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The Recoupling Dashboard 2021

How the pandemic changed the relation between the market and society.

While Covid slashed the economy, indicators for social and environmental wellbeing are on the rise. According to the results of our updated version of the Recoupling Dashboard, people in the G7 countries have reacted very differently to the pandemic: For instance, Italians and Japanese have shown more solidarity both with their compatriots as well as with other countries while the opposite is true for Canadians and French.

The Recoupling Dashboard 2021 sheds light on interesting effects of the Covid 19 pandemic on social prosperity in the G7 countries.

The COVID-19 pandemic changed the relationship between the market economy, state, and society in the G7 countries and beyond. While economies collapsed due to the shutdown of broad swathes of the economy, the state and civil society have gained new significance in protecting people from the pandemic’s effects. This dramatic shift has recalibrated the public’s perception of the role of markets, government, and society in response to the worldwide shock. This is a central finding of our research initiative on “Recoupling Economic and Social Prosperity”, which examines the effects of the pandemic in terms of normative foundations for societal well-being.

Not surprisingly, the GDP decreased in all countries of the G7 due to the economic recession caused by Covid and so did CO2-emissions which are the indicator for Environmental sustainability. The uniformity of response in the economic and environmental domains is illustrated in the last two columns of table below (GDP and CO2 emissions fall in all G7 countries). This uniformity stands in sharp contrast to the diversity of social responses to the challenge of cooperation that the coronavirus posed.

Sources: Solidarity and Agency are based on own calculations using data from the Gallup World Poll and the World Bank, GDP data was extracted from OECD National Accounts at a Glance, CO2 Emissions represent estimates from The Carbon Monitor. Since no data from the Carbon Monitor is available for Canada we use Greenhouse Gas emissions from Climate Action Tracker instead. This is not directly comparable to CO2 Emission from the other source, but gives an indication of Canada’s reduction in GHG emissions in 2020.

The response of solidarity to the pandemic

Inward Solidarity rose in four of the G7 countries (signaling the resilience of civil societies in providing social support networks where the economic ones had crumbled) and remained roughly constant in the three remaining countries.

By contrast, Outward Solidarity fell in four of the countries (mirroring the well-documented rise in nationalism, including support for the globally damaging “vaccine nationalism”), rose in two countries, and remained roughly constant in the remaining countries. Needless to say, a fall in outward solidarity may be expected to hinder voter support for multilateral efforts to eradicate the pandemic worldwide.

The only clear pattern that emerges from cross-country comparisons solidarity is that Inward and Outward Solidarity have drifted apart in all G7 countries except Japan (as shown below). Otherwise the movements in solidarity are highly idiosyncratic. In two of the countries (Italy and Japan), Inward and Outward Solidarity both rose; in one country (Germany), Inward Solidarity rose while Outward Solidarity fell; in three of the countries (Canada, France, and the U.K.), Inward Solidarity remained roughly constant while Outward Solidarity declined; and in one country (the U.S.), Inward Solidarity rose while Outward Solidarity remained roughly constant. In short, there are many different ways in which societies respond to the pandemic, in line with the different social norms and values, as well as the different relations between civil society and state, across the G7 countries.

Figure 1: Inward and Outward Solidarity Index over the past 15 years in the G7 countries 

Note: The Solidarity Index is composed of Inward Solidarity and Outward Solidarity and is calculated using data from the Gallup World Poll. Inward Solidarity reflects social support received by friends and family. Outward Solidarity is composed of 1) a Giving behavior Index, 2) satisfaction with efforts to deal with the poor, and 3) a Minority rights index.

Those who believe that the global challenge of eradicating the pandemic should have helped prepare the world for dealing with other global challenges are likely to be disappointed. On the whole, citizens of the G7 appear not to have learned the most important lesson that the pandemic could have instilled, namely, that global problems call for global cooperation. Pandemics—like climate change and cybersecurity—cannot be overcome fully anywhere unless they have been overcome everywhere. However, citizens often responded to the pandemic by falling back on their traditional support networks, both national and social. Nevertheless, polls revealed support for some global cooperation (particularly among young, highly educated adults), even at the expense of own national interests. With regard to global cooperation that is nevertheless taking place in response to the pandemic (such as the Covax Facility), policymakers in many countries appear to be more inclined to multilateralism than their citizens.

