Exploratory Analysis on Sweden's Coronavirus Strategy: How Successful Has the Swedish Approach Been So Far?

Many on the Left, particularly Senator Bernie Sanders, laud countries such as Sweden because the "Nordic model." Forget for a moment that Sweden abandoned actual socialism in the 1990s because it had failed, that Sweden economic freedom comparable to the United States, or that Sweden has some features that are undesirable to the self-identified "democratic socialists," whether that be school choice, abolishment of the wealth tax, or the fact that Sweden deregulated significant portions of its economy in the late 1990s and early 2000s. In spite of these counterfactuals, it had been common for the Left to idolize Sweden.....at least until the pandemic began.

Once we were in full lockdown mode, Sweden received considerable derision. Why? Because Sweden did not implement a lockdown. On top of that, there was no face mask mandate. Granted, they closed down secondary and tertiary schools and gatherings exceeding fifty people, but a lot of businesses and institutions remained open while multiple countries implemented lockdowns and stay-at-home orders. Sweden largely relied on voluntary social distancing. I can understand why lockdown proponents would throw shade at Sweden. Imagine if a country proved that the goals of the lockdown could have been achieved without a lockdown. It would mean that so many of us went through lockdowns for nothing. Those who get angry at Sweden for their approach to handling COVID-19 do so because they have skin in the game. They want to know that their sacrifice was worthwhile. But enough of psycho-analyzing (at least for now). Let's answer an important question here: how successful has the Swedish model been so far?

One way to answer this question is to look at the death rates. If keeping things open like Sweden were as bad as lockdown proponents purported, Sweden would be an unfortunate outlier. However, that is not the case. Looking at John Hopkins' Coronavirus Resource Center, Sweden has a death rate of 57.05 per 100,000 people. This is certainly a higher rate than multiple countries, including its Nordic neighbors: Denmark (10.73), Finland (6.05), and Norway (4.97). On the other hand, Sweden has fared better than four European nations that locked down: Belgium (87.48), the United Kingdom (62.44), Spain (61.72), and Italy (58.64). France was not so far behind, with 45.56. Another noteworthy example is when you compare the state of New York to Sweden. Andrew Cuomo touted his work on defeating COVID-19 at the Democratic National Convention last week, although the death rate for New York is almost three times that of Sweden, at 169 per 100,000 people (Kaiser Family Foundation).

Let's take a look the raw number of COVID deaths. One Swedish model, which was inspired by the Imperial College model that got the United Kingdom to go into lockdown mode, predicted back in April that if they did not "change their evil ways" by implementing stringent social distancing measures, there would be 96,000 deaths (Gardner et al., 2020). Where are we with that?  If you look at statistics at Folkhälsomyndigheten (FOHM), which is Sweden's health ministry, the deaths are slightly over 5,800. When looking at the FOHM death data by age, you have some interesting findings:

1. Nearly 4,000 of the deaths of those who are 80 and older. About half of Sweden's COVID deaths in Sweden during its peak were in nursing homes. If I were to have any criticism about the execution of Sweden's strategy, it was the inadequate protocol at long-term care facilities at the onset of the pandemic (Stern and Klein, 2020). 
• Although elderly deaths were high in Sweden, it still was nothing in comparison when New York governor Andrew Cuomo mandated that COVID patients stay in nursing homes, thereby significantly contributing to New York's COVID deaths.
2. As we see below, COVID deaths in Sweden peaked in April, but in recent weeks, COVID deaths have come to a grinding halt (Worldometer). 
3. One study from Sweden shows that those in nursing homes in Stockholm had an average about 5 to 9 months of life remaining (Stern and Klein, 2020). While we should not minimize anyone's death, looking at it from the angle of years of life lost (YLL) due to premature mortality also should play a role in assessing Sweden's success. For example, someone who dies from COVID at age 30 would have more years of life lost to COVID than someone who is in their twilight years. About 500 of Sweden's COVID deaths come from those who are 50 and younger. This is significant because setting the initial nursing home policy aside, you see there are not that many deaths for most age demographics. 

