We Were Already Unhappy: COVID-19 Just Made It Clearer

There are quite a few plans to save our lives and the economy. The only thing left to do is execute it. (image; Harvard TH Chan, School of Public Health)

The World Happiness Report on: Subjective Wellbeing, Urban-Rural Divide, Sustainable Development Goals, and how Blockchain can help fix all this

As we enter the tenth week of COVID-19 in NY, there are indications that the number of sick are decreasing and that a persistent 14-day decline in hospitalizations and deaths; hospital vacancies and ICU bed availabilities at 30%; at least 30 virus tests per 1,000 residents a month; and at least 30 working contact tracers per 100,000 residents; are sufficient criteria to reopen the city for business.

Yet as NY case counts are decreasing, many States remain vulnerable and most of the nation is going the opposite direction (below).

NY case counts are decreasing, but the rest of the nation is going the opposite direction (source)

Fortunately the CDC issued reopening guidelines and the Edmond J. Safra Center for Ethics at Harvard, issued a detailed roadmap to pandemic resilience (below) which includes: (1) massive scale testing, (2) tracing, (3) supported isolation (TTSI) as well as R&D priority areas (opening figure).

Phases 1 through 4: aggressive research and development (source)

Nonetheless, irrespective to these evidence-based recommendations, many Governors are opening or plan to open business, despite warnings that trying to reopen the economy too soon will cause both human tragedy and economic catastrophe (read here where each of the 50 states stands on reopening).

Why is that? What is driving these decisions?

#1: Looks like we are not living the same experience: The high-middle-low income divide

Many assume that assessing the pandemic threat, trusting government policies and following guidelines are driven solely by partisan politics (I write about this here).

However reasons to accept scientific evidence as a guide for policy goes beyond ‘believing in Science’. A strong driver in public behavior change is dependent on the personal and societal sense of trust and well-being, namely: (1) GDP per capita, (2) social support, (3) healthy life expectancy, (4) freedom to make life choices, (5) generosity, and (6) freedom from corruption.

In general, communities and countries that enjoy institutional trust fare significantly better than when ill-health, unemployment, low incomes, discrimination, family breakdown, and fears about the safety of the streets are predominant. Living in a trusting social environment helps not only support all individual lives directly, but also community viability.

Indeed, as described in the 2020 World Happiness Report, European countries, US, South East Asia and South America enjoy higher levels of subjective well-being, than Middle Eastern, ex-Soviet and African countries (below). Eight of the top 10 are European, the other two are Australia and New Zealand; 8 of the bottom 10 are African, the other two Afghanistan and India; the US ranks 18.

Top 50 ranking countries
Bottom 50 ranking countries

Although economic and subjective well-being has changed throughout the years (especially in Central and Eastern Europe, and in Sub-Saharan Africa), their has been a general increase in unhappiness following the 2008 financial meltdown, consistently worsening at a 8–10% annual rate.

Using Gallop’s Cantril Ladder, the global trends for worry, sadness, and anger all move in the same direction, starting to increase about 2009. increasing around 8~10% in the 9 years span (source)

In other words, unhappiness started at least a decade ago and has only worsened since COVID-19.

#2: Looks like we are not living the same experience: The Rural-Urban divide

Large cities have followed the same well-being trend of countries, and financially affluent capitals in high-income countries usually do well. Seven of the top 10 cities are European, the other three are Brisbane, Wellington and Tel Aviv; and six of the bottom 10 are in Africa, the others being Kabul, Sanaa, Gaza and Port Au Prince in Haiti.

However despite the general agreement between country and city subjective well-being, there is an interesting difference between high- vs. low income countries. The results below show that the average country happiness is a very strong predictor of city happiness only in high-income countries, whereas this is not the case for countries at lower incomes levels.

Stated differently, urban happiness is lost when economic thriving is lost.

General correlation coefficient between country-city pairs stands at 0.96 (F-test = 35.90)
The correlation coefficient is slightly lower at 0.90 (F-test = 35.72)

This challenges the idea that urbanization is predominantly driven by changes in income and economic opportunities. Perhaps this was true in the early stages of urban economic development, however with the Fourth Industrial Revolution (4IR) at bay, geographic clustering of non-agricultural production and services in cities makes less sense.

If migration of people from rural to urban areas does not offer both a higher probability of employment and higher wages, and the occupational structure of rural areas continues to offer improved wages and standards of living, the reversal of urbanization or suburbanization is inevitable (below).

This is referred to as the “Urban paradox”

This “Urban Paradox” can be explained by:

People factors: household income and sufficiency, employment status; economic optimism; health problems and experience of pain; social support; civic engagement; feelings of safety perceptions of country conditions; quality of institutions, corruption, and perceived freedom.

Place factors: Water and air quality; public infrastructure; transportation, healthcare, education; housing affordability; local job market conditions; community attachment and diversity.

‘People factors’ may be still ahead in the cities, but ‘place factors’ make rural living more attractive.

In other words: in high-income countries, big cities have lost their attractiveness, in particular when stressed by economic decline (like with COVID-19).

#3: It really is all about Trust

It is intuitive that sustainable development and subjective well-being are intimately linked, the strongest correlates being: income per capita, social support, and good health. However when fulfilling sustainable development goals such as: no poverty; zero hunger; industry, innovation and infrastructure; decent work and economic growth; the strongest predictor for sustainability is institutional trust and community engagement (below).

High institutional trust and strong community connections are the strongest indicators for sustainable growth

So as States are declaring “back to work”, forcing people like modern-day wage slaves by denying them unemployment insurance, they cannot force people to spend, invest and buy again, if they do not trust their local government.

And it is this lack of trust that is breeding a plethora of alphabet shaped recovery projections: Z-shaped (most optimistic), V-shaped (still optimistic), U-shaped (more likely), Nike Swoosh (like U), W-shaped (pessimistic), L-shaped (most pessimistic).

Household ability and willingness to spend will be key, since even once the economy opens up, people may be unable or unwilling to spend as readily as they did. Similarly businesses will try to arrange financing, find a location and suppliers, hire workers, but declines in investment could make these companies less productive or close.

In order to safely “open the economy” we should try and emulate a civic technology response, as described by Jaron Lanier and E. Glen Weyl— a combination of decentralized technology, activism and civic participation. The guiding principles are there is not top-down centralized control, but community based public-private partnerships, where mutual respect and privacy are carefully protected avoiding both technocracy (US, China) and technophobia (Europe).

Instead of a one-size-fits-all solution, we should design hybrid high-middle-low income and urban-rural solutions and tailor our recommendations

taking into account a COVID-19 community vulnerability index (CCVI) which includes: socioeconomic status; household composition; disability; housing; transportation; minority status; beyond the better known epidemiological and healthcare factors.

Final Thoughts:

  • We have been unhappy for a while. COVID-19 just made it clear.
  • Healthcare has not been working for a while. COVID-19 made that clearer.
  • The US need not emerge from COVID like Taiwan, South Korea or Germany, but like Taiwan and South Korea and Germany — since different regions in the US will require different solution types.

Since we are probably heading to a digital, virtual, remote, automated, interdependent future, personal, communal and institutional trust will become essential. If anything we will need blockchain more, not less.

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We Were Already Unhappy: COVID-19 Just Made It Clearer was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.