Inward and outward solidarity: Solidarity may be directed “inwardly” to one’s national, religious, ethnic, racial, or class groups, or “outwardly” to groups with regard to which one does not define one’s social identity. Inward solidarity by itself may promote the well-being of one’s in-group members, but it may lead to conflict with out-groups, and this conflict generally detracts from the well-being of both in- and out-group members. In other words, inward solidarity generates positive externalities for in-group members, but negative externalities for out-group members. Populism, for example, represents a form of inward solidarity that often generates hostility to immigrants, from which social conflicts within nations can arise. However, inward solidarity may also be associated with outward solidarity—as when people with a strong sense of national identity welcome immigrants and benefit from the resulting cultural exchange—generating positive externalities and promoting the well-being of in- and out-group members alike. Inward solidarity is commonly understood as a precondition for outward solidarity—that is, a strong sense of social identity is necessary for openness to strangers.

The response of agency to the pandemic

The Agency Index increased in most countries. Changes in Agency are to be understood in relation to the challenges that people have faced during the pandemic. An increase in Agency may be viewed as an enhanced sense of empowerment that comes from rising to a new challenge, such as dealing with the diverse problems—social and economic—associated with the loss of social contact and work during the pandemic. Under these difficult circumstances, people may have care and support within their communities – opportunities that may be absent under normal conditions. Conversely, a fall in Agency suggests a sense of being overwhelmed and increasingly helpless in the face of the crisis. Agency rose in four of the G7 countries (Germany, Italy, U.K., and US), remained roughly constant in two countries (France and Japan), and fell in one country (Canada).

Figure 2: Development of the agency index over the past 15 years in the G7 countries

Note: The Agency Index has four components: 1) Confidence in empowering institutions Index, 2) Freedom of life choice, 3) Vulnerable employment and 4) Life expectancy. The changes that we see in the agency index are driven by changes in “confidence in empowering institutions” and “Freedom of life choice”. Life expectancy relies on figures from 2018 and therefore we cannot see any differences here. Vulnerable employment also does not show large changes, because it reflects the share of contributing family workers and own-account workers as a percentage of total employment – not unemployment or “Kurzarbeiter”.

Tribalism is on the rise in most G7 countries

A rise of tribalism—measured in terms of the difference between Inward and Outward Solidarity—is a cause for concern. The difference has grown over the past three years in all G7 countries except Japan. This suggests that popular support for multilateral efforts to address global problems—not just pandemics, but also financial crises, cybersecurity, climate change, ocean acidification, biodiversity loss, forced immigration, and much more—is waning. This is particularly unfortunate since these problems are proliferating and multilateralism is the only way to address them.

The discrepancies in the social responses (S and A) to the pandemic may be expected to have potentially important implications for how these countries fare during the pandemic and how well they come out of this crisis.

To gain an overview of the different social responses, we divide the G7 countries into four groups, to give us an impression of how well civil society rose to the challenge of the pandemic:

  • We classify a country as “tribalizing” if Inward Solidarity rises while its Outward Solidarity declines or remains roughly unchanged. By contrast, a country is considered “cooperating when both Inward and Outward Solidarity rise.
  • A country is “empowering” when Agency rises, and “not empowering” when Agency falls or remains roughly constant.

From this perspective, civil society responds adaptively to the pandemic when it is cooperating (more socially cohesive nationally and more willing to cooperate with other countries) and empowering (addressing the COVID-19 challenges through one’s own efforts). By contrast, when a country’s response is tribalizing and not empowering, citizens tend to be focused primarily on their own health and economic concerns, but are not willing and able to address these concerns by themselves.

From this perspective, the G7 countries fall into the following categories:

Table 2: Groups of countries according to their development in Solidarity and Agency

People, societies and the state can process and absorb external shocks – the market cannot.

The market economy, was not able absorb the shock as the pandemic has required the closure of many economic activities. For this reason, it was necessary that the state and society step in. This has happened to different degrees in the G7 countries and the short-term impact on economic prosperity has been a sharp decline in GDP in all countries the impact on social prosperity is more diverse as our country analyses shows.

Note: The Figure illustrates how different the G7 countries score on the four dimensions (SAGE) of the Recoupling Index relative to each other and the G7 Average (light grey square).

The Recoupling Dashboard for Selected Countries

The Recoupling Dashboard shows that solidarity and agency develop differently over time and across countries compared to indexes of GDP per capita and environmental sustainability.

United States

Increasing Agency levels in the US are mainly driven by rebounding confidence in empowering institutions. Life expectancy continues to stagnate on a remarkably low level for an advanced economy while survey results on the perceived freedom to make life choices, in contrast, are high. A slight increase in the Solidarity Index is mainly driven by improvements for Inward Solidarity defined as perceived social support through family and friends. This is mostly offset by a decrease in Outward Solidarity along most dimensions with an improving treatment of minorities being a notable exception. GDP per capita decreased by 1.9%, while the EPI increased by 4.4% during the last 10 years.