The other scary COVID model that came from Sweden had to do with hospital capacity. This model predicted that intensive care unit [ICU] would reach 10,000 beds, well above the pre-pandemic capacity of 526 beds (Sjödin et al., 2020). Sweden was quickly able to ramp up its capacity to 1,100 ICU beds, but if we took the model seriously, Sweden would be screwed in either case. Guess what happened? Did Sweden exceed hospital capacity? Svenska Intensivvårdregistret (SIR), which is Sweden's intensive care registry, has data on COVID ICU bed usage. There was a two-day peak of 558 ICU beds in April, but it has declined considerably ever since (see SIR data below). Not only did the model exaggerate by almost twenty-fold, but Sweden still had plenty of ICU capacity left. In other words, Sweden was able to accomplish one of the lockdown's main goals without locking down, i.e., making sure that hospitals did not exceed capacity.

I would like to say a word about herd immunity. When the pandemic began, experts postulated that herd immunity would be around 60 to 70 percent. In May, an antibody study showed that Sweden only reached about 7 percent (see here), which is a far cry from 60 percent. By late July we started to see a decline in cases, hospitalization, and deaths. If it is not the antibodies, what could it be? It could be possible that T-cell immunity is contributing to herd immunity, as is implied by studies from Karolinska University in Sweden (Sekine et al., 2020) and University Hospital Tübingen in Germany (Nelde et al., 2020). Even better is that herd immunity might not be so high. One study from Science magazine calculates a possible herd immunity rate of 35 percent (Britton et al., 2020), whereas a preprint study from Oxford suggests that it could be as low as 10 to 20 percent (Aguas et al., 2020). While this evidence is preliminary, it does suggest that Sweden could be closer to herd immunity than we might realize. If Sweden did inadvertently reach herd immunity sooner than expected, it could mean that Sweden has experienced the bulk of its COVID deaths as a result. And if that is true and other countries end up going through a second wave, it means that it is too early for lockdown proponents to use death rates as a metric.

While this a pandemic, there is more to consider than the health aspect. There has also been the question of whether keeping the economy open would help Sweden. If you would have asked me at the beginning, I would have expected the Swedish economy to get pummeled along with the rest of the world. After all, Sweden is more dependent on imports, not to mention greater dependence on international demand for Swedish goods. Not even the Riksbank, which is the Swedish central bank, was that optimistic. They were predicting an annualized contraction of 6.9 percent. Yet the GDP for the first half of 2020 surprised me. Although economists were predicting a 0.6 percent contraction for Sweden in Q1, it actually grew at 0.1 percent (or an annualized rate of 0.4 percent).

Sweden did experience a contraction in Q2, but it was not nearly as bad as their European neighbors (BBC). Sweden had a quarterly decline of 8.6 percent, which was still less than half of the United Kingdom (19.1 percent) and Spain (18.5 percent). As a reminder, the United Kingdom and Spain locked down, yet they both had higher death rates and a higher economic contraction than Sweden. The European Union average was a contraction of 11.9 percent, which is also worse than that Sweden. Capital Economics found that Sweden is going to have the least shallow recession in Europe, even in comparison to its Nordic neighbors.

Since the Swedish economy did not experience economic contraction in Q1, they technically are not in a recession yet. That could change in Q3, but as of now, economic growth is faring better than other developed countries.

Unemployment figures are less encouraging. Sweden has an unemployment rate of 8.9 percent (Statistika centralbyrån [SCB]), whereas the Euro Zone average is 7.8 percent (Eurostat). While it is still higher than the Euro Zone average, it is still lower than the U.S. unemployment rate of 10.2 percent.

Postscript: Yes, the Swedish government made some clear mistakes at the beginning, most notably with long-term care facilities. But even after that rough start, Sweden seems to have gotten the virus under control. The decline in deaths, hospitalizations, and cases since its April peak has been encouraging. The GDP figures are also higher than forecasted, which is also good news. Sweden's economy seems to be faring better than its European peers.

