As Outcomes Are Uncertain, Pick No-Regret Policies

There is enormous uncertainty about how COVID-19 will affect health outcomes, as well as its impact on the economy and the poor. “Following the science” is great advice, but when the evidence base is thin, it only helps so much. Such uncertainty makes policymaking hard. Some decisions that seem sensible now will prove to be wrong, highly costly, or ineffective later on.

With so much uncertainty, it helps to focus on decisions that no one will regret later on, that are right whether the crisis is short or long, the recession deep or shallow. These are “no-regret policies.” In a short note, I discuss no-regret policies for developing countries and international agencies in three areas: health, vaccine development, and economic rescue.

While much discussion seems to focus on the number of ventilators or hospital beds, even if there is no proven treatment, no one will regret investing in the reach and quality of community healthcare and the protection of health workers, irrespective of whether a choice was made for a long-term lockdown or not. Community healthcare workers will be key to making sure that the collateral health damage from the measures to stop the spread of COVID-19 are kept to an absolute minimum. This will ensure that vaccinations, antiretrovirals, supplementary feeding, maternal health, bed net distribution, malaria treatment, and other crucial interventions that save lives every day will be kept up. These workers will be essential to shield the most vulnerable in high-population density areas, including through information and targeted support. As diagnostic tests are simply not available in sufficient supply, they can help with tracking the spread and control the disease, as Hans Rosling’s spreadsheet did with Ebola.

It is clear that the exit from this crisis will have to involve the large-scale deployment of a vaccine, even if it takes months if not years to get there. So when international agencies or governments look for sensible investments, funding research and development, including through efforts like the Coalition for Epidemic Preparedness Innovations (CEPI), makes sense. Crucially, it is also worth spending public money now to de-risk the required large-scale manufacturing, even though vaccine candidates have not yet proven efficacy nor licensing. Even if we end up having to destroy the vaccines that are not effective, that cost is nothing compared to the crazy costs of this crisis, running in the tens if not hundreds of billions of dollars per month globally. Such spending is still good value for money, as it boost the chances to have the required vast numbers of doses of a working vaccine earlier than usual. And no one will regret making sure that organisations like GAVI get the resources to help countries to build up the capacity to deliver vaccines.

When it comes to the economy, there are calls for vast spending everywhere, even in countries where fiscal resources are tight. The poor and vulnerable, often informal sector workers in urban and rural economies, are heard the least, yet they are the ones who could use these resources most. Without assistance they are at risk of having to sell all their assets just to survive—which would increase poverty figures not just temporarily but permanently, as they then cannot help themselves to get out of poverty again once there is a recovery, burdening state and society later on. Putting resources into all possible existing safety nets is a wise decision that no one will regret. Working with mobile phone operators to spread cash in geographies not covered by social protection schemes also makes sense.

As for other spending across the economy, I would be much more cautious: lots of large-scale support, such as tax relief, bailouts, or formal sector firm support will be hard to reverse. I dread to think how many previously inefficient loss-making utilities or national airlines will be bailed out, locking the state into unsustainable spending even after the recovery. Much wiser would be investing in as much data as possible now, so we can gradually learn more and more in the coming weeks and months, enabling us focus on the areas that can help with later recovery.

The best advice to give in situations of huge uncertainty is to focus on the data. Lifting up the veil of uncertainty is the key for better policymaking. When data does become available, decision-making will have to be highly adaptive. Now is a good moment to listen to John Maynard Keynes’ advice: “when the facts change, I change my mind”—rather than giving in to the temptation to be locked into grand plans that seem right at first. These are hard times for policymakers and politicians. In the absence of clear data, they should prioritize policies that will help mitigate the crisis regardless of what comes next. With public trust in short supply, politicians will need to be authoritative communicators, explaining in a clear narrative why decisions are taken—and may be reversed.