Friday 23 July 2021 6:15 am

Status quo anxiety: from Covid to foreign aid, we're trapped by our desire to keep things the same

Christopher Snowdon is head of lifestyle economics at the Institute of Economic Affairs

Covid restrictions were relaxed this week, but it was far from universally supported.

A group of academics wrote to the Lancet to condemn the move as a “dangerous and unethical experiment”. Some scientists warned that letting the virus run amok would create a fertile breeding ground for new variants and urged the government to once again postpone Step 4 of its roadmap.

Very few of them urged the government to reintroduce a lockdown or to revert to Step 2. This is curious because the rules in place had conspicuously failed to control the virus. Since May, the number of confirmed infections has rocketed from 2,000 a day to over 50,000. The epidemic has been doubling every two weeks. If it continued at that rate, there would be over a million confirmed cases a week by mid-August. 

That sounds like a fertile breeding ground for variants, but the critics of reopening didn’t seem to want to stop this exponential growth. They just wanted to keep the existing rules in place.

This strikes me as an example of “status quo bias”, a form of small-c conservatism in which people have a preference for what they have become accustomed to even when it is clearly suboptimal from their perspective.

There are many examples of this. Take foreign aid: Boris Johnson faced his first major backbench rebellion last week when he “temporarily” cut the foreign aid budget from 0.7 per cent of GDP to 0.5 per cent. The 0.7 per cent pledge had been enshrined in law since 2015 because David Cameron wanted to meet the United Nation’s target. Why does the UN recommend a figure of 0.7 per cent? There isn’t really a reason. It’s an arbitrary number.  

One MP described the cut as a “death sentence” for people in developing countries. Another opposed it because, he said, “when I come to choose between money and lives, I always choose lives.”

The amount due to be given in foreign aid this year was going to fall in any case because GDP collapsed during the pandemic, but nobody seemed particularly angry about that. Nor was anybody calling for the 0.7 per cent target to be increased, although that would be the logical conclusion if you really saw it as a choice between lives and money.

Pensioners, by contrast, found themselves the beneficiaries of the economic downturn. Thanks to a statistical quirk, they are in line for an 8 per cent rise in the state pension. Under the Triple Lock, the pension is guaranteed to rise in line with either inflation or earnings or by 2.5 per cent, whichever is the highest. During the pandemic, low paid workers have been the most likely to be made redundant or put on furlough. With the low paid squeezed out of the workforce, the average employee was on more money and the median wage appeared to rise by 8 per cent even though most workers have not had a pay rise of that magnitude.

Against a backdrop of colossal government debt, this is an absurdity, but the Trade Union Congress immediately leapt to the Triple Lock’s defence and social media was awash with people claiming that a failure to pay the 8 per cent would drive the elderly towards destitution.

If an 8 per cent rise is now essential to prevent pensioner poverty, why had nobody called for it before? The reality is that such an increase would have been considered preposterous by almost everybody had it not come about as a result of a set of rules to which we had become accustomed.

In each of these instances, the tyranny of the status quo has trapped people into campaigning for policies they would never advocate if they were looking at the issue with a fresh pair of eyes. They either fall short of solving the problem they seek to address or go far beyond any reasonable expectation. Anchored to a set of arbitrary rules, we sometimes forget that we are the ones who dropped the anchor and we could move it any time we like.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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