Figure 1: Number of free packs distributed – by year

Source: Bloody Good Period

Period poverty is often talked about in terms of financial hardship, where people struggle to afford period products. In 2019, the UK government pledged to end period poverty by 2030. Their approach has varied greatly across the country, with policies to improve access to products being introduced in some, but not all, areas.

These include the Welsh government’s provision of £1 million to tackle period poverty, the Department for Education’s ‘Period Products Scheme’ in England, the passing of Scotland’s ‘Period Products (Free Provision) Bill’ and the approval of a pilot project to provide period products in all primary and secondary schools in Northern Ireland.

In addition, the ‘tampon tax’ was abolished in January 2021, scrapping the 5% VAT on disposable period products nationwide, in recognition that period products are essential items.

Why is period poverty still such a problem?

Research shows that many people struggled to access period products during the pandemic and continue to do so today. In a study surveying 240 people, 85% stated they had difficulties getting period products during lockdown. Of these, 30% reported that this was due to financial problems, including losing their jobs or being furloughed (Williams et al, 2022).

Non-profit organisations that provide access to free period products experienced huge increases in demand for products during the pandemic, highlighting some of the reasons why period poverty increased despite the introduction of government policies to address the issue.

The reasons for this rise included the emergence of new groups experiencing period poverty for the first time (such as students and NHS staff), supply shortages and hoarding of products, the closure of places that would normally provide access to products (such as schools, libraries and public toilets) and the failure to recognise period products as ‘essential items’ in care packages for those who were shielding.

Although lockdown measures were lifted in the UK in July 2021, concerns over funding uncertainties and central support remain for the organisations that provide support to those experiencing period poverty. Much of this is linked to the shift in government priorities during the pandemic.

Non-profit organisations will continue to provide the majority of support, until the policies introduced to improve access to free period products are effectively implemented across the whole of the UK.

What about the cost of living crisis?

There is a risk that rising prices will further exacerbate period poverty in the UK. There have already been reports of large increases in demand for products as a result of the cost of living crisis during the first quarter of 2022.

People are having to choose between essentials as the cost of energy and food continues to rise. In this case, hygiene essentials – which include period products – are often forsaken. As a result, there has been a rise in the use of ‘hygiene banks’ – services that provide access to toiletries and other essential hygiene items including soap, toothpaste, cleaning products and nappies (as well as period products).

An increase in the production cost of disposable period products due to inflation and supply issues is also having an effect. Some supermarkets and suppliers have increased the cost of such period products. Tesco, for example, has doubled the price of its least expensive period pads from two pence per pad (23p for a pack) to four pence per pad (42p for a pack). This means that any gains made with the abolition of the 5% VAT tampon tax have been wiped out.

The rising costs of period products will not only affect the ability of women, girls and people who menstruate to buy these essential items but will also mean that non-profit organisations will find it increasingly difficult to purchase the quantity of products they need to meet increasing demand.

This increase, coupled with a decrease in donations that such organisations would typically receive as people reprioritise their spending, could further hinder their ability to continue to provide support for those experiencing period poverty.

What are the implications of rising period poverty?

There is currently no consistent central government strategy or funding in place to address period poverty, despite claims that money would be available. In 2019, the then Minister for Women and Equalities, Penny Mordaunt, stated that the government would provide ‘£2 million funding through UK Aid Direct to for projects to help women and girls living in poverty to manage their periods with dignity’. Also promised was a further £250,000 of seed funding from the Government Equalities Office ‘to support the work of the [period poverty] taskforce’. It is still not known how or if this money has been spent.

With the pandemic and the cost of living crisis making the situation worse for people experiencing period poverty, as well as for organisations providing support for these individuals, there is a clear need for the UK government to honour its pledge to ‘end period poverty by 2030’. Until then, the cost of living crisis is likely to have a disproportionate effect on women, girls and people who menstruate from lower-income households.

Where can I find out more?

• Periods in a pandemic: how UK period poverty initiatives have mitigated Covid-19 challenges.
• Cost of living crisis has exacerbated period poverty, charities say’: The Guardian.
• Period products up in price as inflation hits menstrual care sector: The Grocer.
• Tesco no longer cheapest for sanitary pads after it DOUBLES price – here’s where to find the cheapest now: Money Saving Expert.

Who are experts on this question?

• Gemma Williams, Birmingham City University
• Alison Briggs, University of Manchester
• Menstruation Research Network
• Plan International UK

Author: Gemma Williams

Photo by Ildar Abulkhanov from iStock

The post How is the cost of living crisis affecting period poverty in the UK? appeared first on Economics Observatory.

The response has been an outpouring of support from the West. In the UK, 100,000 people signed up to host a Ukrainian refugee family on the first day that the ‘Homes for Ukraine’ scheme opened. An emergency appeal by the Disasters Emergency Committee (DEC) received more than £150 million during the first week, making it DEC’s second largest fundraising appeal in more than 50 years.

Some critics have accused the West of double standards in the response to the Ukrainian crisis – for caring more about a humanitarian disaster unfolding on their doorstep than about similar tragedies further afield.

A senior CBS News correspondent has been particularly berated for his comments that: ‘This isn’t a place, with all due respect, like Iraq or Afghanistan that has seen conflict raging for decades. This is a relatively civilised, relatively European – I have to choose those words carefully, too – city where you wouldn’t expect that, or hope that it’s going to happen.’

A contrast has also been noted with a DEC emergency appeal launched for Afghanistan in December 2021, which collected £30 million, less than a quarter of the amount given to the Ukrainian appeal.

But do people really care more about crises closer to home?

Analysing the responses to more than five decades of DEC appeals, there is in fact, little evidence that UK donors are more generous when it comes to close European neighbours. Across the whole period, there have been 73 DEC appeals, of which six (including Ukraine) have been in response to disasters in European countries – the previous ones being floods in Romania (1970), earthquakes in Turkey (1990) and the former Yugoslavia (1969), and conflict in the former Yugoslavia (1994) and Kosovo (1999).

Looking at average total donations by geographical area (see Figure 1), the amounts donated were, if anything, lower for European appeals compared with those in Asia, Africa and Central America.

This mirrors findings from economic experiments that explore the role of race in generosity in the context of Hurricane Katrina in 2005. In these experiments, donors were primed with information about the race of victims, but this information did not affect how much they gave.

In other words, on average, white donors gave as much to black people as to other white people. But people did give less when they were primed to think that the victims were from a less economically disadvantaged area. This may explain the higher amounts given to Africa and Asia in DEC appeals.

Although there was no variation by victims’ race on average, there was variation according to the participants’ subjective identification with racial groups. This was measured by the question ‘How close do you feel to your ethnic or racial group?’

Where white donors identified more with their racial group, they gave less to black victims, while white donors who did not identify with their racial group gave more to black victims. (Similarly, black donors who identified more with their racial group gave less to white victims.) The role of group identity in pro-social behaviour is more complex than a simple ‘them and us’.

Figure 1: Analysis of donations to 72 DEC appeals, 1968 to 2021

Source: Disasters Emergency Committee
Note: Real donations in 2021 prices (GDP deflator)

What explains responses to disaster appeals?

There is a perception that people give more in response to natural disasters than to man-made disasters. This is not the case for DEC appeals. Since 1968, roughly two-thirds of the appeals have been in response to natural disasters.

The average amounts given are not significantly different between man-made disasters and natural disasters – £26.8 million for man-made emergencies (such as war and violent conflict) and £39.2 million for natural disasters (£28.6 million excluding the 2004 tsunami in the Indian Ocean). The current response to the invasion of Ukraine also confirms that people give generously when it comes to man-made disasters.

The amount of money donated is closely related to the scale of the disaster, as measured by the number of people who are killed and the number affected in other ways. Standardised information on the scale of natural disasters is available from the Emergency Disaster Database (EM-DAT) provided by the Centre for Research on the Epidemiology of Disasters (CRED).

Controlling for natural disaster type (floods, earthquakes, storms, etc.) and geographical area, a 10% increase in the number of people killed and in the number of people affected both increase the amount donated by 3-4%.

Another key factor driving donation responses is media coverage. While this is closely correlated with the scale of disasters, research has isolated the effect of media coverage by exploiting the presence of competing news events, particularly sporting events. The results show that television coverage of natural disasters has an effect on the provision of aid.

The exact mechanism is not clear, but media coverage is likely to provide information on the scale of the need, to make the need more salient in people’s minds, to create identifiable victims by showing images of real people who are suffering, and to reduce the social distance between donor and potential recipients.

Media coverage is an important factor in explaining the very large response to the DEC appeal in the aftermath of the 2004 tsunami. The response to that natural disaster remains the biggest fundraising appeal, with more than £500 million donated (in real terms). Dramatic pictures of devastation were broadcast around the world during the Christmas holidays, a time when people typically watch a lot of television and when there may be few competing news stories.

Similarly, the almost constant coverage of the war in Ukraine is likely to be an important factor driving the large donation response.

Lift or shift?

When large amounts of money are donated in response to a single fundraising appeal, there is a concern that this will reduce donations to other causes. But there is no evidence that this is the case.

Focusing on responses to six DEC appeals between 2009 and 2015, analysis of detailed donation data from the Charities Aid Foundation (CAF) accounts found that donations to other charities increased during the time of an appeal. Although these other donations subsequently reduce, there is overall zero effect on other donations.

The contemporaneous increase may be the result of transaction costs – ‘if I am giving to one charity, I might as well make my other regular donations at the same time’. But this may also be a salience effect: the DEC appeal makes people more aware of the need to give to those in need.

Taken together with the positive response to the DEC appeal itself, the most important takeaway for the charity sector is that the response to the current humanitarian crisis in Ukraine is likely to generate new giving rather than taking donations away from other charities.

Where can I find out more?

• Disaster Emergency Committee (DEC).
• Charities Aid Foundation (CAF).
• Emergency Disaster Database (EM-DAT) at the Centre for Research on the Epidemiology of Disasters.

Who are experts on this question?

• Sarah Smith
• Kim Scharf
• Susan Pinkney, CAF

Author: Sarah Smith

Photo by Radek Procyk from iStock

The post Charitable donations: do we care more about our close neighbours? appeared first on Economics Observatory.

Hopes of 2022 being a better year for humanity than the previous two have been horrifically dashed by Russia’s invasion of Ukraine. While the natural catastrophe of the pandemic was devastating for the lives and livelihoods of millions, it was an experience to which the world was responding collectively – and we could all contribute, even if it was just by staying at home. It’s difficult not to feel helpless faced with the man-made disaster of war.