Germany

Increases in the confidence in empowering institutions drive a slight uptick in the Agency Index for Germany. While both the decrease in the fraction of the workforce in vulnerable employment as well as average life expectancy are stagnating, the main counteracting force is a decrease in the reported freedom to make life choices. The Solidarity Index stagnates with perceived levels of Inward Solidarity increasing while Outward Solidarity decreases along most dimensions. Again, for Outward Solidarity an improvement in the perceived treatment of minority groups is a notable exception. GDP per capita decreased by 9.4% in 2020, while the EPI increased by 1.6% over the past 10 years.

Canada

For Canada, we observe a decrease in the Agency Index which coincides with reduced levels of trust in empowering institutions and a marked decrease in the perceived levels of freedom to make life choices. The fraction of the workforce in vulnerable employment and average life expectancy both stagnate. Also, the Solidarity Index decreases with an uptick in perceived levels of Inward Solidarity measured by social support through family and friends being offset by a decreasing level of Outward Solidarity. The latter being driven by marked reductions in giving behavior that dominated an improvement regarding the perceived treatment of the poor and stagnating developments regarding minority rights. The GDP per capita decreased by 14.4% in 2020, while the EPI increased by 5.5% over the past ten years.

France

After a marked increase in previous years, the Agency Index for France stagnated in 2020 among all measured dimensions. Noteworthy is that slightly increasing levels of trust in the national government as well as reduced fear of corruption in government are both offset by a marked decrease for trust in the judicial system. The Solidarity Index decreased both along the Inward as well as the Outward dimension with a significant reduction for Giving behavior being a noteworthy driving force. GDP per capita decreased by 19.8in 2020, while the EPI increased by 7.8% during the last decade, placing France only second to the United Kingdom among the G7 nations.

Italy

The Agency Index for Italy increased significantly. This was driven by a marked increase of confidence in empowering institutions (trust in the judicial system shrank slightly) and further improvement in the perceived freedom to make life choices. The Solidarity Index increased slightly with a previous major decline in Inward Solidarity being mostly offset during the last year. Outward Solidarity also increased slightly with improvements regarding the perceived treatment of minorities and the poor being a driving force that offset declining levels of trust in empowering institutions. GDP per capita decreased by 21.2% in 2020, while the EPI increased slightly by 1.5% during the last decade.

United Kingdom

For the United Kingdom, we observe a slight increase in the Agency Index. This reflects a growing share of people satisfied with their freedom to make life choices dominating stagnating developments in other dimensions. The Solidarity Index decreased slightly among both Inward and Outward Solidarity. Notable is again the marked decrease in reported Giving behavior along worsening conditions for the poor that jointly offset slight improvements regarding the perceived treatment of minority groups. Annual GDP per capita decreased by 23.6% in 2020, while the EPI increased by 12.4% during the last decade placing the United Kingdom on the first position among G7 nations.

Japan

For Japan, the Agency Index rose slightly above its 2017 level after a marked decrease in 2018. This development follows an increase in reported levels of Confidence in Empowering institutions along with an uptick in the share of people satisfied with making life choices. The Solidarity Index increased along both dimensions with levels of Inward Solidarity growing again after a decline in previous years. A slight growth in the level of Outward Solidarity is driven by improvements in the reported treatment of minorities and the poor that both counteract the continuing decline of Giving behavior. Annual GDP per capita decreased by 12.3%during 2020. Japan’s EPI stagnated during the last decade.

Data Sources

Data provided were used to take up the already established indexes of economic prosperity and environmental sustainability on the one hand, and to determine the indexes first presented with the Recoupling Dashboard on the other. The indexes of solidarity and agency are based on data exclusively provided.

Integration of Gross Domestic Product

GDP per capita (constant 2010 US$)

GDP per capita is gross domestic product divided by mid-year population. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in constant 2010 U.S. dollars. Source: OECD National Accounts data files.

Data Sources included in the Agency Index Data Sources included in the Agency Index

Confidence in empowering institutions (Gallup World Poll)

Confidence in empowering institutions is an indicator for showing empowerment and sourced from the Gallup World Poll. Each country is ranked for the following three measures of confidence in institutions: Confidence in judicial systems, confidence in national government, spread of corruption. In order to establish a rounded measure of confidence in empowering institutions across the world, the Index relies on a simple averaging of the responses from the three key questions asked in each country. Each country is given a percentage score (calculated as a combined average of the proportion of people who reported one or more of the three aspects in the month prior to interview).

