The Effect of Non-Pharmaceutical Interventions on the Demand for Health Care and Mortality: Evidence on COVID-19 in Scandinavia

We study the effectiveness of non-pharmaceutical interventions (NPIs) against COVID- 19 on the allocation of scarce resources in the hospital sector in Scandinavia. Denmark and Norway imposed strict NPIs, but Sweden followed an extraordinarily lenient approach. We use an event study to compare COVID-19 hospitalizations, intensive-care (ICU) patients, and deaths in Sweden to Denmark and Norway. The outcome variables initially follow a common trend, but diverge 2-3 weeks after lockdown. Both the timing of the effect, and the similarity in the trend between Denmark and Norway are highly consistent with a causal effect of the lockdown. We use our event-study to build a counterfactual model which predicts the outcome variables for Denmark and Norway in case they would have followed Sweden’s approach. In the absence of strict NPIs the peak number of hospitalizations would have been 2.5 (3.5) times as large in Denmark (Norway). Overall Denmark (Norway) would have had 334 (671) percent more hospital-patient days, 277 (379) percent more ICU-patient days and 402 (1015) percent more deaths. The benefit of lockdown in terms of healthcare and mortality costs amounts to 2.8 (2.4) percent of GDP in Denmark (Norway).