So what can we do? One possibility is giving to charities that support victims: indeed, an appeal by the Disasters Emergency Committee (DEC) has already received donations of more than £200 million. As Sarah Smith (University of Bristol), one of our lead editors, points out on the Economics Observatory this week, that already makes it DEC’s second largest fundraising initiative in more than 50 years.

Sarah notes that while some critics have accused European donors of caring more about a humanitarian crisis unfolding on their doorstep than about similar tragedies further afield, evidence suggests that this is not the case. Rather, it is the scale of a disaster, together with media coverage, that most influence the response to an emergency appeal: DEC’s biggest ever fundraiser followed the tsunami in the Indian Ocean in 2004.

Another way to help is to welcome refugees from Ukraine. And as Sascha Becker (Monash University and University of Warwick) explains in another recent Observatory piece, we shouldn’t just be looking to provide shelter and safety to the millions of forced migrants: we also need to offer access to education. Evidence from history, notably the millions of Polish people expelled from their homes during the Second World War, demonstrates the lifelong benefits of investment in human capital, particularly of refugee children, at the earliest opportunity.

A third potential contribution to the war effort is to make the case for an embargo against Russian oil and gas. Here at the Observatory, in our first piece on Ukraine, Erkal Ersoy and Chris Aitken (both Heriot-Watt University) explored the options for diversifying Europe's energy supply away from Russia, concluding that while the continent could realistically meet its energy requirements without Russia in the medium to long term, it is unlikely in the immediate future.

Nevertheless, a number of economists have been active in the campaign for action now. These include researcher turned politician Luis Garicano; former rector of the New Economic School in Moscow Sergei Guriev; Ben Moll (London School of Economics) and colleagues, whose analysis of the impact of stopping energy imports from Russia on Germany’s economy suggests it would be severe but manageable; and a poll of economic experts, several of whom indicated that while a total ban on Russian energy risks recession in Western Europe, it is a price worth paying.

Other notable contributions from economists to discussions of the economic consequences of the war, include a report by the National Institute of Economic and Social Research (NIESR), whose director Jagjit Chadha, another of our lead editors, provided evidence to inform a House of Commons Treasury Committee report on economic sanctions on Russia; a debate hosted by VoxEU, featuring analysis by Luis, Sergei, Ben and many other experts; and the Kyiv School of Economics (KSE) led by Tymofiy Mylovanov, which together with Ukrainian businesses and state-owned companies, has launched a humanitarian aid campaign for Ukraine.

Spring season

While it is hard to think about anything other than what’s unfolding in Eastern Europe, let me mention some events in April and May that are likely to interest Observatory readers. Spring is generally a busy time of year for meetings in economic research and policy-making – and no fewer than six upcoming conferences are worth exploring.

Economic History Society 2022 annual conference (#EHS2022), Cambridge, 1-3 April

First up, the annual gathering of the UK’s economic historians features several researchers who’ve written for us on key questions: what can looking back at the past teach us about dealing with pandemics, recessions and related crises? And can it help us think through how best to ‘build back better’, notably in the aftermath of war?

John Turner, another of our lead editors, is managing editor of the Society’s journal, the Economic History Review. He has also contributed to the Observatory this week in a piece asking where Russia’s post-communism economic reforms went wrong. John notes that since the early 1990s, both Russia and China have reformed their economies – but the paths taken have been very different. In Russia, the speed of privatisation, alongside inadequate laws and institutions, led to economic collapse and ultimately the rise of Vladimir Putin.

#EconomicPolicy, Paris, 7-8 April

The Centre for Economic Policy Research (CEPR) will be holding the half-yearly meeting of the journal Economic Policy in a hybrid format – online and in Paris at the French finance ministry, Direction Générale du Trésor.

The standout session is an online public debate on the potential effects of school closures during the pandemic on children’s futures, featuring new evidence from Germany and the United States presented by Nicola Fuchs-Schündeln (Goethe University Frankfurt). On the panel will be Monica Costa-Dias (University of Bristol and the Institute for Fiscal Studies, IFS) and Andreas Schleicher (director for education and skills at the OECD), and the discussion will be moderated by Andrew Jack, global education editor at the Financial Times.

Royal Economic Society 2022 annual conference (#RES2022), online, 11-13 April

The UK’s annual gathering for economists features a presidential address by Tim Besley, another lead editor, and contributor of Observatory pieces on a national infrastructure bank for the UK and how an independent Scotland might build fiscal capacity.

Further RES conference highlights include plenary lectures by Stefanie Stantcheva (Harvard), who has written for us about policy actions on inequality, and Nicholas Bloom (Stanford), who has contributed to several Observatory pieces on the impact of the pandemic on firms and industries, and its effects on future working arrangements; plus former RES president Partha Dasgupta, lead author of the independent government review of the economics of biodiversity, in conversation with Diane Coyle, another of our lead editors.

Scottish Economic Society 2022 annual conference (#SES2022), Glasgow, 25-27 April

Towards the end of the month, the birthplace of economics hosts the annual gathering of economists in Scotland, including some policy roundtables in Edinburgh and Glasgow with the Observatory. No doubt there will discussion of some of the issues raised in our continuing series on the economics of Scottish independence, curated by Graeme Roy (University of Glasgow), another of our lead editors, and Stuart McIntyre (University of Strathclyde).

The role of economics and economists in public policy and public debate, Chicago, 28-29 April

This conference, which will examine how economists engage with different groups of people outside academia, is hosted by the Initiative on Global Markets (IGM) at the University of Chicago. I am co-organising it with Chicago Booth economists, Anil Kashyap, who is also a member of the Bank of England’s Financial Policy Committee, and Christian Leuz, who has written for us on mandatory corporate reporting on sustainability.

Topics will include how economists influence public policy and public opinion, teaching approaches, evidence-based policy-making, the debate over the causes and consequences of inequality, and an analysis of responses in the IGM expert panels – the last an issue that has been discussed recently on the Observatory by Sarah Smith in a piece on women’s voices in economics.

ESCoE conference on economic measurement 2022, Glasgow, 25-27 May

The Economic Statistics Centre of Excellence (ESCoE) will hold its annual conference, organised in partnership with the UK Office for National Statistics (ONS) at the University of Strathclyde. The Observatory will be running a data masterclass introducing best practice in data visualisation and a 'code along' to create an interactive chart (including using the ONS API). We're also contributing to a panel on effective communication of data and statistics.

 Other news

The Society of Professional Economists is inviting entries for this year's Rybczynski Prize. This prestigious award is given to the best piece of writing on an issue of importance to economists, and offers individuals the opportunity to increase their profile among professional colleagues. The Society is particularly keen to receive entries from women.

The big economic news story in the UK this week has been the government’s spring statement. Many of the economic experts and organisations that work with us at the Observatory are key contributors to the in-depth independent evaluation of economic policy announcements like this, and their implications for families, firms, public finances and the economic recovery.

As ever, the IFS provided detailed pre- and post-match analysis. So too did NIESR, the Resolution Foundation (which focuses on living standards of low and middle-income households) and, with a Scottish perspective, the Fraser of Allander Institute at the University of Strathclyde.

And finally, next week on the Observatory, we’ll be launching a series of pieces on what we’ve learned about the impact of the pandemic two years on from the first lockdown in March 2020. These will include a look at what’s happened to businesses in the UK as a result of restrictions and recession, and an overview of the past, present and future effects of Covid-19 on public health.

Author: Romesh Vaitilingam, Editor-in-Chief

Picture by Drazen Zigic on iStock

The post War stories appeared first on Economics Observatory.

In addition, charitable donations have almost certainly shifted within the sector – for example, towards charities related to healthcare and those that have adapted best to the changed fundraising landscape as charity shops closed and events were cancelled. A full analysis of the ‘winners’ and ‘losers’ will only be possible when the data on charity incomes become available.

Looking forward, there is a worrying decline in the number of givers and an increased reliance on older and richer donors. In the next 12 months, there is likely to be increased debate about the role of the super-wealthy – through tax and/or philanthropy – in tackling the huge inequalities exposed by the pandemic.

Can charities expect some festive cheer?

Historically, the season of goodwill has meant a boost for charitable donations. In 2018 and 2019, for example, December was the month with the highest total donations of the year, linked to above average numbers of givers and amounts donated (see Figures 1 and 2).

But the typical seasonal pattern of giving was disrupted during the first year of the pandemic and levels of giving were higher in April 2020 and July 2020 than in December 2020. Covid-19 was associated initially with a boost to donations in the UK – visible both in a higher numbers of givers and the amounts donated – during the first months after the pandemic hit in March 2020.

Yet the initial positive effect appears to have diminished by the end of 2020 and the number of givers during the first half of 2021 has remained below the previous three-year average.

Figure 1: Percentage of people who make a donation

Figure 2: Average (mean) monthly donations

Source: UK Giving, 2021 and UK Giving, 2019

How has Covid-19 affected donations?

The pandemic is likely to have affected charitable donations in several different ways (as discussed in an earlier Economics Observatory article).

Covid-19 was associated with an increase in need that was highly salient. In the early stages, there were many prominent examples of pro-social behaviour in response to the increased need. For example, in March 2020, 400,000 people signed up to volunteer for the NHS on one day and in April 2020, Captain Tom’s fundraising appeal raised £38 million for NHS charities.

One innovative experimental study on a UK sample shows that mention of Covid-19 in a fundraising campaign resulted in a significant increase in donations: by around 8% (Adena and Harke, 2021). It also finds that the increase in giving was stronger in areas that were concurrently experiencing higher incidences of Covid-19 cases and deaths. This stronger positive effect could have been because the disease had higher relevance in these areas and/or been attributable to a response from people who were personally affected by Covid-19.

Another study sheds light on the phenomenon of ‘altruism born of suffering’ – the idea that personal experience of suffering triggers greater pro-social behaviour (De Gruyter et al, 2021). Using data from the US Panel Survey of Income Dynamics, the research finds that the unexpected onset of a personal illness (cancer, heart attack or stroke) did not lead anyone to start giving or to increase their overall donations. But it did lead people to change the causes that they gave to – increasing the amount given to health-related charities at the expense of other, non-religious giving (religious giving was unaffected).

Charity winners and losers

Almost certainly, the pandemic will have affected which charities people give to in the UK, although there is little sign of a major shift from looking at broad causes. Animal welfare remained the most popular cause in 2020 (given to by 27% of donors), followed by children (24%) and medical research (22%). Religious organisations received the highest share of donations (19%), followed by overseas aid (11%) and children and young people (9%) (UK Giving, 2021).

