1. Introduction
The coronavirus disease (henceforth: COVID-19) was characterized as a pandemic by the World Health Organization (WHO) as, after its initial outbreak in Wuhan, China, it spread very fast to the rest of the world (
WHO 2020a). Countries worldwide adopted a different set of social distancing measures to contain the virus and help decrease the rate of transmission among their citizens. The initial response of countries was to control their borders to decrease the incoming transmission from other countries (
McBryde et al. 2020). When the local transmission was increased, domestic social distancing became the core concept underlying all the containment efforts around the world (
Brodeur et al. 2020), and several measures were implemented to this end (
Gabutti et al. 2020). The Oxford COVID-19 Government Response Tracker recognizes the following categories of restrictions: school closing, workplace closing, cancellation of public events, restrictions on gathering size, closure of public transport, stay at home requirements, restrictions on internal movement, and restrictions on international travel (
Hale et al. 2020).
The optimal mix of policies and their effectiveness have been, extensively, studied even from the first stream of papers on the COVID-19 pandemic policy responses (
Kong and Prinz 2020;
Nussbaumer-Streit et al. 2020;
Tian et al. 2020; inter alia). Many authors show that strict preventive policy measures seem to have worked in reducing peoples’ mobility and thus adequately promoted the targets of social distancing (
Lapatinas 2020;
Wielechowski et al. 2020). Nevertheless, this is not always the case, as state capacity also plays a role in rendering policy responses more effective (
Frey et al. 2020). The general consensus is that there is not a “one-size-fits-all” policy mix and the policies should be adapted to the specific epidemiological, socioeconomic, and policy context of each country (
European Centre for Disease Prevention and Control 2020). In particular, a lockdown is a policy option that may damage economic activity, with negative potential impacts on a range of economic sectors (
Yu et al. 2020). It is noteworthy that even the
WHO (
2020b) stresses that any preventive measures that slow down social and economic activities should be taken with caution and only after careful examination. A critical parameter for the success of the social distancing measures is citizens’ compliance. Governments worldwide mostly relied on fines to deter non-compliance (
Beaumont 2020). It is widely known that fines have a major role in securing the compliance of citizens in a range of instances, such as traffic laws and smoking prohibition. For the COVID-19 pandemic, a relevant case study in Germany has shown that the imposition of fines had a decisive role in reducing the speed of transmission of the disease (
Chae and Park 2020).
In general, fines, when supporting the enforcement of laws, play multiple roles, including incapacitation, deterrence, rehabilitation, and retribution (
Piehl and Williams 2011). Bentham (1780 in
O’Malley 2009) considered fines as a license paid arrear and, much later,
Becker (
1968) as a price which is a function of the violators’ benefit and the cost to the society that the violation incurs. When attention is drawn to the optimality of fines, the very old principle that the punishment should fit the severity of the crime runs through the relevant research through the years (
Montag and Tremewan 2018). Concerning traffic fines, for example, effective tickets should encompass three basic principles (
Sun 2011;
Hummel 2015): first, they should make the drivers aware of the externalities and social cost of disrespecting the traffic law; second, they should act as a constant reminder to drivers that they should respect the speed limits; third, they should be set by acknowledging that people tend to underestimate the danger of driving carelessly. On the same rationale, and regarding competition laws,
Kobayashi et al. (
2016) claim that fines should internalize the social cost to the violator considering also the probability of compliance together with the probability of getting caught. Incorporating the aforementioned rationale into the case of pandemics, the social cost of non-compliance could be approximated by the cost of treatment. Besides, an effective fine should, inter alia, incorporate factors such as the probability that someone is infected, the risk of a violator transmitting the virus, and the probability that an infected person would need hospitalization. Moreover, from an operational point of view, the probability of people violating the rules and the capacity of the authorities to spot the violators should, also, be considered. In general, several epidemiological, socioeconomic, and policy factors should be considered when fines are being set.
The imposition of well-documented fines is critical for conveying the right message to citizens in the sense that citizens will be able to understand the risk of not obeying the laws. This is extremely critical since people are aware of the measures taken in other countries and, thus, they can easily estimate if the stringency of fines in their country is analogous to the corresponding fines of other countries, ceteris paribus (
Evans 2020;
Richings 2020). When huge differences occur in the stringency of fines, which cannot be attributed to epidemiological, socioeconomic, and policy factors, reverse effects may turn up (
Bull 2020;
Verseck 2020). Particularly, people in a country where fines seem to be higher than normal may consider the policies as a means for restricting their freedom or increasing public revenues. Correspondingly, people in a country where fines seem to be lower than normal may think that the risk is lower than the government claims.
