPR Economics and CEPR Fiorella De Fiore, Bank for Hélène Rey, London Business School International Settlements and CEPR and CEPR Mathias Dewatripont, ECARES, Dominic Rohner, University of Universite Libre de Bruxelles and Lausanne and CEPR CEPR Moritz Schularick, University of Barry Eichengreen, University of Bonn and CEPR California, Berkeley and CEPR Paul Seabright, Toulouse School of Simon J Evenett, University of St Economics and CEPR Gallen and CEPR Christoph Trebesch, Christian- Antonio Fatás, INSEAD Singapore Albrechts-Universitaet zu Kiel and and CEPR CEPR Francesco Giavazzi, Bocconi Karen-Helene Ulltveit-Moe, University and CEPR University of Oslo and CEPR Christian Gollier, Toulouse School of Jan C. van Ours, Erasmus University Economics and CEPR Rotterdam and CEPR Rachel Griffith, IFS, University of Thierry Verdier, Paris School of Manchester and CEPR Economics and CEPR Timothy J. Hatton, University of Essex and CEPR Ethics Covid Economics will publish high quality analyses of economic aspects of the health crisis. However, the pandemic also raises a number of complex ethical issues. Economists tend to think about trade-offs, in this case lives vs. costs, patient selection at a time of scarcity, and more. In the spirit of academic freedom, neither the Editors of Covid Economics nor CEPR take a stand on these issues and therefore do not bear any responsibility for views expressed in the journal’s articles. Submission to professional journals The following journals have indicated that they will accept submissions of papers featured in Covid Economics because they are working papers. Most expect revised versions. This list will be updated regularly. American Economic Review Journal of the European Economic American Economic Review, Applied Association* Economics Journal of Finance American Economic Review, Insights Journal of Financial Economics American Economic Review, Journal of International Economics Economic Policy Journal of Labor Economics* American Economic Review, Journal of Monetary Economics Macroeconomics Journal of Political Economy American Economic Review, Journal of Population Economics Microeconomics Quarterly Journal of Economics* Economic Journal Review of Economics and Statistics Journal of Development Economics Review of Economic Studies* Journal of Econometrics* Review of Financial Studies Journal of Economic Growth Journal of Economic Theory (*) Must be a significantly revised and extended version of the paper featured in Covid Economics. Covid Economics Vetted and Real-Time Papers Issue 16, 11 May 2020 Contents Do lockdowns work? A counterfactual for Sweden 1 Benjamin Born, Alexander M. Dietrich and Gernot J. Müller Gender equality in work and Covid-19 deaths 23 Renée B. Adams Shutdown policies and worldwide conflict 61 Nicolas Berman, Mathieu Couttenier, Nathalie Monnet and Rohit Ticku Getting people back into work 76 Monica Costa Dias, Christine Farquharson, Rachel Griffith, Robert Joyce and Peter Levell If the objective is herd immunity, on whom should it be built? 98 Christian Gollier Nash SIR: An economic-epidemiological model of strategic behaviour during a viral epidemic 115 David McAdams Should I stay or should I go (out): The role of trust and norms in disease prevention during pandemics 135 Toker Doganoglu and Emre Ozdenoren Assessing the spread of the novel coronavirus in the absence of mass testing 161 Oscar Dimdore-Miles and David Miles 1 Covid Economics Issue 16, 11 May 2020 Do lockdowns work? A counterfactual for Sweden1 Benjamin Born,2 Alexander M. Dietrich3 and Gernot J. Müller4 Date submitted: 5 May 2020; Date accepted: 7 May 2020 Is a lockdown an effective means to limit the spread of the COVID-19 pandemic? We study the case of Sweden – one of the few countries without a lockdown – and use synthetic control techniques to develop a counterfactual lockdown scenario. First, we use a “donor pool” of European countries to construct a doppelganger that behaves just like Sweden in terms of infections before the lockdown. Second, we find that infection dynamics in the doppelganger since the lockdown do not systematically differ from the actual dynamics in Sweden. Third, we study Google mobility data and find that Swedes adjusted their activities in similar ways as in the doppelganger, although to a somewhat lesser extent. Covid Economics 16, 11 May 2020: 1-22 Covid Economics 1 We thank Christian Bayer, Hartmut Egger, Zeno Enders, Philip Jung, Willi Kohler, Kris Nimark, Julia Peters, and Harald Uhlig for very useful comments and discussions. Lennart Fischer provided valuable research assistance. The usual disclaimer applies. 2 Associate Professor of Macroeconomics, Frankfurt School of Finance & Management and CEPR. 3 PhD Candidate, University of Tübingen. 4 Professor of Economics, University of Tübingen and CEPR. Copyright: Benjamin Born, Alexander M. Dietrich and Gernot J. Müller COVID ECONOMICS VETTED AND REAL-TIME PAPERS 2 “And when countries do all the wrong things and still end up seemingly not as battered by the virus as one would expect, go figure.” (New York Times, May 3, 2020) 1 Introduction As the COVID-19 pandemic spread around the globe in early 2020, many countries shut down their economies in order to limit social interactions. In China, the Hubei province was put under lockdown for more than two months, starting in late January 2020. In Europe, Italy imposed a lockdown on March 9, followed by the large majority of countries in Europe and elsewhere. A widely discussed exception is Sweden, which opted against a lockdown in its approach towards the COVID-19 pandemic. And while the Swedish authorities advised citizens to adjust
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