COVID-19 Hits the Poor Harder, but Scaled-Up Testing Can Help

IMF Blog, December 3, 2020

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IMF staff research builds a model connecting wealth and health in the pandemic by modeling individual behavior and choices based on income rather than focusing solely on age, gender, and other demographics.
The model examines how income-driven constraints (work options, density of living, savings) alter exposure and outcomes across income groups.
The analysis highlights the role of information (through testing) in changing behavior and reducing contagion while supporting economic activity.

"A little more than 10 percent" of rich households ever get infected by the virus over a two-year period.
"Over half" of poor households would become infected over a two-year period.
Poor households are about "four times" more likely to die, per the model.
Poor people benefit disproportionately from improved testing: their COVID-19 fatality rate drops by "about three-fourths" with massive testing, compared to a fall of "about a half" for the more well off.
The use of testing to identify and isolate positive cases is "even more effective" in countries with a higher share of poorer households.

When no asymptomatic infectious people are tested and the virus spreads undetected, the drop in GDP is "15 percent" in the first year for the representative economy.
If "50 percent" of the asymptomatic infectious are identified (and isolate), the GDP loss shrinks to "just 3.3 percent" of GDP in the first year.
The above testing coverage is achievable with a test with an "80 percent true positive rate (sensitivity)" if "about 60 percent" of the whole population could be tested weekly.
Better information through widespread testing "unequivocally boosts the economy by lowering the risk of infection while interacting with other people."

The World Health Organization recently negotiated "$5 per test."
With scaled-up demand and production, prices "could drop to $1 or less."
Rapid tests' simplicity means household or business use is feasible ("no medical equipment or labs needed to evaluate"), without centralized processing or recording.

Targeted income support to poorer households to directly buffer consumption against the large, adverse economic shock.
Improving information on pandemic spread and containment through widespread, rapid testing to identify and isolate new cases.
Combine mass testing with mask wearing, hand washing, and physical distancing to reduce spread and better control outbreaks.
Scale-up testing rapidly to achieve high coverage (for example, weekly testing of about 60 percent of the population with an 80 percent sensitive test to identify 50 percent of asymptomatic infectious people).

Scaled-up, cheap, and rapid testing can reduce infections and deaths, disproportionately benefiting the poor and reducing inequities exacerbated by the pandemic.
The returns from widespread testing combined with mask wearing are described as "enormous," given the potential to avoid large GDP losses and the declining costs of tests.

Source: COVID-19 Hits the Poor Harder, but Scaled-Up Testing Can Help — Allan Dizioli, Michal Andrle, John Bluedorn; December 3, 2020 (IMF blog).