Nevertheless, some individual charities are likely to have been winners and losers with indications of early increased support for NHS-related and health charities, for example. Support for individual charities will have been affected not only by changes in their salience as a direct result of the pandemic, but also by knock-on changes in fundraising efforts – Captain Tom’s campaign for NHS charities and Marcus Rashford’s support for Fare Share, a network of charitable food redistributors, being high-profile examples.

The pandemic has also disrupted many traditional fundraising methods. For example, charity shops closed during lockdowns, which both took away a source of income and reduced brand visibility. There was a similar story with the cancellation of major fundraising events such as Race for Life and the London Marathon.

Cash donations virtually dried up and there was also a significant reduction in face-to-face fundraising. Charities that were best placed to embrace alternative, online fundraising strategies are likely to have done much better during the pandemic. Unlike private companies, where the share price gives an early indication of winners and losers, the full picture of the effects on different charities will only emerge once they report their annual incomes.

Local or global?

Survey evidence indicates that donors were thinking about changing their giving in response to the pandemic by targeting it towards local charities and UK causes, rather than international causes.

But an experimental study finds no difference in donors’ willingness to support Save the Children UK versus Save the Children International (Adena and Harke, 2021). In part, donors’ continued support for international causes may be because of the global nature of the pandemic and its devastating consequences in many developing countries.

Yet there is also evidence that exposure to local adverse events makes people more sensitive to adverse events occurring overseas. A study of the effect of a severe storm that hit a famous music festival in Belgium shows that people in the immediately affected area were more likely to increase their donations to a continuing nationwide campaign to collect money for famine relief in Africa, compared with people in areas that were not affected by the storm (Meon and Verwimp, 2016). These findings suggest that a positive effect on donations to local charities dealing with the immediate effects of the pandemic could spill over to a broader set of charities.

There is also evidence of positive spillover effects to other charities from the impact of fundraising appeals launched by the Disasters Emergency Committee (DEC) in response to overseas disasters (Scharf et al, 2021). DEC appeals result in a large and immediate increase in donations to overseas disaster relief, but this does not come at the expense of donations to other charities. Rather, donations to other charities increase at the time of the DEC appeal, an effect that is predominantly driven by time-shifting – in other words, bringing forward donations to other charities that would have been made later.

This time-shifting could be the result of transactions costs (‘if I make one donation, I might as well make my other donations at the same time’) and/or due to a temporary increase in salience, not just of disaster relief but also of charity in general.

A key practical takeaway from this study is that DEC appeals – which, unlike personal adverse health shocks, are linked a widespread increase in need – do not replace donations to other charities, but instead lead to an increase in total donations.

Another study documents a similar result in response to natural disasters in the UK (Deruygina and Marx, 2021). This appears to have been exactly what happened to total donations during the first year of the pandemic in the UK: 2020 saw an increase in household donations to charity to an estimated £11.3 billion, up from £10.6 billion in 2019 (UK Giving, 2021).

What happens next?

The first year of the pandemic was characterised by a positive response in terms of overall donations. Any increase in donations to individual (health and other) charities was not completely offset by reductions in donations elsewhere. Analysis of charity income data, when they become available, is likely to reveal both individual winners and losers, but the sector as a whole saw donations increase.

The first half of 2021 has looked less positive for the sector, with the numbers of donors and the donation amounts both down on the same time in previous years. Charities will be hoping for a return of seasonal giving this Christmas, but the economic damage caused by the pandemic – and the current uncertainty around Omicron – may dampen households’ generosity. In the 1980s and 1990s, donations proved resilient to economic downturns, but evidence from the United States suggests that this changed during the global financial crisis of 2007-09.

Moreover, charities face challenging long-term trends in donations, in particular a decline in the number of givers (see Cowley et al, 2011 and UK Giving, 2021) and an ageing of the donor population as giving by older households holds up better than that by younger households (see CAF 2012 and UK Giving, 2021).

In 2020, 62% of households reported that they gave, down from 65% in 2019, and the over-65 age group was the most likely to report that they had given. There is also an increasing concentration of giving among richer households. For the United States, for example, research shows that half of all donations now come from just 2% of donors, down from 10% in 1960 (Duquette, 2020).

Big donors

According to the latest Sunday Times Giving List, the total amount given by the top 200 givers in the UK increased to £4.30 billion in 2021, up from £3.16 billion in 2020, although the 2020 figure was down from £3.75 billion in 2019.

Prominent individual donors such as Jack Dorsey and Bill Gates made sizeable pledges in response to Covid-19 in the United States, while MacKenzie Scott shook up the billionaire donor world with upfront donations of around $5 billion that were unrestricted and came with no strings attached.

Overall though, it was estimated that barely one in ten of the world’s billionaires gave in response to the pandemic during its first few months. Those who did were younger, wealthier, more likely to be in the technology industry and more likely to be self-made – a pattern that is broadly in line with earlier studies on which billionaires signed the Giving Pledge.

As the pandemic has highlighted (and intensified) global inequalities and increased the wealth in the hands of the world’s billionaires, debates about tax and donations paid by the super-wealthy to contribute to tackling the problems that lie ahead are likely to feature prominently in the coming months.

Where can I find out more?

• Do we give more to charity after we've been sick? Interview with Sarah Smith on the effects of serious illness on charitable giving.
• UK Giving 2021: Study of giving behaviour in the UK.
• Covid-19 – what it means for giving: Report from the Charities Aid Foundation.
• Long-term effects of the Covid-19 pandemic on social concerns: study of the effects of charitable donations during the pandemic on other social objectives, such as tackling climate change and reducing inequality.

Who are experts on this question?

• Susan Pinkney, Head of Research at the Charities Aid Foundation, is a highly experienced market and social researcher, with particular expertise and interest in the charity sector.
• Kimberley Scharf is Professor of Economics and Public Policy and Head of the Economics Department at the University of Birmingham, works on the economics of charitable giving and social interactions, tax incentives for giving, and the effect of fundraising on giving behaviour.
• David Reinstein, Senior Lecturer in Economics, University of Exeter. Research on charitable giving and other-regarding behaviour, social influences on giving, and anonymous contributions to public goods.
• Sarah Smith, Professor of Economics, University of Bristol, works on the economics of not-for-profit organisations.
• Johannes Lohse, Lecturer in Economics, University of Birmingham, uses experiments to study voluntary cooperation, pro-environmental behaviour, and climate change mitigation.

Author: Sarah Smith

Photo by Mina Waters on Flickr

The post How has Covid-19 affected charitable giving? appeared first on Economics Observatory.

An earlier Economics Observatory article describes the social care system in England and its widespread failures. These generated inefficiencies even before the pandemic and made it harder to provide care and protect social care users when Covid-19 hit. As is often the case in both academic and policy work, the focus of the article was largely on older social care users, specifically those over the age of 65. This is despite half of all public spending through local authorities on adult social care being on younger adults, equivalent to £6.8 billion in 2018/19.

The single biggest group of younger adults receiving publicly funded social care are those with learning disabilities: 134,000 received support in 2018/19 in England. Over the course of the pandemic, it became clear that those with learning disabilities experienced disproportionately high Covid-19 mortality rates: data show that they were six times more likely to die of the disease than the general population.

This article considers the impact of the pandemic on those with learning disabilities – and how the current social care system may have contributed.

What support is available to younger adults with learning disabilities and how is it funded and organised?

State support available to people with learning disabilities aged 18 to 64 includes benefits in the form of cash transfers, government-funded social care and healthcare through the NHS.

As of the end of 2020, an estimated 165,000 people aged 25 to 64 and 281,000 people aged 16 to 64 in England received disability benefits in the form of cash transfers because they had either a learning disability or an autism spectrum disorder. These transfers are paid through the disability living allowance (DLA) or personal independence payments (PIP).

Eligibility is needs-based on the level of disability, and some of those with learning disabilities may not meet the criteria. For help with daily living, the maximum PIP someone could receive is £89.60 a week. In addition, those with learning disabilities and their families are often also eligible for other benefits, such as the employment and support allowance (ESA) and carer’s allowance (up to £114.10 and £67.60 a week respectively).

The social care system for younger adults is the same as for older people. Eligibility for publicly funded social care through local authorities depends on meeting a needs threshold and having assets under £23,250, not including family members’ income. The assessment of a person’s need for social care is separate from the assessment of whether they qualify for disability-related cash transfers. This is despite a great deal of overlap in the criteria.

There is a national framework on the needs thresholds for who qualifies for social care, but these can be interpreted differently across local authorities. As with older people, local authority social care funding can be used to provide a range of services, including personal assistants, home help, community services or residency in care homes.

Younger adults who use social care receive a greater proportion of their care in the community compared with those over 65 years of age. This includes using services such as transport, day centres and help with employment and volunteering opportunities.

For people with learning disabilities who do not apply for local authority funding, who do not qualify or who receive less care than they or their families would like, social care is given informally by friends and families, provided through charities or self-funded.

Work by economists on learning disabilities focuses mainly on children. Specifically, it addresses the impact of having a child with disabilities or developmental delay on the outcomes for parents (typically mothers).

Recent research finds that delay in early childhood development reduces mothers’ working hours, and that the effect is larger when the child is a teenager than in kindergarten (Lafférs and Schmidpeter, 2021). Earlier work shows that child disability tends to reduce mothers’ participation in the workforce (Power, 2001; Corman et al, 2005). As responsibilities for a child with learning disabilities do not end when the child reaches adulthood, these consequences are likely to continue.

How has the pandemic affected younger adults with learning disabilities and how has the government responded?

In the early part of the pandemic, the focus of the media and policy attention was on the death toll among older social care users. But over time, the impact on younger social care users, and particularly those with learning difficulties, has become more apparent.

In September 2020, QCovid (a coronavirus risk prediction analysis) identified those with Down’s syndrome as extremely vulnerable and showed an increased risk for those with all learning disabilities. Then in November, Public Health England released data showing that those with learning disabilities were six times more likely to die of Covid-19 than the general population. Finally, in February 2021, the Office for National Statistics (ONS) demonstrated that the risk of death involving Covid-19 was 3.7 times greater for both men and women with a learning disability compared with people of the same age without one.

The Care Quality Commission (CQC) published an interim report showing that, during the pandemic, ‘do not attempt cardiopulmonary resuscitation’ (DNACPR) orders were placed on some people with learning disabilities without consultation with them, their loved ones or the people who support them.

Beyond Covid-19 itself, successive lockdowns have restricted the access that younger individuals have to both health and social care. A recent UKRI-funded survey found that 30% of family carers or paid support staff said that the physical health of the person they support had changed for the worse since the first lockdown. Almost all participants reported that community activities had stopped completely or had been reduced, and 89% reported the same for their day service.