While there is some reason for initial optimism, it is still too soon to definitely determine if Sweden's light-touch method was the correct one. Whether Sweden gets hit with a second wave will help determine if its more lax, voluntary approach was the right one. If Sweden does not get a second wave, I would most likely give Sweden a rating of B/B+ for its overall response. For Sweden's sake, I hope that it does not get a second wave.

Should States Be Encouraging Voting By Mail During the Pandemic?

Democratic presidential nominee Joe Biden announced that his running mate for this election is to be Senator Kamala Harris (D-CA). With the presidential elections less than 100 days away, the American people are gearing up for Election Day. A question still remains: what is the best way to hold an election during a pandemic? One of the possibilities is to encourage voting-by-mail efforts, which many states are examining as an option. According to Pew Research, 65 percent of Americans support "no-excuse" absentee voting. Nevertheless, there is a partisan divide: Democrats are nearly twice as likely to support voting-by-mail. What I would like to do here is get past the partisan clamoring and examine whether we should push for more voting by mail or not.

1. How many states allow for mail balloting? Those who are against the proposal act as if voting by mail were unprecedented or untested. That's simply not the case. We have allowed for absentee voting for civilians since the late 1800s. There are five states in which voting by mail is the default: Colorado, Hawaii, Oregon, Utah, and Washington. Another 29 states allow for "no-excuse" voting by mail. According to the Election Assistance Commission (EAC), 31 million Americans (or 25.8 percent of ballots) were casted by mail in 2018.

2. Would allowing for more voting by mail give one party an advantage over the other? Given the partisan divide, I have to ask this question. On the one hand, greater access to voting could increase turnout for young adults, minorities, low-income individuals, all of whom are more likely to vote Democrat. On the other hand, this could provide greater access to voting for senior citizens, who skew Republican. It really could go either way. What do historical data have to say? Four political scientists from Stanford University answered this question. They looked at voting data from 1998 to 2016. Their conclusion is that although there is a mild increase in turnout, it does not favor either party when it comes to election outcome (Thompson et al., 2020). The statisticians over at FiveThirtyEight also explain how the net effects are negligible.

3. Is voting in-person during a pandemic unsafe to the point where everyone should vote by mail? This is the main impetus for those to be in favor for voting by mail. Waiting in long lines, being in tiny voting booths, and using pens shared by hundreds of voters could spread COVID-19. This is certainly plausible.

On the other hand, I remember how liberal media outlets were freaking out in April because the Republican assemblymen were pushing for the in-person voting, and the U.S. Supreme Court ruled that Wisconsin should hold their primaries without delay. A piece in the Atlantic said that voting in public during a pandemic is not compatible with safety. There was sure to be an uptick in COVID-19 cases in Wisconsin as a result, right? Not really. Researchers at Stanford University and the World Health Organization found no detectable surge as a result (Leung et al., 2020). The CDC came to a similar conclusion in July (Paradis et al., 2020).

Granted, Wisconsin is one case study. At the same time, if it were impossible to keep safe with in-person voting, the outcome from the Wisconsin primaries would have been different. As long as we keep the same protocols that we do while going grocery shopping or to a retail store (e.g., face masks, social distancing), the odds of an outbreak of COVID-19 would be low. Plus, if Liberia can conduct elections during the Ebola pandemic, I think the United States could handle this pandemic.

4. Does voting by mail increase the likelihood of fraud? This is a concern commonly held by those on the Right who oppose voting by mail. Theoretically, by-mail voting makes it easier for someone to falsely vote on behalf of someone else or tamper with ballots. The MIT Election Data and Science Lab points out that while it is more likely for fraud to occur for by-mail voting than in-person voting, voter fraud is still an overall rare occurence. How rare? Based on an investigative reporting project funded by the Carnegie Foundation, there were 491 reported cases of absentee ballot fraud between 2000 and 2012. As Snopes illustrates, the methods for tracking in-mail ballots (e.g., Electronic Registration Information Center [ERIC]) have gotten more sophisticated since then.

