Many states have vaccinated enough of their populations to begin lifting many Covid-19 measures in a move toward pre-pandemic normalcy. Now, a year and a half after the start of the pandemic, Wharton public policy students sought to answer the question: what have we learned?

For their capstone project for BEPP 401: Managing the Pandemic: Money and Messages, Robert Inman, Richard K. Mellon Professor of Finance, Business Economics, and Public Policy Emeritus, challenged 20 Wharton undergraduate seniors to study public policy responses for the management of the coronavirus pandemic — researching what worked, what didn’t, and what the country might do when facing a next pandemic.

With the help of a grant from Analytics at Wharton, Prof. Inman spent the Fall working with Wharton PhD students to create a database, including health and job statistics for each state for each month of 2020, detailed content coding of the tweets and press conferences of former President Trump, the Coronavirus Task Force, and state governors over the year, state mask and social distancing regulations, and monthly spending by the federal government to relieve the adverse economic consequences on businesses and workers from the pandemic. 

To evaluate the health consequences of the pandemic, the health data reports the number of Covid-19 cases and deaths at the start and end of each month for each state. To evaluate the economic consequences of the pandemic, the jobs data compares jobs in each state in the year 2020 by major industry to its 2019 (non-pandemic) counterpart. Messaging in tweets and press conferences were coded as “pro-health” or “pro-jobs” and reported for each month by source (President Trump, Coronavirus Task Force, or state governor). State regulations for mask wearing, stay-at-home, and social distancing and monthly spending under the Coronavirus Aid, Relief, and Economic Security (CARES) Act beginning in April 2020 and its Supplemental Funding beginning in December 2020 were also reported for each month. 

The health data allowed the students to study how the virus has developed in  each state and the effectiveness of state and national messages and mandates in controlling its spread. The jobs data allowed the students to study 2020 job losses from fear of COVID, from the policies meant to control the spread of the virus, and from federal spending meant to protect incomes and to encourage jobs.       

Students then used this data to design research reports that included recommendations based upon their own data analysis. The final reports were written as policy memorandum to the President and Task Force recommending and defending policy strategies with evidence-based analysis. Students were encouraged to consider both the benefits and costs of their recommendations — in particular, the difficult trade-off of improved health outcomes against the economic costs in lost jobs. 

“The papers were uniformly well executed and, in several instances, went well beyond my background presentations by offering new data and, most exciting, new takes on the course’s original research design and policy agenda,” Prof. Inman said. 

Here is a summary of what the class found. 

What Worked for Health Outcomes

Student projects found that mask mandates made important differences for controlling the spread of the virus, reducing the rate of new Covid-19 cases and subsequent Covid-19 deaths by 7 percent, on average. The trick was getting residents to comply.

State-required mask mandates were effectively enforced by establishments, but store owners and managers had to cooperate in order for them to work effectively, and compliance varied significantly across states by citizens’ political inclinations. 

States with a greater share of citizens who “trusted the government” were more inclined to wear a mask, while states with a greater share of citizens who “trusted former Pres. Trump” were less inclined. States with a higher share of “trust government” citizens found the rate of new cases fell, on average, by 10 percent with a proportional reduction in Covid-19 deaths. In states with more “trust Trump” citizens, new cases were simulated to rise by 16 percent, again with a proportional increase in Covid-19 deaths. 

What Worked for Job Outcomes

The spread of Covid-19 had a devastating negative impact on the U.S. economy. At the height of the infection in July 2020, GDP had declined by 5 percent from July 2019, jobs by 9 percent, and the national rate of unemployment had risen from 3.7 percent to 10.2 percent.

Student projects found there were two important drivers for the economy’s decline: first, the simple risk of contracting the illness measured by the monthly reproduction rate of the illness in each state. And, second, the adoption of state stay-at-home, social distancing, and mask mandate policies meant to control the spread of the illness.

Students found that policies controlling the spread of the illness reduced the risk of the illness in each state. Thus, the lowered risk encouraged shopping and improved the state’s economy. But, the policies themselves — particularly stay-at-home and enforced mask mandates — discouraged shopping and slowed the state’s economy.

Of the two effects, the adverse job effects of health regulations proved more important. Together, the students’ research revealed an important trade-off: Health policies that reduce the spread of Covid-19 hurt local economies.

Impact of the CARES Act 

One important federal policy — the CARES Act policy for increased unemployment compensation and its extension of coverage — softened the trade-off by protecting the spending of households who lost their jobs. Students found that what did not work as a jobs protection program was the CARES Act provision providing loans directly to businesses to retain workers, the Payroll Protection Plan (PPP). The projects concluded that money paid directly to families to protect household spending helped local economies; money paid directly to firms did not.

What Didn’t Work

Effective regulations and money matter, words less so. Early messages in March and April by the Task Force warning of the virus’ dangerous health effects encouraged mask wearing and social distancing, but later Task Force messages seemed to have little additional effects on preventive behaviors and the rate of illness.

School closing regulations had little effect on the rates of infection, but they did have a negative effect on jobs.

Finally, one carefully done project looked at the effect of existing state health care facilities on Covid-19 deaths. Given the prevalence of cases in the state, the students found no significant effect of increased facilities for fewer Covid-19 deaths. Finding no effect may have been due to the projects’ use of state data, as it is too aggregative to reveal the consequences of local disparities in health care facilities. The students offered a more encouraging answer, however, presenting anecdotal evidence that facilities and seriously ill patients were often shared across state lines.

Lessons Learned

Though each of the students’ projects could take on only one aspect of the U.S. Covid-19 experience, Prof. Inman suggested that together the projects provided valuable lessons for managing a future public health emergency.

1. Once the risk of the illness is identified, act quickly, both with information and with behavioral regulations.

Policies that control the initial levels of the contagion reap significant benefits in controlling the future spread of the virus. States that acted quickly saw their Covid-19 rates, and subsequent deaths, fall more quickly. 

2. While many citizens adopted appropriate health behaviors on their own, many did not.

Enforceable regulations – mask mandates and stay-at-home regulations enforced at the store level – had valuable impacts in reducing the spread of the virus.  

3. Pandemics cost jobs. Thus, governments need a jobs policy to reduce job loss effectively.

The risk of the virus alone will discourage participation in the economy, but so too will the regulatory policies meant to control the illness. Policies such as extended unemployment benefits paid directly to families can lessen jobs losses.  

4. In a politically, culturally, and economically diverse society such as ours, pandemics are likely to have significantly different health and economic consequences across the citizenry.

The students’ projects revealed this fact. How our national and state leadership might address these disparities remains a lesson to be learned. Perhaps Albert Camus provides an answer near the conclusion of the course’s optional text, The Plague. Commenting on what may have been learned by the citizens of Oran as the plague abates, Dr. Rieux, Camus’ narrator, observes that “(n)ow at least, the position was clear; this calamity was everybody’s business.” (Albert Camus, The Plague, 1948; conclusion to Part III,)

– Emily O’Donnell

Posted: July 16, 2021

Read More Stories