In addition to the direct impact on young people themselves, there have also been effects on their family members who act as unpaid carers. In a Carers UK survey in April 2020, 70% of unpaid carers reported providing more care due to the Covid-19 outbreak and the majority (55%) felt overwhelmed and worried about burnout.

When the Joint Committee of Vaccination and Immunisation (JCVI) announced their vaccine priority groups in December 2020, older residents of care homes were put in the first priority group. This reflected the high rates of disease and death in the first wave. Younger adults in care homes with learning disabilities, of which there were over 23,000 individuals in 2015, were not included.

The main criterion used for prioritising vaccination – after care homes, and health and social care workers – has been age. Initially, only those with Down’s syndrome and severe learning disabilities were prioritised for vaccines, as part of group four. Those with mild or moderate learning disabilities were excluded. A so-called ‘postcode lottery’ developed, as some areas of the country decided to expand the vaccine offering by placing all those with learning disabilities in group six.

After further evidence of the risks faced by those with learning disabilities and considerable press attention, the JCVI guidance was updated in February. All people on the GP Learning Disability Register became eligible for a vaccine as part of priority group six. But this register is considered incomplete, with the NHS estimating that only around a quarter to a third of the estimated number of people with a learning disability are on a GP register.

NHS England released guidelines in 2019 to try to improve identification of those with learning disabilities, but coding is still imperfect and relies partially on the availability of GPs to update the register on a case-by-case basis. Without accurate information, it is hard to target interventions or help towards this group.

How has the social care system for younger adults contributed to the impact of the pandemic on those with learning disabilities?

Covid-19 has presented challenges to those with learning disabilities and their families, which are hard to overcome. In some cases, such as Down’s syndrome, learning disabilities are accompanied by physical co-morbidities that make people more vulnerable to the virus. It can be harder to maintain social distancing, especially when social care is often provided in group community settings.

Further, when people with learning disabilities get sick, it may be harder to ensure they comply with the care that they need, such as oxygen masks. These individuals experienced health inequalities and unmet need before the pandemic, but Covid-19 has highlighted several of these shortcomings in the health and social care services available.

First, state support for younger adults with learning disabilities is a complex web, involving the benefits system, the NHS and local authorities, all supplemented by unpaid care. Families must make separate applications based on slightly different criteria to access various types of support.

On the supply side, social care is provided by a patchwork of public, private and third sector providers. There is no single body coordinating across these different systems and providers. Even in non-pandemic times, this makes the system difficult to navigate and for it to make the most efficient use of public money across services. When the pandemic hit, many home and community services were withdrawn, leaving many without the care they needed, and unpaid carers without support.

Second, the information held by the government and the NHS on those with learning disabilities is incomplete and sometimes inaccurate. This in part reflects the lack of coordination across the systems and services that provide support for those with learning disabilities. During the pandemic, this made it harder to identify quickly how different groups were affected by the pandemic and design and implement targeted policy responses. For example, once the JCVI had decided to extend the vaccine to all those with learning disabilities, the roll-out was impeded by the incomplete GP Learning Disabilities Register.

Third, there are large geographical and socio-economic inequalities in the support available. More deprived areas, with the most need, had the greatest reductions in per person local authority spending between 2009/10 and 2017/18. This was further highlighted during the vaccine roll-out where some local authorities prioritised those with learning disabilities more than others.

The government has again committed to bringing forward improvements in social care. The pandemic has highlighted how vital reform is to providing high quality support to those who need it. The pandemic has also demonstrated that younger social care users do not receive much attention in the debates around either the current shortcomings or future of social care.

How could the social care system for those with learning disabilities be improved?

The effects of the pandemic on mortality and access to support for those with learning disabilities will inevitably lead to many reflections on how the organisation and delivery of services could be improved. Looking through an economics lens, there are at least two areas where policy reform could make system more efficient and better for those that rely on it.

The first is to build up the links between the different systems that support people with learning disabilities. Separate assessment processes for disability benefits, employment support and social care generate high administration costs for the state and are burdensome for families. It is also harder to ensure that each person has the most cost-effective package of support that meets their needs.

The second is to improve data collection on the health and social care use of those with learning disabilities. This would make it easier to monitor the impacts of particular policies or events, such as the pandemic, on the population with learning disabilities, target policy interventions, and allow for more joined-up or integrated health and care services. Better data in this area could also help in assessing the quality of social care for younger adults, which is often delivered by private companies or third sector organisations.

Where can I find out more?

• Mencap for advice.
• Social Care Sector COVID-19 Support Taskforce: final report, advice and recommendations.
• Wave 1 results from Warwick study into the lives of adults with learning disabilities through the pandemic.
• A summary of government support for people with a learning disability.

Who are experts on this question?

• Rafael Wittenberg, London School of Economics
• José Luis Fernández, London School of Economics
• Chris Hatton, Manchester Metropolitan University
• Anita Charlesworth, Health Foundation

Authors: Elaine Kelly and Claudia Barclay

Photo by Cliff Booth from Pexels

The post How has Covid-19 affected younger adults with social care needs? appeared first on Economics Observatory.

Data for the UK as a whole and for Scotland indicate that, going into the crisis, social capital was declining. It is unclear whether or not the pandemic will exacerbate this trend. But given widespread evidence of the positive effects of social capital and the dramatic effects that Covid-19 has had on so many parts of our lives, it is likely to play an important role in the post-pandemic recovery.

It is therefore worthwhile examining how Covid-19 has affected these vital networks in the UK and what policies might be needed to strengthen or rebuild them.

What is social capital?

Social capital means different things to different people and there is no single widely accepted definition. But there is a commonality of the relevant factors and concepts that underpin the various interpretations.

For example, social capital has been described as ‘an instantiated set of informal values or norms shared among members of a group that permits them to cooperate with one another. If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another’ (Fukuyama, 1999).

Similarly, it is argued that social capital ‘generally refers to trust, concern for one’s associates, a willingness to live by the norms of one’s community and to punish those who do not’ (Bowles and Gintis, 2002). For others, ‘social capital refers to connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them’ (Putnam, 2000).

Trust seems to be the key word that captures the central element of what social capital is all about.

What are the benefits of social capital?

Mutual trust underwrites our interactions, whether they are private, social, economic or political in nature. From an economic perspective, firms can benefit from the cooperative trust embodied in various types of networks, since this can reduce transaction and monitoring costs, and help to facilitate an efficient allocation of resources.

In contrast, society wastes resources when people distrust each other and are dishonest. For example, management may have to introduce complex monitoring and surveillance systems in the workplace to ensure staff to fulfil their work time obligations.

At the macroeconomic level (in other words, looking at the economy as a whole), it has been demonstrated that inter-personal trust is strongly linked to GDP growth (Knack and Keefer, 1997). It has also been shown that ‘trust-based cooperative relations’ between different organisations have contributed to the competitive advantage of manufacturing enterprises in Germany and Japan, as well as in parts of Italy (Humphry and Schmitz, 1998).

Further, a variety of studies have demonstrated that social capital is positively associated with improved health outcomes along a number of dimensions, as well as reduced inequality and a reduction in crime rates (OECD, 2000; OECD, 2010). When there is trust embedded in our communities, individuals and society as a whole benefit.

What are the recent trends in social capital in the UK and Scotland?

The most recent study of social capital in the UK by the Office for National Statistics (ONS) was published in February 2020 and included data for the year up to the end of Autumn 2019 (ONS, 2020). The ONS measures social capital in terms of personal relationships, social network support, civic engagement, and trust and cooperative norms – using 25 indicators of social capital in total.

Figure 1: Trust (%) in national government in the UK, 2004-2019

Source: Office for National Statistics

A number of indicators show a fall in social capital going into the pandemic. First, there was a dramatic decline in the general public’s trust in national government from 2017 to 2019 – from 32% to 21%, as shown in Figure 1.

Second, the proportion of those saying that they feel they ‘belong’ to their neighbourhood has also fallen since 2014. In terms of individual engagement, which includes interactions with their personal environment and networks, people are less likely to connect with wider interests through organisational membership of clubs, community trusts, religious networks and social service groups, both in the short and longer term.

Finally, and corresponding to the falls in actual community engagement, there has been a sharp rise (53% in 2013 to 68% 2019) in the use of the internet for social networking in the recent past. This is shown in Figure 2 and is discussed further below.

Figure 2: Proportion who used the internet for social networking in the last three months in the UK, 2011-2019

Source: Office for National Statistics

The Scottish government’s social capital index is based on four themes: social networks, community cohesion, social participation and community empowerment (Scottish Government, 2020). Under these headings, data from 18 survey questions asked in the Scottish Household Survey are tracked over time and used to create an overall measure of the national change in social capital since 2013.

The latest data were published in February 2020 (but the next publication is not scheduled until October 2021). The Scottish social capital measure was stable at the 100 mark between 2013 and 2017 but fell in the two subsequent years, to 93 points by 2019. The change between 2017 and 2019 has been driven by the decrease in the social capital themes of ‘empowerment’ (feeling able to influence decisions), ‘networks’ (neighbourhood help and support) and ‘participation’ (volunteering).

What has happened to social capital during the pandemic?

The pandemic has dramatically changed the way in which many people work and enjoy their leisure time, with working from home becoming a new norm for many. This shift, when considered alongside the millions on furlough and those that have become unemployed, raises important questions about the impact of the pandemic on the UK’s stock of social capital.

The effects can be seen at different levels. Trainees in various sectors are most likely to have found it difficult to build good network relationships, despite access to the internet. Many may have started jobs but never met their colleagues. This is something their employers may need to address after the pandemic. In workplaces where good trust-building networks were not built-up pre-pandemic, enforced working at home may have exacerbated existing inefficiencies.

Given the behavioural changes that have resulted from the pandemic, its effect on trust is likely to have had wider implications and affected how people interact outside the workplace. For example, the risk of catching Covid-19 from other people is likely to have changed levels of trust. This may limit people’s ability to sustain the kind of network relationships that are essential to building and maintaining social capital.

As noted above, the UK-wide survey of social capital indicates a dramatic fall in trust in national government going into the pandemic, and it is unclear at this stage whether or not this trend will continue. The UK government’s handling of the first phase of the pandemic perhaps suggests that the loss of trust will continue, although the impressive speed of the rollout of the vaccine in the second phase may counter this. The overall effect on government trust is likely to be dependent on how gradual relaxation of the current lockdown pans out.

