Economics

In a groundbreaking study, professor emeritus of economics Jim Davies has shown that, across countries, income inequality — and not poverty — is associated with higher death rates in relation to COVID-19. “It’s been known for a long time that where there’s greater income inequality, there are worse health outcomes,” Davies said. “I was curious about whether the same thing would be true with COVID-19. A few researchers have looked at whether poverty has an effect, but no one had looked at income inequality, which covers not just poor people, it’s everybody.” His findings were published in the latest issue of CEPR COVID Economics. Using a sample of 144 countries undergoing the pandemic’s first wave (up to August, 2020), Davies studied the cross-country relationship between COVID-19 crude mortality rates and previously measured rates of income inequality and poverty. He controlled for underlying factors associated with higher COVID mortality — an older population, fewer hospital beds, lack of tuberculosis vaccinations, and greater urbanization. His work revealed some unexpected results. While income inequality significantly increased death rates, poverty did not — quite the opposite, in fact.  “Poverty is associated with fewer deaths,” Davies said. Death rates had a consistent, strong, positive relationship with the Gini coefficient, a measure of the distribution of income across a population, Davies found. Poverty, which was measured using the $1.90 per day international standard, had a small negative association with death rates. There would have been 11 per cent fewer deaths — 67,900 — in the first 150 days of the pandemic if those countries whose income inequality was above the OECD median were instead at the median, Davies calculated, assuming the observed empirical relationships were unchanged. Shrinking income inequality to the G7 median reduces predicted deaths by 14 per cent. Davies suggested some possible reasons for his findings. “If we cast our minds back, we recall that early on, Italy had a very bad experience that was unexpected at the time. The virus then travelled to other countries in Europe, with Britain severely affected. Then it showed up in the United States, which had one of the most terrible experiences with COVID-19. It was international air travel that spread the virus. It’s usually those with higher incomes, professional people, who travel by air.” He added that transmission of the virus was also a factor. Diseases such as the Zika virus, West Nile and historically, the plague, have been carried by animal hosts. “They come to your house (and) if you’re poor, your house may not be well defended against these intruders,” Davies said. “But to be exposed to COVID, you must meet human carriers. Extremely poor people have a higher incidence of unemployment; they may not be leaving the house to go to work or to stores, bars, restaurants and the like.”

“I think the bottom line is, in the critical early stages, the transmission was occurring more between and among higher-income people than low-income people for many reasons.”

Davies also studied the difference between Canada and the U.S. in COVID rates. “The United States has higher income inequality than Canada, and has had more COVID-19 deaths per capita. My results show that 19 per cent of the per capita gap in COVID-19 deaths between the two countries during the first wave was associated with the difference in income inequality.” His findings also aligned with those of epidemiologists and other researchers on the possible protective effect of BCG vaccinations against tuberculosis. “The data do show that, in countries where there’s more complete BCG vaccination, there are fewer cases and deaths from COVID.” The implications go well beyond the current pandemic. “Studies like this illustrate why inequality matters,” Davies said. “If it affects health, and if it affects how we manage in a pandemic, it is all the more important to take it seriously. There are things that can be done to reduce inequality at the same time that we deal with other priorities.” For example, the $1.9-trillion COVID relief package passed recently in the U.S. targets low-income people, he said. With scientists warning more pandemics are likely, Davies hopes studies like his will show the importance of considering the health impacts of income inequality. “I hope future research will look at how greater inequality reduces our defenses against a pandemic. If it shows, for example, that countries with more inequality have worse outcomes because they tend to have weaker public health systems, then that will flag the need to improve those systems.”