It is true that, despite the early warnings of scientists, governments were not highly prepared for confronting a disease on such a large scale (
McKay and Dvorak 2020). The lack of preparedness may be due to structural factors, having to do with the countries’ overall adequacy in providing reliable health services to citizens (
Eissa 2020), but also because the impact of the disease was so asymmetric compared to many past simulations of various task forces (
Maxmen and Tollefson 2020). In many cases, countries imposed a state of emergency based on disease laws over a century old (
Desval 2020;
Ling 2020). Therefore, many governments had to issue special laws, acts, and decrees in order to adjust their policy responses to the particular challenges of the COVID-19 pandemic, just like Canada did when it adjusted the outdated Quarantine Act for confronting the SARS disease in 2003 (
Ling 2020). These laws, acts, and decrees covered issues such as self-isolation and quarantines. Yet, a great number of countries, and especially the Western ones, did not have the experience to impose measures such as lockdowns and curfews as these measures had rarely been used in the past due to their incompatibility with the democratic political systems (
Bull 2020). Moreover, policy responses were driven by the contextual economic, institutional, and political factors prevailing in each country (
Ferraresi et al. 2020). Therefore, factors other than the epidemiological conditions might have driven the stringency of policy responses as well. As far as fines are concerned, in particular, governments faced a situation where they needed to define a value of a fine without the existence of a law or adequate formulas. The lack of previous experience may have rendered the selection of proper fines a rather difficult task. Notable is the example of France, where on the first day of the lockdown, the fine was set at EUR 35, just to be increased to EUR 135 on the day after (
France 24 2020). This shows that even the most developed countries were not ready to justify the setting of the fines.
The present paper analyzes the way(s) different governments worldwide dealt with the imposition of fines to support lockdown measures and to what degree those measures were based on reasonable economic evidence considering the corresponding epidemiological, socioeconomic, and policy factors. It does so by examining the fines imposed by many governments for supporting compliance with “stay-at-home” measures in the first wave of the pandemic. In total, 44 countries, from different parts of the world, are considered. The analysis covers the first wave of lockdowns, starting with the Italian lockdown (10 March 2020) and ending with the Singaporean lockdown (7 April 2020), and is divided into two parts. The first part, more descriptive, answers the first research question of the paper which seeks to reveal whether the stringency of fines is driven by epidemiological, socioeconomic, and policy factors. To do so, initially, a triad of fine stringency indices is computed and then a composite index of fine stringency is compiled. Finally, the relationship among the values of the composite index with various epidemiological, socioeconomic, and policy variables is systematically tested in order to shed light on the factors that may have driven fine imposition for the considered countries. The second part answers the second research question which seeks to reveal what the optimal height of the fines would be, considering the epidemiological, socioeconomic, and policy factors of each country.
The contribution of the paper is twofold. First, it incorporates the critical issue of sound economic reasoning policy measures for the confrontation of a pandemic and the COVID-19 pandemic in particular. Second, it proposes a set of factors that could be considered for countries to set effective fines. The need for evidence-based fines is critical, especially when many citizens stand skeptical about the very existence of the virus. If the fines are estimated based on a specific rationale, they could be adjusted when major conditions change and so they can convey messages about the severity of the disease not only within a country but also in an international context. The paper could be used as a starting point for building global-driven standards for fine setting. This could lead to a more harmonized public policy response to pandemics, which could be extremely helpful for coping with the subsequent waves of COVID-19 or any future pandemics.
The paper proceeds as follows: the next section elaborates on data and methodology. The third section performs the empirical analysis and discusses the findings. The last section offers the conclusions and some policy recommendations.
4. Discussion
The present paper, by examining the fine policy for backing lockdown measures in an international context, has revealed that the imposition of fines has been rather asymmetric and without clear economic reasoning. This is because the variations of the fines across countries do not seem to be driven by epidemiological, policy, or socioeconomic factors. As the regression analyses revealed, the only clear driver of fines found by the present study seems to be the level of the economic development of each country. Therefore, epidemiological factors played a minimal role and the policy-making differences that are usually found between developed and less-developed countries may have also driven the response of governments in terms of the imposition of fines. This was evident in the study of
Frey et al. (
2020), who found that the level of democracy was inversely related to the stringency of the overall government response to COVID-19. The worrying fact of the study of
Frey et al. (
2020) is that stronger measures were not found to be more effective than less intensive responses. This may be also the case with fine stringency for two reasons.