With the significant increase in the use of the internet and social media platforms during the pandemic, it could be argued that virtual networks have substituted for actual networks. But there is growing evidence that it is the ability of the internet to create in-person meetings and foster ‘real-world’ relationships that are the most important means through which it can bring about change (Putnam and Skocpol, 2018).

Another aspect of working from home is that commuting times have fallen significantly. This has allowed people to interact more at their local community level, thereby potentially building social capital in a different direction.

One of the key ways this has been demonstrated during the pandemic is the large number of local voluntary community groups that have been formed to assist the most vulnerable with deliveries of food and other essential supplies. It is estimated that ten million adults in the UK have volunteered for community activities or organisations for, on average, three hours per week. This would be equivalent to approximately £400 million worth of labour at the median UK wage.

What are the potential policy responses to changes in social capital?

Whatever the actual outcome for social capital that results from the pandemic, we know that there will be inferior outcomes for health, inequalities and economic growth. This means that there is a strong case for rebuilding social capital. What policy changes and other factors could bring about positive change?

Comparisons have been made between the end of the so-called ‘Gilded Age’ in the United States (1870-1900) and the current period in terms of persistent inequality, polarisation and cultural self-absorption (Putnam, 2020). In reaction to the large inequalities in the Gilded Age, a diverse group of progressive reformists became prominent in civil society. These reformers created a huge range of groups, such as the Rotary Club and other societies with a community-based focus on socialising, service and mutual aid. This movement created a vast store of social capital, which helped to foster widespread support for legislation to address such issues as labour reform, the monopoly power of corporations and inequality.

In order to achieve a comparable reform today, policy-makers may need to follow the lead of the progressive reformers of the Gilded Age and engage in an ‘immense collaboration’. Perhaps post-pandemic, other pressing concerns such as climate change or global inequality will be the galvanising focus that creates such collaboration, with the internet and social media playing a supporting role.

Another way in which the UK’s stock of social capital could be improved is in terms of reforming the objectives of companies. The idea that the modern-day corporation is only about maximising shareholder value has created huge inequalities, leading many to call for a move away from the shareholder-based model to a system where firms have responsibilities to the societies they operate within.

Such a change could be achieved by a change in corporate law that would alter the governance of modern companies and refocus their objectives to include taking account of the undesirable side-effects of maximising shareholder value. Specifically, this could be done by ensuring that the costs of maintaining social, human and natural capital are taken into account when determining profits.

It is widely accepted that the UK is over-centralised. As a result, in many communities, the level of perceived influence over local decision-making has been consistently low in recent years. Decentralisation of decision-making could therefore give people in local communities a greater incentive to get involved in local governance, building stronger local-level social networks in doing so.

Further, policies that support the greater use of information and communications technology could be used to help connect people with their local neighbourhoods, as well as more distant communities. Electronic networks can also serve to communicate information and ease market transactions, especially where matching information is lacking (OECD, 2000). There are undoubtedly inequalities in the ability to access technology, for example high-speed broadband, and policy should therefore recognise the special need to target disadvantaged groups.

Other initiatives could include fiscal support, in the form of tax relief, for families that encourages or facilitates more parental involvement in the lives of children. These policies could work alongside government support for voluntary initiatives on the ‘demand-side’, with measures that encourage funding of organisations that make effective use of volunteers. There could also be ‘supply-side’ measures that encourage employers to offer time off for some sorts of community activity (OECD, 2000).

Finally, government could empower citizens by supporting co-production models in communities. This could help ensure that health and social care, for example, are embedded in local communities (Scottish Co-production Network). Such initiatives would enable elderly and other groups to stay closer to their families, sustaining social ties and reaping positive health benefits. Research has shown that such benefits are closely linked to social capital – a finding that has particular resonance in light of the pandemic, given the severity of Covid-19 outbreaks in care homes.

In the wake of the financial crisis, the pandemic has again highlighted the overemphasis of financial capital in our society at the expense of other forms of capital, such as natural capital and social capital. Given the considerable evidence that social capital has a pervasive effect on a wide variety of socio-economic indicators – such as health, wellbeing and productivity – if we are to rebuild a post-pandemic society that addresses the key issues of inequality and climate change, and create a sustainable and resilient recovery, there has to be a greater emphasis on rebuilding and strengthening social capital.

Where can I find out more?

• OECD report on social capital, human capital and health: This report builds on findings from a workshop of the Social Capital Global Network, organised in Paris in October 2018.
• OECD report on the accuracy of measuring institutional trust: This report presents data from a wide range of different household surveys containing measures of trust and combines this with information on other social and economic outcomes.

Who are experts on this question? 

• Diane Coyle, University of Cambridge
• Imran Rasul, UCL
• Mirco Tonin, Free University of Bozen-Bolzano, Italy
• Partha Dasgupta, University of Cambridge
• Ronald MacDonald, University of Glasgow
• Ben Fine, SOAS

Author: Ronald MacDonald

Photo by Manuel Peris Tirado on Unsplash

The post How has coronavirus affected social capital in the UK? appeared first on Economics Observatory.

More than 16 million people have received a first vaccination dose for Covid-19, and it seems likely that the UK’s schools will re-open not too long after the half-term holidays. So perhaps now is a good time to look up from our immediate health and economic concerns, and think about what comes next. Can we really just go back to life as normal – or is it time to deliver on the widely expressed hope of ‘building back better’?

This is a recurring theme in the latest contributions to the Economics Observatory. Indeed, a longer-term perspective on coronavirus and the economy is what we’ve tried to provide ever since our launch back in June last year.

To answer some of the big questions we face, our writers have drawn on evidence from past crises to explore the future of cities with so many of us working from home; how we can balance the need to promote environmental sustainability with the desire for economic recovery; and whether the collective financial hit will make us care more or less about the wellbeing of others. This week, we’ve come back to each of these topics.

Sound of the suburbs

In the early days of lockdown, it felt like the switch to remote working for millions of people would only be temporary. Now, almost a year on, could there be a more permanent shift on the horizon? And if so, what does that mean for patterns of ‘economic geography’ – the balance between where people live, work and spend? And how might this affect city centres, suburbs and the countryside?

That’s what Gianni De Fraja, Jesse Matheson and James Rockey have been exploring with a measure they call ‘zoomshock’ – the net inflow or outflow of workers into small geographical areas (nearly 1,000 in the case of London) – and what that means for local businesses that ordinarily serve incoming commuters.

In places like the City of London, which has experienced a huge negative zoomshock, it’s been very bad news for shops, restaurants and gyms. But while there could be substantial job losses for such businesses in city centres, there is potential for growth and new establishments in other areas like the suburbs.

Zoomshock for Greater London, by MSOA and borough

Source: Authors' calculation based on data from the ONS Annual Survey of Hours and Earnings, 2017, 2018, 2019

The longer-term consequences will naturally depend on whether workers go back to their offices. But the ‘forced experimentation’ with remote working of the past year has shaken up how both staff and employers think about the workplace, and permanent changes seem likely. Mass commutes on a daily basis may well be a thing of the past.

Warm glow

The move to working from home is what researchers refer to as a natural experiment: it’s happening in the real world, now let’s see what we can learn from it. But laboratory experiments can also help us understand human behaviour and its possible consequences. In their Observatory piece, Alexandra Baier, Esther Blanco and Natalie Struwe outline what we know about ‘warm glow’ – the extent to which people care about others and feel good about doing good.

Top donation cause areas by percentage of total donations (2016-2019)

Source: Charities Aid Foundation

There’s a great deal of experimental evidence showing people’s ‘pro-social concerns’, which fits with day-to-day observation of charitable donations, volunteering and philanthropy. There’s also evidence of increased giving in response to appeals for financial aid in the wake of natural disasters like hurricanes and tsunamis.

But, these authors ask, what happens with a global crisis? Might Covid-19 lead to donations being diverted from other causes? More broadly, could it be distracting us from other pressing social concerns, such as tackling climate change and reducing inequality?

 Looking across the data so far, including from their own work, they conclude that while there is a partial substitution of social concerns, the pandemic is not a total distraction. They are optimistic about society’s desire to maintain support for climate action and poverty alleviation, alongside fighting Covid-19.

Green recovery

Our other new article this week picks up the baton on environmental matters in the aftermath of the crisis, focusing particularly on the potentially important role of green finance in promoting a sustainable recovery.

Top central bankers, including former Bank of England governor Mark Carney and the current president of the European Central Bank (ECB), Christine Lagarde, have been pushing this agenda. But as one of our earlier pieces shows, far from being green, the ECB’s monetary policy has not even been ‘carbon-neutral’: its asset purchase programmes have tended to favour polluting industries.

The new piece – by Theodor Cojoianu, Andreas Hoepner and Fabiola Isabel Schneider – looks further at central banks’ role, but also more widely at private investment strategies that can support green objectives. These include investing in only the top environmentally sustainable companies across sectors; designing investment portfolios that don’t include fossil-fuel producers and users; and divesting from fossil-fuel-based economic activities.

This team of authors also end on an optimistic note: green investing can support a green recovery, both by promoting sustainable sectors and by diverting funds away from heavy polluters. And fiscal and monetary authorities can help to create the right incentives as we come out of the Covid-19 crisis.

Dates for the diary

Finally, what comes next in terms of public conversations about economic research and policy-making? Three upcoming online events are worth checking out.

• Lessons from a pandemic year for macroeconomic & financial stability policy: In a high profile webinar today, Larry Summers, top US economic policy-maker in both the Clinton and Obama administrations and outspoken commentator on a potential ‘overheating’ impact of the Biden coronavirus relief plan, will be talking to former Bank of England deputy governor Paul Tucker. Paul wrote a provocative piece for the Observatory recently on the need for what he describes as ‘a new constitution for central banking’ in the wake of the global financial crisis of 2007-09, persistently weak growth and now Covid-19.

• Royal Economic Society 2021 annual conference: The UK’s annual bash for economic researchers, which will take place virtually this year, features lectures by the Society’s two most recent past presidents: Nick Stern, author of the eponymous 2006 report on the economics of climate change and contributor to the Observatory on the potential role of a national investment bank in recovery from the crisis; and Rachel Griffith, who spearheaded the Observatory’s early stages, remains a lead editor and has written several pieces, including on obesity, supermarket prices and whether anyone has been made better off by coronavirus.

• Economic History Society 2021 annual conference: The equivalent gathering of economic historians will also be virtual and feature several researchers who’ve written for us on key questions: what can looking back at the past teach us about what comes next? And can it help us think through how best to build back better?

Author: Romesh Vaitilingam, Editor-in-Chief

Photo by Pixabay for Pexels

The post What comes next? appeared first on Economics Observatory.