As the Brennan Center brings up in its analysis on by-mail voting fraud, one is more likely to get struck by lighting than commit mail voting fraud. In short, while it is more likely, the risk of widespread fraud is minimal, even if we reverted the entire system to in-mail voting.

5. How much less likely ballots by mail less likely to be counted? Let's forget for a moment that there are those on the Left accusing Trump of hampering USPS operations in hopes of undermining the election. As I brought up in May, the United States Postal Service (USPS) was having issues before the pandemic began.  Can the USPS honestly handle such an uptick in delivery both in ballots from election officials and back to them? Also, how many ballots will get lost in the mail?

Postal delivery could have a great impact on whether mail-in ballots are counted. For one, there is the issue of undeliverable ballots, i.e., the ballots that were returned the registered voter did not live at the address on file. Of those that were transmitted to voters (as opposed to returned to election officials), 1.4 percent were counted as undeliverable in 2016 (EAC).

Second, the 2020 primaries could give us a glimpse into what that could look like. According to the Associated Press, 1.5 percent of mail-in ballots for California's 2020 primaries received were ultimately rejected, the most common reason being that the ballot was not mailed and delivered on time. Another reason for ballot rejection could be in filling out the ballot. For thousands of Americans, this will be the first time voting by mail. As MIT political scientist Charles Stewart points out, first-time mail-in voters are more likely to have ballots rejected.

How bad is the rejection rate for returned ballots? According to the Election Assistance Committee (EAC), the national rejection rate for 2016 was 0.77 percent (Overview Table 2) and 0.9 percent for 2012 (Table 32). NPR highlights how multiple states, including Virginia, Arkansas, Minnesota and Oklahoma, had rates above 1.0 percent during their 2020 primary elections. And if you want a scary outlier, New York City is rejecting one out of five of its in-mail ballots. But we don't have to use an outlier to make a salient point: If in-mail ballots are done on a large scale, a 1-2 percent rejection rate could make the difference between a win and a loss for a candidate.

Conclusion
My take on the whole debate is this. Both sides of the debate are stoking fear to gain support for their side, whether that is the fear of the pandemic, of voter fraud, or of the erosion of democracy. My main concern is that of delivering the ballots. Absentee ballot rejections rates are high enough during normal election years. Combine that with the disheveled nature of the USPS along with perturbing rejection rates that were high in the 2020 primaries, I am skeptical of the ballot delivery system to be adequate.

Does this mean I want to force everyone to go to the voting booth in-person? No. Does this mean I want mandated by-mail voting? Again, no. Some people will feel more comfortable going to the voting booth because it helps better guarantee that their vote gets counted (plus, it takes pressure off the USPS). Others will feel more comfortable with an absentee ballot because they do not want to risk contracting COVID-19. Each individual should be allowed to assess their own personal risk and make the choice that best fits that situation. State government and election officials should do their utmost to make sure voters have the ability to exercise whichever method of voting works best for them.

Has the CARES Act Helped Out Small Businesses?: A Preliminary Look at the Paycheck Protection Program (PPP)

With the coronavirus-induced lockdowns, there have been millions who cannot go to work. Even with the reopening, businesses still struggle and the high level of unemployment is hitting millions especially hard. That is why Congress allocated $669 billion as part of the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP was designed to provide up to eight weeks of federal-backed, forgivable loans to small businesses to cover employee payroll, utilities, and rent in order to make sure that small businesses do not permanently close during these lockdowns. The PPP was intended to prevent rupturing employer-employee connections and the matching of workers to firms, as well as limit the suffering of unemployment and loss of health insurance. The Small Business Administration (SBA), which is responsible for administering the PPP, went through the initial funding in a matter of days. Congress had to approve a second round of $310 billion in April. It is now August, and Congress is looking to pass another coronavirus stimulus package. While we wait to see whether there will be further funding for the PPP, I had been asking myself whether the program has been successful enough to merit another round of funding.