Freedom of life choice (Gallup World Poll)

Satisfaction regarding the freedom to choose one’s lifepath is an indicator of empowerment and sourced from the Gallup World Poll. This indicator refers to the share of people reporting that they are satisfied with the freedom to choose what they do with their life. It is based on the survey question: “In this country, are you satisfied or dissatisfied with your freedom to choose what you do with your life?” and presents the percentage of the sample responding “yes”.

Vulnerable employment (World Bank)

Vulnerable employment is contributing family workers and own-account workers as a percentage of total employment.

Life expectancy (World Bank)

Life expectancy measures how long on average people could expect to live based on the age-specific death rates currently prevailing. This measure refers to people born today and is computed as a weighted average of life expectancy for men and women.

Data Sources included in the Social Solidarity Index

The Solidarity Index is composed of Inward Solidarity and Outward Solidarity.

Outward Solidarity

Giving index (Gallup World Poll)

Giving behavior is an indicator originally developed by the Charities Aid Foundation. This index relies on a simple averaging of three giving behaviors: Helping a stranger, Donating money, Volunteering time.

Satisfaction with efforts to deal with the poor (Gallup World Poll)

This indicator refers to the share of people reporting that measures that deal with poverty in this country are satisfactory.

Minority rights index (Gallup World Poll)

Each country is ranked for three statements regarding the rights of minority groups: racial minorities, gay or lesbian people, and immigrants. To establish a rounded measure of minority rights across the world, the index relies on a simple averaging of the responses from the three key questions asked in each country. For our analysis, we focus on the percentage of people who believe that the city or area where they live is a good place for the minority groups.

Inward Solidarity

Social support (Gallup World Poll)

This indicator refers to the share of people reporting that they have friends or relatives whom they can count on to help in case of need. It is based on the survey question: “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them, or not?” and presents the percentage of the sample responding “yes”.

Scoring Environmental Sustainability

Environmental Performance Index

The Environmental Performance Index (EPI) ranks countries on 32 performance indicators across 11 issue categories covering environmental health and ecosystem vitality. Source: Wendling et al. (2020).

Co2 Emissions (Carbon Monitor)

Carbon dioxide (CO2) emissions from the use of fossil fuels and the production of cement are the main driving force of climate change. The Carbon Monitor is an international initiative providing for the first time regularly updated, science-based estimates of daily CO2 emissions. Estimates of fossil CO2 emissions rely on activity data (e.g., the amount of fuel burnt or energy produced) and emission factors. The data reveal the drop and re-growth of emissions during the COVID-19 pandemics for all G7 countries (no data available for Canada). The data is available on https://carbonmonitor.org/

Greenhouse Gas Emissions (Climate Action Tracker)

No data from the Carbon Monitor is available for Canada. In order to still have an idea about Canadas performance in terms of emissions we use Greenhouse Gas Emission data from the Climate Action Tracker. This is not directly comparable to CO2 Emission from the other source, but gives an indication of Canada’s reduction in GHG emissions in 2020. Source: Climate Action Tracker

General Notes on the Collection and Variables Selection

As is frequent with data projects, some of the variables included in the Recoupling Dashboard have a degree of missing data. To ensure continuity and comparability between composite scores over time, it is necessary to estimate values for these years. Missing data can be located in the interior of the available time series or at the exterior. For the former, the linear interpolation method is used – values are replaced with numbers incrementally higher or lower than the neighboring data points. For the latter, the missing values are replaced using the closest data point from source (last value carried forward – LVCF – or first value carried backward – FVCB).

Data collected to compute the indexes are diverse. At source, the variables collected are produced on different scales, and can also have different polarities – higher is better or higher is worse. In order for them to be meaningfully combined and compared, raw data are standardized before being included in the indexes. We employ a min-max normalization whereby all raw data are transformed to a scale of 0.0-1.0 (where a score of 1.0 is the best score a country can achieve). While this constitutes an order-preserving linear transformation of the data, a score of 1.0 after normalization does not imply that a country’s score in raw data terms is perfect, but rather is the best score in the set of countries.

The authors of the Recoupling Dashboard use linear, additive aggregation and weigh each sub-component equally within its dimension.

Pew Study Sources
  • Delvin, Kat & Kent, Nicholas. “As Pandemic Continues, More in U.S. and Europe Feel Major Impact on Their Live”. Pew Research Center. 3 February, 2021
  • Connaughton, Aidan & Delvin, Kat. “Most Approve of National Response to COVID-19 in 14 Advanced Economies”. Pew Research Center. 27 August, 2020