Piroska Nagy-Mohacsi, London School of Economics
Elod Takats, Bank for International Settlements, LSE
Our paper explores the relationship between health and economic outcomes, key components of well-being, and trust during the COVID crisis in Central Europe. This region followed a curious path during the pandemic: initially it performed better than its more advanced counterparts in Western Europe, with significantly lower output losses and mortality through mid-2021. But then the region back-slided to end up with the worst health record in Europe. We find that at the core of this ‘puzzle’ is the region’s endemically low level of trust in state institutions as well as in each other. Low level of trust translates into high level of individualism and low level of social capital relative to Western Europe. We argue that trust in society acted as a “double edged sword” in Central Europe: it was helpful at the outset of the COVID crisis to lessen the crushing impact of the spreading of the virus amid uncertainty, but ultimately turned out to be detrimental. Low level of trust and high level of individualism initially prompted fast individuals response for isolation. Hence Central Europe’s better health outcomes in the first phases of COVID, despite much more limited government economic support for the economy. But then the region’s mistrust turned against health outcomes when government-supplied vaccination became widely available in mid-2021. Low level of trust led to a slower/lower level of vaccine uptake in Central Europe. The result was much higher mortality in the region than elsewhere. Our paper investigates the origins of the region’s trust deficit and points to historical hysteresis: legacy of communist regimes and path dependence. However, our research also confirms that trust did not improve following joining the EU, even though this was been a long aspiration of the majority of the region’s population. We investigate the political economic reasons for this puzzle..
Presented in Session 76. The State and Disaster