These objectives are interrelated with the pandemic – see, for example, the ‘Covid-19 Response’ to each of the SDGs (United Nations, 2020) and a report by the World Wide Fund for Nature (2020). But the complex interrelationships between Covid-19 and other social concerns might be difficult to perceive for many citizens – and this may translate into focusing on the pandemic at the expense of other issues.

There is research evidence of significant short-term effects (during the spring of 2020), with the public’s concerns about individual and collective responses to Covid-19 partly displacing their concerns about other social objectives. What we don’t know yet is how persistent these effects will be or the likely magnitude of the substitution.

What do we mean by social concerns?

There is wide consensus that the majority of people care about the wellbeing of others and get a ‘warm glow’ from doing good things for others – see Andreoni (1989); Meier (2007); and Chaudhuri (2011) for reviews of what researchers call ‘pro-social’ behaviour. We also know that most people care about inequality and social welfare (Fehr and Firschbacher, 2003; Fehr and Schmidt, 1999; Bolton and Ockenfels, 2000).

Broadly speaking, these measures of social concerns are based on individual choices that affect the wellbeing of others, typically measured in the controlled environment of the experimental economics laboratory. This evidence is generated from well-studied ‘games’, with results that have been widely replicated across different groups of people (see Charness and Rabin, 2002, for a range of experiments; Henrich et al, 2001, for a cross-cultural study in small-scale societies; and Fehr and Schmidt, 2000, for a review).

An alternative measure of social concerns is donations to charities. Studies of this kind typically ask participants in a lab experiment to decide how to distribute a given amount of money between themselves and a charity recipient (Andreoni, 1990; Eckel and Grossman, 1996). Comparing the amount that an individual donates to a charity and what they keep for themselves gives a measure of their pro-social concerns.

These experiments find a sizeable proportion of participants showing pro-social concerns. This fits with day-to-day observation of charitable donations, volunteering and philanthropy.

Are social concerns affected by crises?

Researchers are more divided on the consistency of people’s social concerns. Some characterise individuals as belonging to set types, but there is growing evidence that social concerns vary according to our experiences in life. Social preferences measured by experiments change over time as a result of such factors as education (Jakiela et al, 2015), economic shocks (Fisman et al, 2015 for evidence after a financial crisis) and natural disasters and violence (Cassar et al, 2017; Voors et al, 2012; Horstmann et al, 2006; Horstmann and Scharf, 2008).

Similarly, charitable donations of households (as a measure of their social concerns) may vary over time – see, as an example, Figure 1.

Figure 1: Top donation cause areas by percentage of total donations (2016-2019)

Source: Charities Aid Foundation

Among the factors influencing charitable giving are calls for donations (appeals) and crises. For example, after Hurricane Katrina in 2005, an experimental study found that the amount of information and direct experience of the disaster affected the charitable giving of the experimental participants (Eckel et al, 2007). An intervention that involved having people recollect the hurricane (an experimental technique known as ‘priming’) had negative effects on both the probability of donation and the amount donated by subjects closer to the disaster: they donated considerably less than subjects who lived far away from the hurricane zone.

Further, studies using donation statistics find that disasters affect charitable giving. For example,

fundraising interventions associated with natural or humanitarian disasters (such as wars, political conflict and refugee crises) lift donations to charities related to the disaster. In addition, donations to other unrelated charities first increase after the donation appeal but decline shortly afterwards. This means that there are no changes in baseline donation levels to those other charities in the longer time horizon (Ottoni-Wilhelm et al, 2017).

Unexpected donations of households after the 2004 Indian Ocean tsunami were positively correlated with planned future donations towards other social causes (Brown et al, 2012). The evidence from these studies suggests that donations to unexpected crises following natural disasters do not necessarily come at the cost of reduced donations to other charities.

But these results do seem to depend on the context. For crises where the donor has also been affected, results seem to differ: there is evidence that having experienced a health shock can generate a shift in donations, leading to a substitution towards donations to health-related charities at the expense of donations towards other social concerns (Black et al, 2020).

Is the pandemic modifying people’s social behaviour?

A number of research projects are monitoring the impact of Covid-19 on charitable organisations (see, for example, research at Nottingham Trent University and the University of Birmingham). There are also a number of recent studies using experimental methods addressing how Covid-19 affects people’s aggregate pro-social behaviour:

• The emergence of the pandemic led to short-term reductions in trust. But compared with baseline data from 2019, altruism increased significantly, as measured by decisions about donations to other participants (Shachat et al, 2020).
• Individuals that were intensively exposed to the crisis (where exposure is measured by a regional index comprising the prevalence of the virus, as well as measures of concern and negative sentiment expressed through internet searches and social media) showed an increase in anti-social behaviour, increasing theft among participants or intentionally reducing the monetary rewards of others (Lohmann et al, 2020).
• Short-term results on the pro-social concerns of adolescents during three weeks of lockdown show stable levels of pro-social behaviour towards other people (differing in their degree of familiarity and their level of need or deservedness), as measured via hypothetical decisions about donations to others (van de Groep et al, 2020).
• Information policies about Covid-19 show that having people exposed to examples of positive private role models (citizens stepping up to volunteer) or negative public role models (politicians being accused of using the pandemic for personal gain) increases donations to a charity (Abel and Brown, 2020).
• Similarly, learning about the true mortality risk of older people increases the likelihood to donate (Abel et al, 2020).
• In addition, priming people to think about Covid-19 increases pro-social behaviour towards other people, as measured in so-called ‘ultimatum’ and ‘dictator’ games (Guo et al, 2020).
• Priming subjects on the narrative that the emergence of Covid-19 is linked to human destruction of wildlife increases donations to nature conservation (Shreedhar and Mourato, 2020).
• More generally, although one might expect from previous evidence that the income shock associated with the pandemic might decrease pro-social behaviour (see, for example, Almunia et al, 2020, on the financial crisis), it has been shown that the collective threat posed by the pandemic increases trust (Li et al, 2020).

In addition, a recent study presents initial evidence specifically on the substitution effect that concerns related to the pandemic might have on other social priorities, including climate change and poverty alleviation (Blanco et al, 2020). By means of a controlled experiment on donation to charities, the focus of this study is on the short-term effects, presenting data for eight consecutive weeks during April/May 2020 for Austria.

The main result is that introducing the World Health Organization (WHO) Covid-19 Solidarity Response fund significantly reduces the sum of donations to the original eight charities. This derives from two effects:

• Donations to the WHO fund are substantial, illustrating a high degree of concern about Covid-19 among participants. When the WHO fund is the only possible recipient, donations amount to over 50% of endowment; when the WHO fund is one out of nine possible recipients, donations are still 9.5% of endowment.
• Irrespective of whether participants could or could not donate to the WHO fund in addition to the list of eight charities, aggregate donations were stable.

Overall, these results indicate that donations to diverse social concerns are partially substituted by donations to the WHO fund. Does this mean that the pandemic has fully replaced other concerns of participants in this study? This does not seem to be the case. The donations to the other charities were still positive. As a result, while there is a partial substitution of social concerns, it is not the case that Covid-19 is fully distracting individuals from other pro-social causes.

What is different with the Covid-19 crisis?

Why might we see a partial shift in donations towards Covid-19 relief charities at the expense of reduced donations to other social causes when there is prior evidence that crises do not affect donations to unrelated charities? With the evidence so far, it is not possible to pin this down to a causal mechanism. But the crisis caused by Covid-19 is certainly different from the comparatively localised crises, such as tsunamis or hurricanes, which have been previously studied.

Covid-19 is a shock that is directly or indirectly affecting people worldwide. The overwhelming global presence of Covid-19 in people’s everyday lives and their social media feeds, as well as within politics, is something fundamentally different to the disasters studied in the past.

The substitution results found for the pandemic are in line with previous findings for individual health problems, supporting a substitution in social concerns. For Covid-19, we see this substitution for the general population, even if not all individuals have fallen sick themselves. It could be that being personally affected by a crisis could be the trigger for substitution in social concerns and associated charitable donations.

 How reliable is the evidence on the substitution of social concerns due to Covid-19?

Much of the existing research on this topic is based on evidence from experimental methods. These studies have the advantage of providing early results from controlled environments. But these advantages come at the cost of uncertainty on whether the results are generally robust and would replicate in general populations and different cultural and geographical contexts.

Similarly, some studies on the impact of Covid-19 on social concerns lack a baseline before the pandemic. This brings limitations to interpretation of the causal effects. Studies using time series data tackle these issues (see, for example, this Economics Observatory article). But, by design, these studies can neither assess causal effects nor explanatory mechanisms, as they address naturally occurring settings where multiple potential confounding factors are at work.

Why does all this matter?

The accumulating results on how Covid-19 is affecting other social priorities are highly relevant in understanding support for diverse social priorities during the pandemic. This in turn informs policy design on social support during the crisis. In understanding the social acceptability of public policies to ‘build back better’, it is critical to provide empirical evidence on citizens’ support for diverse social priorities.

We interpret the results as illustrating society's desire to maintain support for climate action and poverty alleviation, alongside fighting Covid-19. This is consistent with the supranational policy for charitable action that was set in the spring of 2020. For example, the United Nations has explicitly introduced a Covid-19 relationship to each of the SDGs, highlighting the links between the pandemic, economic wellbeing and environmental conservation.

National governments have also followed this path of policy action. For example, there is the proposal for the European Union’s Green Deal and the implementation of the universal basic income in Spain (Arnold, 2020). Similarly, the scientific community has been calling for policy design for protecting the natural environment and tackling various inequalities (Hodges and Jackson, 2020; Rosenbloom and Markard, 2020; Thorp, 2020; von Braun et al, 2020).

Future research on this topic would benefit from multidisciplinary efforts to advance towards integrative research from different disciplines in aiding policy-making during the challenging times of the Covid-19 pandemic (see also Coyle, 2020).

Where can I find out more?

• A COVID-19 recovery for climate: editorial in Science magazine.
• A UN framework for the immediate socio-economic response to COVID-19: United Nations April 2020 factsheet.
• The Secretary-General’s UN COVID-19 Response and Recovery Fund: April 2020 summary.
• Open Letter to Global Leaders – A Healthy Planet for Healthy People: A call for action from the Club of Rome.

Who are experts on this question?

• Catherine Eckel
• Rachel Croson
• Philipp Grossman
• James Andreoni
• Kimberley Scharf
• Sarah Smith

Authors: Natalie Struwe, Esther Blanco, Alexandra Baier

The post Is coronavirus distracting us from other pressing social concerns? appeared first on Economics Observatory.

