Don’t let ‘sunk costs’ hold New Zealand back from freedom

Published in the New Zealand Herald (Auckland), 16 September 2021

There is an anecdote about Christopher Columbus, which still holds a lesson for us today.

After his first voyage to the new world, Spanish Cardinal Mendoza hosted a banquet for Columbus. While some guests praised his achievement, others were not so impressed.

Finding America wasn’t all that remarkable, they claimed, since people could have thought of it years earlier.

The upset Columbus took an egg and asked if anyone could stand it upright. The egg finally stood after Columbus cracked an end of it.

Some protested they could have done the same, to which Columbus replied, “But I did it and you didn’t”.

Finding our way out of Covid is a bit like that. The question is whether our exit will be as hard as discovering America or as easy as cracking an egg.

If others are doing it, why can’t we?

The answer is that our early success in containing Covid may have put us on the wrong long-term path.

New Zealand kept Covid out for over a year. We were virus-free in the community, except for a few cases where it escaped through the border.

At least in relative terms, we had a good pandemic in 2020 and for the first half of 2021. While the rest of the world endured tough restrictions on everyday life, high case numbers and deaths, life in New Zealand was more-or-less normal.

We owe much of our success so far to geography and luck. However, our success also came at a high price.

Companies lost income and profits. On borrowed money, the government kept parts of the economy afloat. When cases appeared in the community, cities and regions were locked down. Families across borders were torn apart.

Keeping the virus out was a tough job. No wonder the Prime Minister likes to refer to the “team of five million”. We all paid a price for elimination – and now we all own a piece of it.

With all these billions spent and all the sacrifices we have made, is it any wonder that people are hesitant to abandon elimination? In a recent NZ Herald-Kantar poll, 46 per cent of those surveyed believed we should pursue Covid-19 elimination even when the vast majority of New Zealanders are vaccinated.

It has been the biggest project of our lives to keep New Zealand free of Covid. If we now allowed the virus into the community, not only would it cause some sickness and death. Many would also regard it as a betrayal of the collective effort we have made in the past one and a half years.

Social scientists know this human behaviour pattern. They call it by different names. Some speak of escalating commitments, while others call it a ‘sunk-cost fallacy.’

It is the same behaviour under both terms. To maintain the progress we have made, we will invest considerably more. And we do so even when circumstances change and a change of strategy would be warranted.

Not that it would be wise to let the virus rip through an unvaccinated population. But once everyone in New Zealand has had the opportunity to receive their two shots of the vaccine, this logic should change.

In a world of fully vaccinated people, the virus would still cause harm, but at a much lower level. By then, it would have become one of many other dangers such as drowning, falling from ladders, or getting injured in a traffic accident.

Society accepts such risks, even when they can theoretically be avoided, not least because a “zero-harm” approach would be prohibitively expensive. For example, the idea of lighting all country roads, imposing a general 30 km/h speed limit, and only allowing five-star rated cars is absurd. Sure, it would reduce the road toll. But it would also defeat the purpose of promoting mobility.

If we had never gone down the path of Covid elimination, we would regard the virus in just the way as we think of road accidents. Sure, nobody likes accidents, but we would not go to extremes to avoid them. Similarly, while no one wants to get sick or die from Covid, we would not surrender our lives to achieve that aim.

However, this is where our ‘sunk-cost fallacy’ kicks in. Having spent billions on elimination, for many people, the calculus looks different. Even minor health hazards associated with Covid now appear to be unbearable. After all the sacrifices we have made, why should we accept any illness or death in our community? Can’t we just stay with ‘Zero Covid’ forever?

For other countries, the equation looks diametrically opposed. Both England and Denmark have formally abandoned all Covid restrictions. Instead, they will now “learn to live with the virus”.

New Zealanders may view the phrase “learn to live with the virus” as cynical since some will die from it.

But to the English and the Danes, such a connotation does not exist. Because the virus was never eradicated in either country, people have always died from it.

Neither had England and Denmark invested vast amounts and efforts into the goal of elimination. There are no ‘sunk costs’ they now believe they need to protect. As a result, both the English and the Danes can treat the virus as an everyday health risk.

To be fair, there are two other factors at play, too. First, both countries’ hospital systems are better equipped to deal with outbreaks when they arise. Second, they also have far higher immunisation rates than New Zealand right now.

New Zealand will hopefully reach the same immunisation rates as England and Denmark in time. Perhaps we will get even higher since our compliant population may yield higher vaccination participation than other countries.

And (here is hoping), we will soon realise that our hospital system requires an upgrade (not just to deal with Covid). Having more capacity will also enable us to cope with outbreaks.

England and Denmark show it is possible to leave behind the old world of Covid. But for us, that means shedding the myth that past elimination costs justify continuing to eliminate a virus once we are vaccinated.

This means thinking anew to resolve a complex problem, just as Columbus did when he cracked that egg. It requires evaluating the reduced dangers from Covid in a vaccinated environment – regardless of how much we had spent on elimination in the past.

By the way, the safest thing Columbus could have done was to keep his fleet anchored in a Spanish harbour. Instead, he took a risk and discovered the new world.

Thankfully, Columbus did not dwell on how much his ship had cost to build.

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