First, because the less-developed countries imposed heftier fines, it is possible that COVID-19 may increase the inequalities among developed and less-developed countries at the policy level. Moreover, the analysis of the optimality of fines has revealed that the imposition of fines may also increase the inequalities within countries. Many citizens of countries, especially those with existing high levels of inequality, may see their economic position deteriorate further, as in many instances they cannot stay at home as they need to work to earn the essentials for living. This necessity is higher for informal workers, as they hardly receive state support (
International Labour Organisation—ILO 2020). Nevertheless, the risk of violating lockdown rules results in a loss that exceeds their monthly salary. So, in situations where the state cannot apply adequate welfare policies, many people may take the risk to leave home and work, despite still risking more than their monthly income. The pressure exerted on citizens by the improper imposition of fines is added to other types of disparities amplified by the pandemic, in domains such as food security (
Power et al. 2020;
Wolfson and Leung 2020), migrants’ living conditions (
Sengupta and Jha 2020), capacity for protecting against diseases (
Clouston et al. 2021), racial and ethnic disparities (
Raine et al. 2020), and many other aspects of economic and social life.
Moreover, the very effectiveness of the fines as policy instruments may be jeopardized when they are not driven by the prevailing conditions. Therefore, citizens of many countries may turn out to be very reluctant towards the real intentions of their governments and may defy lockdowns. For example, Ukrainian citizens may find it very difficult to understand why they were faced with a fine that was five times higher than their minimum monthly salary and 39 times higher than the maximum fine for traffic penalties when, by the time of the imposition of lockdown, the country recorded the lowest number of active cases per million people of the countries of the sample. At the same time, the Netherlands, with 400 cases per million people, had imposed fines that accounted for 25% of the minimum salary and only 1.6 times the highest traffic penalty. The analysis of fine optimality has shown that the deviation of the real fine from an optimal fine did not exceed 100%, while the results for Ukraine showed that the fine imposed was over 774 to over 900 times higher than the optimal one, according to the formula considered for estimating the optimal fines.
5. Conclusions
In the time of an unprecedented pandemic outbreak, policy responses for the containment of the disease acquire great importance. Even though the need for adjusting preventive measures, such as lockdowns and border closures, in order to alleviate the economic shocks, is evident, there is, still, an absence of recommendations to guide countries in achieving a state of optimality when setting fines to support various types of responses. Since fines, when properly imposed, have been long recognized as effective means for enhancing citizens’ compliance, it is evident that an effective fine policy may help countries to render their policy responses more successful and thus become more effective in confronting the COVID-19 pandemic. During a pandemic, and according to the standard economic theory, fines, to be effective, must incorporate the risks associated with the pandemic and thus consider all the factors that may affect the risk levels. For the citizens to perceive the role of the state as an institution that does its best to protect them, the latter should make explicit the factors considered to estimate the fines’ size. Then, any differences will be well understood and thus people are expected to comply with the measures more easily. In contrast, when such great differences remain unexplained, people may lose their confidence in their governments and thus not follow the official guidelines. Without question, if fines are disproportionate to peoples’ ability to pay them, then negative social effects may amplify inequalities.
Responding to this necessity, the paper proposes a couple of formulas for assisting governments in estimating evidence-based fines to support their measures. Even though these formulas should by no means be considered as a panacea, the paper fulfills its role in introducing and highlighting the need for open and evidence-based fine formulation. Given that the majority of countries considered overestimated the risk of the pandemic, by imposing fines that did not correspond to the epidemiological, policy, or socioeconomic conditions at the time of imposition, the need for a more thorough examination of fines and their overall role in confronting the pandemic still exists. To this end, the paper paves the way.
As with all particular issues related to the COVID-19 literature, there are many additional steps to be taken in order for more light to be thrown on the issue of fine optimality. As countries adjust their responses according to the severity of new waves of the pandemic, new data will become available and the samples for performing multivariate analyses will grow, thus enhancing the validity of the findings. Moreover, data not only on fines but also on some of their possible drivers will also become available as the literature on COVID-19 expands. Therefore, panel analyses on the drivers of fines and new variables, not considered by the present paper, could complement the present analysis. Moreover, questionnaires and relevant surveys could be also used to directly investigate the logic behind policy makers’ decisions on fine settings. Those developments may lead to models of higher explanatory power which will more effectively treat any potential issues of omitted variables and potential sources of endogeneity. Finally, what remains as a future challenge is to expand the studies on how fines helped the confrontation of the pandemic. To this end, panel data will be extremely valuable.