To inform these decisions, cost-benefit analysis requires estimates of the consequences of different potential policies. Metrics including the value of a statistical life (VSL), the value of a life year (VOLY) and the value of quality-adjusted life years (QALYs) put monetary values on health and safety consequences in different ways (as explained on the Economics Observatory by Coast and Sanghera, 2020).

The methods differ in their conceptual frameworks and in the empirical approaches for their estimation, yet all of them are blind to the distributional consequences of policies. Here, we examine how the distribution of safety should be considered in policy-making.

What is the role of altruism?

The VSL and VOLY metrics rest on a number of assumptions. Importantly, they assume that the appropriate perspective for the valuation of safety is self-interest, with people valuing reductions in their own risks but not those of others. The metrics also assume that the total amount of safety (that is, the total expected lives saved or life years gained) should be the policy objective for these measures.

Contrary to these assumptions, people care about others and value improvements to others’ wellbeing (Simon, 1993). For example, people give to charity and donate their time to good causes.

To develop a better understanding of the underlying preferences driving this behaviour, some economists conduct experiments that involve people making choices under controlled conditions. In some experiments, participants are given a sum of money and asked how they would like to split it between themselves and an anonymous stranger. Participants consistently give away some of their money to others, even when their actions are entirely anonymous and are therefore neither strategically useful nor helpful in improving the way they are viewed by others (Camerer, 2003).

In the context of the pandemic, people have shown remarkable willingness to incur personal costs by abiding by lockdown rules to protect others from harm as well as themselves. Recognising altruism, and ideally quantifying its extent, can help to predict how effective policies will be when they rely on people’s self-sacrifice.

Moreover, if altruism towards others is focused on safety, which implies that people’s wellbeing is enhanced specifically by knowing that others are being made safer, then estimates of VSL, VOLY and QALYs may be underestimated (Jones-Lee, 1992).

Whose safety matters most?

Covid-19 – and the methods used to combat it – affects groups in society differently. The elderly and those with pre-existing health problems are the most vulnerable to the virus and so they benefit the most from more restrictive policies. Younger people and those without health problems not only benefit less from these policies, but also tend to be harmed the most by them.

For example, children and their parents suffered when schools closed in the first and third lockdowns, and working age people in the hospitality sector face uncertainty and potential harm to their livelihoods as their industry is restricted by lockdowns and the tier system used to fight the subsequent waves.

When considering the distribution of scarce vaccination and testing capacity, we assign priority to NHS staff and other key workers. Our success in weathering the pandemic relies on their ability to work, so it is an efficient use of resources to protect them. In addition, individuals may prefer that society’s resources are directed towards those helping in the fight against the pandemic (see Persad et al, 2009 for evidence along these lines).

In this instance, efficiency and the preferences of society as a whole work in the same direction, and so making key workers the priority is uncontroversial. But what happens when this is not the case?

What do we learn from VSL, VOLY and QALYs?

Difficult choices must be made when public preferences are unclear – or when the option that best respects public preferences conflicts with the option that is most efficient in saving lives.

In aggregate, older people have fewer years of life remaining than younger people. Under the VOLY approach, policies that reduce the risk of dying for the young are more valuable than those that reduce the risk of dying for the elderly since the young have more years left to live. But under the VSL approach, all lives are valued equally, regardless of age.

Similarly, those who have pre-existing health conditions have fewer QALYs at stake. Under the QALY approach, policy-makers should give priority to saving the lives of those who are healthy, but the VOLY approach makes no such distinction. When different approaches fail to give a clear answer to these distributional dilemmas, where can policy-makers turn?

The answer may lie in measuring how people would prefer to trade-off different types of risks to different population groups using tailored experiments and surveys. The standard VSL, VOLY and QALY approaches all rest on the assumption that individuals’ preferences – or more specifically, their trade-offs between wealth and fatality risk – are the appropriate basis for policy-making. As such, it seems reasonable to suppose that their trade-offs between risks of different kinds and to different population groups is also a legitimate basis for policy-making. Currently though, this is not put into practice.

What tools does economics offer?

While the widely used tools of cost-benefit analysis ignore distributional concerns and measure the wealth-risk trade-offs from an explicitly self-interested perspective, the wider health and welfare economics toolkit has well-developed techniques for addressing these concerns empirically.

In the ‘person-trade-off’ approach (Nord, 1995), participants in research experiments are presented with scenarios describing groups of people at risk of harm. Those groups differ in some observable way, and the number of people in each group is also different. By eliciting the number of people in one group that is equivalent in harm to a different number in the other group, researchers are able to reveal the relative weight that the participants place on the health, safety or wellbeing of people in the two groups.

This method has been used in contexts such as age – where respondents are asked to prioritise saving more older people or fewer younger people – and health status – where they are asked to prioritise saving more people with a given health condition or fewer people with a different health condition. Analysing these priorities reveals the trade-offs that people are willing to make along these dimensions.

Person-trade-off studies are powerful and simple, but suffer from potential biases in the results as participants might give answers that they think the researchers want to hear or which show them in a positive light.

The discrete choice experiment approach is more subtle, masking the trade-off of interest by varying the groups in more ways than one. It is underpinned by an economic theory of decision-making called random utility theory (McFadden 1973). Statistical analysis of participants’ choices reveals their implicit rates of trade-off between different characteristics of the groups.

Seeking to understand how different characteristics affect the way that people around the world would prioritise the safety of different groups, researchers released an online platform called the ‘moral machine’ (Awad et al, 2020). The moral machine ‘game’, which is free to play and multi-lingual, has gained international attention, with 39.61 million decisions being made by people from over 200 countries.

In the game, participants see scenarios in which a self-driving car will hit a group of people unless a bystander diverts it, in which case the car’s occupants will die. The pedestrian and driver groups differ on observables including the number of people at risk, and their age and gender. They also differ in their social status, their fitness and their behaviour (for example, whether the pedestrians are crossing the road legally or illegally), and even whether they are humans or animals.

The results suggest a preference for sparing women over men, the young over the old, and the law-abiding over the unlawful, among other things. Differences between groups of countries are also apparent – for example, decisions made by people in the southern cluster of countries (predominantly Latin American countries and those characterised by French influence) demonstrate a much stronger preference for sparing women, whereas decisions made by those in the eastern cluster (predominantly representing Confucian and Islamic cultures) show a marked preference for sparing the law-abiding.

How should society balance the trade-offs between efficiency and equity in pandemic policy-making?

The VSL, VOLY and QALY approaches include only the value of an individual’s own risk reduction. By adding these values up across a population for cost-benefit analysis, it is implicitly assumed that the objective should be to maximise the sum of individual benefits for the population. But we have already questioned whether individual benefit is the right metric, arguing that safety-focused altruistic concern for others should also be considered. Next, we question whether the simple summation of the value of risk reductions is appropriate.

As well as the total reduction in risks to life, known as efficiency, any policy will also be characterised by the fairness of its allocation of risk reduction across different groups. The most efficient policy may not be the most equitable, and while standard approaches ignore such a possibility, this may not best respect the public’s preferences.

Evidence from my research with co-authors (Arroyos-Calvera et al, 2019) sheds light on this issue in the context of fatality risk reductions. We describe a city made up of two zones, identical except for the risk that they face from dying from exposure to waterborne bacteria.

The results of an experiment in which participants are presented with a simple choice reveal an overall preference for policies that save the most lives, but that people are willing to sacrifice some lives saved overall in order to reduce the risks in both zones of the city. Their implied preferences for saving the most lives and for equity outweigh the preference for policies in their own self-interest (although these are also preferred, all else equal).

In follow-up work, we replicated our earlier experiment during the first wave of the Covid-19 pandemic and our preliminary results point to remarkable stability of preferences. These new data give us confidence in suggesting that, in the context of pandemic policy-making, equitable policies that help a broad range of people may better respect the preferences of the public than opting for less equitable policies, even if these save the most lives.

Specifically, the odds that a participant would choose a policy that scored more highly on equity were 6.6% higher than the odds of choosing a comparable but less equitable policy. The odds of choosing a more efficient policy were 18.4% higher than the odds of choosing a less efficient but otherwise identical policy. This calls for a re-evaluation of the role of the VSL, VOLY and QALY approaches in guiding policy-making both during and after the pandemic, to seek a way to incorporate distributional concerns.

In line with our own findings, equity-efficiency trade-offs have been explored extensively by others (including Ubel et al, 1996; Johannesson and Gerdtham, 1996; and Bobinac et al, 2012).

At what cost?

Choosing a policy with more evenly distributed benefits and costs, or one that aims to be more fair in its distribution of benefits across groups and over time, may come at a stark cost if it means saving fewer lives overall. Striking the appropriate balance between respecting a preference for equity versus saving the most lives may be especially difficult in the context of Covid-19 because the benefits of policies like lockdown are concentrated in one part of the population while the costs are concentrated in another.

This contrasts with applications like road safety, where risks and benefits are more evenly distributed across the whole population. Because of the concentrated nature of the risks and benefits, equity may be difficult to achieve, and it may result in a significant reduction in lives saved compared with a policy more focused on efficiency. Dedicated research using the tools we have described would be invaluable in helping to guide trade-offs in this context.

How can social welfare analysis help?

Social welfare analysis considers distributional issues. This approach recognises that government policies often have an impact on multiple aspects of people’s wellbeing (for example, their financial position as well as their safety); that policies often have different impacts on different groups, so that there are typically ‘winners’ and ‘losers’ from any given policy; and that there are often trade-offs between inequality and overall welfare.

The social welfare function is a mathematical representation of the way that society weights the wellbeing of different groups, and can guide policy-making beyond simple cost-benefit analysis. In this approach, the individual wellbeing of people in society is quantified to give a list of welfare scores for society overall. Different lists, representing the outcomes of different policy options, are then compared according to the social welfare function, which describes how society should prioritise different welfare distributions. In the social welfare function, weights may be placed on the distribution of safety as well as on total amount of safety that can be gained from a policy.

The appropriate social welfare function for practical application is a contested question. Experts debate the role that citizens’ views should play, and the practical application of the framework. But the theoretical underpinnings are well-developed, and work is in progress to determine the UK public’s preferences. The move from theory to practical application could prove an exciting development in the future.

Conclusion

Standard approaches such as the VSL, VOLY and QALY metrics focus on the total sum of benefits, but do not take account of the distribution of safety improvements. This is especially problematic in the context of the Covid-19 pandemic because of the clear distributional differences both in the burden of disease and mortality risk, and in the costs of mitigation.

