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Risk-Sharing and the Corona Pandemic

Risk-Sharing and the Corona Pandemic

How can risk-sharing help resolve the Corona Pandemic? Corona Pandemic is a global health risk that all economies face together. However, the more each country seeks to solve the COVID19 crisis independently, the more all countries seem to lose control of the situation at society’s global, national, and local levels.

The Corona Pandemic is a Global Health Shock

The Corona Pandemic is a global health shock with a globally differentiated local impact that hit every corner of this earth. We can describe the impact of COVID-19 as an asymmetric shock on households, firms, and sectors within and across the world. That means that the impact of the pandemic will hit economic agents in a differentiated manner. Those capable of socially distancing have access to more resources than those who can adequately social distance. Therefore, the battle is on two fronts; solving poverty and increasing health security globally via risk-sharing networks.

Perception, Belief, Self-interest and Risk Behavior

Forces such as perception, belief, self-interest, and behavior towards risks influence how we cope with the Corona Pandemic. Several generations have seen it spread worldwide since January 2020, apart from the anti-corona movements. Some have paid the bitter price of mortality or survived with long-COVID as a side-effect of COVID19. Others will randomly and luckily say that COVID19 has not infected them. Probably they never even noticed whether they had the disease and recovered from it. Such diverging experiences amplified by political opportunism have resulted in global selfishness in the name of self-interest. We have ignored norms such as altruism and reciprocity, which would help us mitigate risk through risk-sharing during the Corona Pandemic.

On the one hand, most of the world population perceives the economic and health risks associated with COVID19. On the other hand, a minority of the world population, including prominent leaders, even doubts the existence of the Coronavirus. From the least developed to the most developed nation in this world, no country can claim that it never felt the pinch of the health crisis. Amid such chaotic controversies, one question remains unanswered. How should the world deal with a global health shock? We should learn to coordinate and minimize risk through risk-sharing behavior during the Corona Pandemic in a globalized world.

Risk-Sharing and the Ebola Pandemics in Africa

Ebola Pandemics have been grazing in Africa for decades but the affected countries and the global community resolved in Africa. Between February 2021 and June 2021, the Republic of Guinea managed an Ebola Outbreak with the help of the WHO. How did Guniea manage two Pandemics at the same time? Scholars estimate the case mortality rate of Ebola between 40 % and 50 % of all cases in Africa. Do you remember hearing of the 2013-2016 Ebola Pandemic in West Africa? The facts you missed are as follows. The Ebola Pandemic in West Africa had the highest number of cases, deaths, and survivors. The Ebola Pandemic was also the most prolonged outbreak in history with a large geographic footprint (28,616 patients reported in Guinea, Sierra Leone, Liberia, and 36 cases distributed in 7 other nations).

Guinea and other affected countries undertook measures to eradicate Ebola. Coordination between the WHO and other international stakeholders seems to have successfully reduced the risk of Ebola. Why are countries hesitant about coordinating the eradication of COVID19?

COVID-19 Vaccine Distribution

The distribution of COVID19 vaccines is a global game of self-interested nations competing to win a globally spread virus with a national strategy. Consequently, the losers of this game are the least developed countries. The developed world has denied Africa adequate access to COVID19 vaccines. The Fact is that about 53.2% of the world population has received at least one dose of a COVID-19 vaccine. Currently, countries have administered 7.69 billion doses globally and are now distributing 26.88 million each day. With regret, only 5% of people in low-income countries have received at least one dose of the vaccine. You will find more information at Our World in Data.

The need for Risk-Sharing Behavior

When will we understand that we willingly and unconsciously share the risks in this world? Where did we lose direction? Europe is an excellent example of a continent without guidance during the fourth Covid wave. How can we collectively minimize society’s health risks with the winter at the front door? Although the “global north” and wealthy nations hoarded COVID19 vaccines in favor of their economies, the uncoordinated risk mitigation plan has failed from the north to the south of the globe. The misery seems to have no end if we defect from cooperative coexistence between global citizens.

Timeline, Risk, Competition and Coordination

The crisis since January 2020 is now proceeding to 2022, but there seems to be no cure to this pandemic. Medical personnel fighting the COVID19 battle at the forefront are slowly getting tired, and other economic, social, and ecological crises are knocking on the doors. Given all these social challenges, the world needs new ways of coordinating risks in society, and one of those solutions lies in risk-sharing behavior. We can improve our strategy to resolve the Corona Pandemic using coordination mechanisms related to risk-sharing behavior. Instead, the world is involved in a global competition of COVID19 vaccinations.

Risk-Sharing Networks during the Corona Pandemic

Risk-sharing networks have been helping households in Sub-Saharan Africa minimize the impact of shocks using mobile money technologies such as M-Pesa in Kenya. Can we derive similar risk-sharing lessons from the Corona Pandemic as a shock and the adoption of vaccination technology as a risk coordinator? So far, I have not found any scientific work researching this hypothesis. Much of the research on risk-sharing during the Corona Pandemic focuses on the macroeconomic fluctuations of the gross domestic product (GDP) or business circles and competition of COVID19 vaccinations. Poor planning of developing countries might have cost them negotiation resources (time, strategy, and coordination) and led to poor access to vaccination after their discovery and innovation. That could also explain why coordinated purchase alliances such as the EU had a competitive advantage over the developed world.

The lack of coordination between the Governments at the international level reveals the fatal and lethal lack of trust, altruism, and reciprocity, but the overstated belief in pure self-interested schemes. By behaving like that, we all end up as culprits of self-interest at the social cost of humanity. 

Covid-Quagmires between Selfishness and Self-Interest

Meanwhile, politicians can use the Corona Pandemic for their political games of re-election or populism putting risk-sharing at risk. The Covid-Millionaires can hence continue draining our pockets, but we are also a source of the problem. Our self-interested behavior has transformed medical personnel into the new army at the forefront. We should not forget they have fought the pandemic with their lives and the livelihoods of their loved ones. We are also part of the same risk game. Accordingly, the general public is going insane because the governments enact a series of Covid19 mitigation regulations that contradict their practical application. Last but not least, the wealthiest nations have decided to keep vaccines in their countries and distribute them like crocodile tears to developing countries at their final will.

Let us call it Covid-madness or Covid-jungle of rules or Covid-selfishness. The research literature on health economics and other field has already revealed this negative trend. Indeed, we need a more cohesive society to withstand the blows of the Corona Pandemic. The world should balance self-interest, altruism, and reciprocity between people and communities worldwide. If we fail to resolve the Covid19 crisis, how do we imagine solving the proceeding ecological problem? Climate change is challenging than the Covid19 Pandemic. Corona-Pandemic is like you throwing a frog in hot water, compared to cooking in cold water for some time.

Society is a Network and not just a Hiarchie of Nations.

What does society need to enable risk-sharing in the Corona Pandemic? If we treat everything as a nail, we might use one tool at all times, which is not rational. When we start to understand that society is a network of interpersonal relationships and not just a hierarchy of the most powerful nations overruling the interest of weaker countries, we might limp to the next level of coexistence. Poverty, corruption, racism, tax havens, global warming, CO2 emissions, hunger in the world, overconsumption, lack of education, and many more are problems stated in the SDGs. We can resolve them by creating peaceful and fair risk-sharing coordination mechanisms.  

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