Since the main goal of the PPP is to keep payroll afloat during this tough time, one of the main metrics is whether the PPP had an effect on the employment figures. Economists over at Harvard concluded that "the PPP had little material impact on employment at small businesses (Chetty et al., 2020)," and that PPP-eligible businesses laid off employees just as quickly as those who were not eligible. Economists at the University of Chicago similarly found a negligible impact on employment (Granja et al., 2020). Those at the Federal Reserve and the Massachusetts Institute of Technology [MIT], on the other hand, found a modest increase of 3.25 percent, or 2.3 million jobs (Autor et al., 2020). There is a possibility that the PPP resulted in milder declines in unemployment and faster rehiring (Bartik et al., 2020).

Another important metric is how businesses fared. Firms with greater exposure to PPP had more cash on hand, they were more able to pay off loans. This means that the PPP likely helped with financial stability of businesses (Granja et al., p. 29). Another paper from the National Bureau of Economic Research [NBER] found that businesses were 14 to 30 percent more likely to survive (Bartik et al., 2020).

Going off that, let us see how smaller businesses or more vulnerable businesses fared. Smaller businesses are going to be more disproportionately affected by the economic downturn in part because they have less capital to weather such disastrous events as lockdowns and decreased demand. Looking at preliminary data, it does not look like smaller businesses have benefitted as much. Why? Because smaller businesses were less aware of the program, less likely to apply, faced longer application times, and were less likely to get approved (Neilson et al., 2020). In terms of geography, funds did not particularly reach the geographical areas that were hardest hit by the economic downturn (Granja et al., 2020). An industry-based look is not exactly flattering, either. The Peterson Institute points out in its analysis on the PPP that although food services, the arts, and recreation incurred huge job losses, other industries received larger shares of the loan money [see below].

Conclusion

So how has the PPP fared so far? We see mixed evidence on the effects of employment, ranging from negligible to slightly positive. It seems that the major benefit of the PPP is that it helped businesses stay afloat for longer. At the same time, there are concerns that the loans were not well targeted, either in terms of geography, industry, or businesses that needed the loans the most. On the whole, was the PPP a good idea? A panel of economic experts at the University of Chicago generally think that it was. The centrist Brookings Institution conversely thinks that it was not because past SBA loans have led to favoritism, delays, and high costs. To that effect, there is evidence that the average cost per job was about $224K through May 2020 (Autor et al., 2020, p. 24), which is a lot for a couple of months of work. It makes one wonder if it could have been more efficiently spent.

Some have proposed alternatives to the PPP. Economist Gregory Mankiw suggests sending a lump-sum, short-term loan to individual ex post. The American Enterprise Institute proposes a tax credit. The Brookings Institution has suggested hazard pay. Instead of the PPP, the Mercatus Center thinks that the government should better ensure access to credit instead. Right now, it looks like there are more downsides to the PPP than upsides. I don't know whether the PPP will ultimately be a force of net good, but I hope to revisit this topic in the future with updated information.  

1-23-2022 Addendum: An economist from MIT along with nine co-authors measured the impact of PPP. (Autor et al., 2022). They found that the PPP preserved two to three million job-years of employment over 14 months. That means to preserve the equivalent of 2-3 million jobs, it cost $170K to $257K. Only 23 to 34 percent of that money spent on PPP went directly to the workers who would have otherwise lost their jobs. Finally, three-quarters of the PPP funds went to households in the top 20 percent of earners. Talking about an ineffective way to spend $800 billion!

7-8-2022 Addendum: The Federal Reserve Bank of St. Louis released its study on the PPP (Emmons and Dahl, 2022). Not only were 75 percent of recipients were unintended recipients, but most of the recipients were in high-income households. Also, the cost of the PPP was anywhere from $169K to $258K, which means that it cost the taxpayers about $4 for every dollar received in wages and benefits.