Growing evidence from economics and related fields demonstrates that people are altruistic towards others, and hold preferences for equitable as well as efficient provision of safety. Yet forgoing the standard approach of cost-benefit analysis means accepting that in the pursuit of fairness, fewer lives may be saved. This is a tough balance to strike, and another difficult trade-off for society to make.

Where can I find out more?

• A scoping study on the valuation of risks to life and health: the monetary value of a life year (VOLY): Susan Chilton and colleagues explain how the technology exists now to generate a theoretically robust, evidence-based and updated valuation of risk to human life and health. They conclude that applying such values would lead to better and more informed policy decisions and would have major implications not only for efficiency of government spending but also for equity in population wellbeing.
• Principles for allocation of scarce medical interventions: In a study written for The Lancet in 2009, Govind Persad, Alan Wertheimer and Ezekiel Emanuel consider different rules that could guide decisions about how to allocate scarce medical resources such as organs and vaccines. They conclude that no simple allocation principle is sufficient to account for the complex moral considerations, and instead propose ‘multiprinciple allocation systems’, evaluating three existing systems and proposing a new one.
• The moral machine: Recent scientific studies in machine ethics have raised awareness about the how humans perceive machine intelligence making autonomous choices involving human life and limb, both in the media and public discourse. This website aims to take the discussion further, by providing a platform for: 1) building a crowd-sourced picture of human opinion on how machines should make decisions when faced with moral dilemmas; and 2) crowd-sourcing assembly and discussion of potential scenarios of moral consequence.

Who are experts on this question?

• Rebecca McDonald
• Aki Tsuchiya
• Paul Dolan
• Joanna Coast
• Richard Cookson

Author: Rebecca McDonald, Department of Economics, University of Birmingham

Acknowledgements: Rebecca held an ESRC New Investigator award [ES/R005893/1].

Photo by Nick Fewings on Unsplash

The post Safety from infection: how should Covid-19 policy make the trade-offs? appeared first on Economics Observatory.

Naturally, this has included a greater shift to online shopping and purchasing products that can be enjoyed at home, while holidays, travel and indoor social activities have fallen by the wayside. These changes to our leisure-based spending relate both to periods of lockdown and to planning activities when making the transition away from times of restriction.

One notable development has been an increase in purchases of products that enhance our ability to spend more time engaging with ‘backyard wildlife’ (Clucas et al, 2015). Data from both the UK and the United States show that interest in bird tables, bird baths and bird food grew significantly through the major periods of lockdown that began in March 2020.

Not only do these trends provide an economic boost to associated industries, but they also have the added advantage of improving survival opportunities for bird species, many of which have faced considerable population decline in recent years through habitat loss.

This increased engagement with nature also contributes positively to individuals’ wellbeing. At a time when society is forced to segment and isolate, deeper engagement with the natural world offers a new form of interaction from which people can establish feelings of connectivity and purpose.

How have people invested in local nature during lockdowns?

Akin to many household-based leisure pursuits that have enjoyed increased popularity through lockdown periods, people intensified their engagement with backyard wildlife in 2020.

This has occurred in two ways. The first is through time spent connecting with local wildlife. Figure 1 shows changes in the time people spent watching garden birds pre- and post-lockdown. This seems to follow a pattern of ‘shifted’ intensity across the spectrum. In other words, this raised interest occurs with both those with little previous engagement and those with a considerable prior interest.

Figure 1: Trends in time watching birds

Source: PFW Data (Nov - Apr) 2015 – 2020
Note: SIP refers to shelter in place

The second relates to online shopping searches for wildlife-friendly goods. The frequency of the searches for bird tables, bird food and bird baths all increased significantly following lockdown announcements, as shown by Figure 2.

Figure 2: Trends in search terms

Source: Google Trends, 2016 - 2020

Although we cannot verify whether the conversion of ‘search to purchase’ is consistent pre- and post-lockdown, the chronology of events is certainly interesting from the perspective of consumer behaviour. Initially, it appears that people display an interest in attracting local wildlife to their area, and they do so through buying food and tables.

Next, and indicated by data from Spiny Software shown in Figure 3, people look to identify species. A spike in related app purchases in April 2020 fits this timeline.

Figure 3: Changes in year-on-year bird identification app downloads

Source: Spiny Software (Dec - Jun) 2018 - 2020

Finally, people enhance their relationship with nature through their search for products that offer nesting and watering opportunities.

These data trends are useful to consider from an economic standpoint, but also shed light on people’s behavioural psychology when engaging with these types of activity. Our conjecture is that this sequence of ‘feed-identify-nurture’ is consistent with cognitive processes people undertake when investing in networks. It demonstrates the necessary first steps that individuals take to forge long-lasting connections with the environment on their doorstep.

What are the implications for bird populations?

While we believe that the motivation for engaging with local wildlife is largely anthropocentric, evidence does suggest that people are concerned about both species’ welfare and the general health of their local environment (Schuetz and Johnson, 2019; Brock et al, 2017). From an economic standpoint, bird feeding can certainly be classified as an action that delivers both personal and wider benefits.

Research indicates that contribution intensity is greatest when there are complementarities between these private and public motives (Cornes and Sandler, 1994; Vicary, 1997; Lefevbre et al, 2020). Habitat loss is causing a decline in local wildlife populations, in particular through brownfield development and changing urban planning structure (Stanton et al, 2018; Rosenberg et al, 2019). Therefore, the boost to avian populations from feeding (the public element) arguably induces greater enjoyment (the private element) because people can see bird populations arriving and thriving in their local area.

Studies indicate that for actions to offer long-lasting benefits, they should involve routine and repeated interaction. Urban feeding typically delivers birds in greater numbers and with improved regularity. It thus fulfils these criteria, while also providing a crucial boost to the species themselves during winter and breeding seasons.

One unanswered question is the trade-off between the variety and stability of bird populations. Supplementary feeding will usually be most beneficial when it supports a significant population of the same species. This would give greater opportunities for breeding and more resilience within that particular population.

Yet we can assume that those feeding birds value variety and the thrill of seeing a range of species that visit their bird tables. This raises concerns about the long-term effect of an elevated interest in lockdown feeding. The propensity for people to become disengaged does need to be taken into account when assessing the true environmental benefits created.

What is the impact on people’s wellbeing?

Engaging with backyard nature has been identified as beneficial to long-lasting life satisfaction. Those studying subjective wellbeing highlight several qualities that immersion in nature offers. ‘Interconnectedness’ is one such example and is an emotion common to many wellbeing-enhancing actions, including involvement with religion, community and wider society (Frey and Stutzer, 2010; Dutcher et al, 2007).

Furthermore, the repetition associated with ‘everyday wildlife’ interactions can induce positive feelings of responsibility, routine and the achievement of success under uncertainty (Rappe, 2005; Jacobssen et al, 2008; Diener and Biswas-Diener, 2008; Dolan et al, 2008).

When applied to bird feeding, this mix of benefits is described as the ‘warden effect’ (Brock et al, 2017). This differs somewhat from the type of value we assume that people derive, say, from donating to environmental charities – where we believe that people donate because doing so evokes feelings of ‘pro-sociality’, or they perhaps have an existence value for the species (that is, they like the notion of it being preserved for future generations).

Instead, displaying ‘warden tendencies’ elicits a value more closely resembling those we derive from our domestic pets or from gardening, because it involves a repeated connectivity that delivers routine, reassurance and purpose within our lives.

If one accepts this concept, then the value that people derive from more pro-active engagement with backyard wildlife is particularly important during a global pandemic. This is particularly the case as many of the other avenues through which people find connectivity, responsibility and interaction are no longer accessible. These include sports club participation, religious attendance and visiting family members.

Even if only temporary, this implies that a rise in the uptake of local environmental activities not only fills leisure time, but also simultaneously improves individuals’ wellbeing through the feeling of usefulness that this allows within their community.

Conclusion

Covid-19 has brought health, economic and social challenges at local, national and global levels. Amid these difficulties, engagement with local wildlife may have offered a ‘triple-win’ during periods of lockdown:

• Economically, searches for and sales of products associated to wildlife-friendly gardening provide a welcome boost to their respective suppliers.
• Ecologically, this increased support for backyard wildlife offers benefits to the individual and more widely, by counteracting the historical long-term species decline that has occurred through habitat depletion.
• Socially, the characteristics of this engagement can evoke ‘warden-style’ feelings for the individual. This may deliver an important substitute for the routes by which this wellbeing was formerly derived, given that these are restricted or prohibited in lockdown.

Whether these habits persist when we emerge from lockdown periods remains largely unknown. Nevertheless, given the nature of Covid-19, countries continue to find themselves in a fluid state with social restrictions as virus cases rise and fall. In such an environment, local wildlife could play a vital role in filling our desire for interconnectivity. In addition, the resilience of these species without human aid means that they will be around for people to enjoy as and when they wish.

Finally, although our local environment contains some components that remain constant (for example, the locations of green space or the wildlife you expect to find there), seasonality brings different opportunities. A lockdown in the spring affords people the chance to see fledgling birds and install man-made nesting sites; in summer, the requirement to refill water resources; and in winter, the need to provide vital sustenance to hungry species.

As a result, engagement with local wildlife throughout a pandemic not only occupies our leisure time, but also offers us diverse ways in which we can feel useful, connected and valuable.

Who are experts on this question?

Public goods

• Richard Cornes, Research School of Social Sciences, Federalism Research Centre, Australian National University
• Todd Sandler, Department of Economics, Iowa State University

Nature and happiness

• Ed Diener, University of Utah and University of Virginia
• Robert Biswas-Diener, Portland State University
• Daniel Dutcher, Clean Energy Group,
• James Finley, Pennsylvania State University
• A.E. Luloff, Pennsylvania State University
• Janet Buttolph Johnson, University of Delaware
• Mike Brock, University of East Anglia
• Jacqueline Doremus, California Polytechnic State University
• Liqing Li, California State University, Fullerton

Where can I find out more?

• Wild bird feeding in an urban area: intensity, economics and numbers of individuals supported: Report by Melanie Orros and Mark Fellowes in Acta Ornithologica.
• Lockdown leads to ‘cleaner air, more wildlife and stronger communities’: ITV News report in April 2020.
• Coronavirus: Only 9% of Britons want life to return to 'normal' once lockdown is over: Sky News in April 2020 reports that people have noticed significant changes during the lockdown, including cleaner air, more wildlife and stronger communities.

Authors: Mike Brock, Jacqueline Doremus, Liqing Li

Photo by Ross Bonander on Unsplash
Note: This is based on a working paper available here.

The post ‘Backyard wildlife’: has the pandemic reconnected us with nature? appeared first on Economics Observatory.