A new sandpit for long side discussions, conspiracy theories, idees fixes and so on. I’ll open this by saying I agree with the view that even an optimal response to the pandemic by China would have given the world only a few days more notice, and that most Western governments would have wasted that time anyway.
Month: April 2020
Trade offs and free lunches in pandemic policy
As the author of a book on opportunity cost, I might be expected to be enthusiastic about the idea that trade-offs are always important in economic and policy choices. This idea is summed up in the acryonymic slogan TANSTAAFL (There Ain’t No Such Thing As A Free Lunch). In fact, however, a crucial section of Economics in Two Lessons is devoted to showing that There Is Such A Thing As A Free Lunch. It is only when all free lunches have been taken off the table that we reach a position described, in the standard jargon, as Pareto-optimal[1].
If a policy is not Pareto optimal, it’s possible to find one that is better in every respect. In the jargon, the first policy is dominated by the second.
That observation is relevant in a couple of crucial contexts. Lots of climate deniers want to claim that there is a trade off between reducing carbon emissions, through investment in renewables, and improving the living standards of poor people, by building coal-fired power stations. In reality, renewables are cheaper and more reliable than coal, and millions of poor people living near coal-fired power stations die every year from particulate pollution. Even without considering global heating, coal fired power is a dominated option.
Exactly the same is true in relation to pandemic policy. Any policy which leaves R > 1 (the pandemic keeps spreading) is dominated by stricter policies that ensure R < 1. The first policy will not only lead to continuing deaths, but it can never be relaxed. So, it will entail more economic losses in the longer run. By contrast, once the prevalence of the disease is reduced to zero, the stricter policy can be relaxed (to be slightly more realistic, it may need to be reintroduced on a temporary basis to deal with local outbreaks).
In this context, it’s striking that none of those talking about an R > 1 policy in Australia are prepared to spell out the trade-offs they envisage. That’s because any attempt to do so would expose the bankruptcy of their reasoning.
fn1. I also point out how Pareto’s economic analysis foreshadows his embrace of Fascism.
Open thread on the lockdown
Most of us are six weeks or so into some kind of lockdown by now, so it would be interesting to read some comments on our experiences. From the discussions I’ve had (almost entirely online rather than in person) my perception is that people with office jobs and no kids at home are finding it much easier than might have been expected, but that those with kids at home are finding it every bit as hard as you would think. So far, the impact on those who have lost jobs (or work like conference organization) has been cushioned by income support, in Australia at any rate. Less online discussion with those still working, of course.
Experiences and thoughts?
Fundraiser for MS
I haven’t done a fundraiser for a while, but this seems like a good time. Like everything, the Brissie to the Bay cycle fundraiser for Multiple Sclerosis isn’t going ahead as usual. It’s been replaced with a challenge where participants record their own efforts and set targets for distance and fundraising. I aim to cycle at least 400km in June (my average is around 200), and raise $1000 or more in the process.
Feel free to suggest challenges of your own, with a donation to back them. For example, if anyone is willing to stump up $100, I’ll cycle around Mt Coot-Tha in Brisbane (only 10km, but very tough).
You can donate here and also sign up yourself if interested.
Monday Message Board
Back again with another Monday Message Board.
Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please. If you would like to receive my (hopefully) regular email news, please sign up using the following link
http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page and at my Economics in Two Lessons page
How many people have been exposed to Covid-19 ?
In the last few days, there have been quite a few reports of studies suggesting that the number of people who have been exposed to Covid-19 is far larger than previously thought. These studies have been based on testing for antibodies against coronavirus (it is unclear whether they are specific to Covid-19, or might reflect exposure to other coronaviruses).
I’m finding it difficult to square these estimates with inferences from direct testing, which (as I understand it) tests whether people currently have the disease. This is a point on which I would really like to see a clear explanation from an epidemiologist, but I haven’t seen one, so I am going to set out my own thoughts.
Alert: Unlike my discussion of the exponential growth rate R, where I was confident in the analysis and rapidly proved correct, this is an amateur effort and I could easily be missing something crucial
Suppose that
- the virus has been around for some number of days D
- infected people will give a positive response to a direct test for d days
- the proportion of positive test results in a random sample of the population is p
Then, as a first approximation, the proportion of people ever exposed is (D/d)p. To estimate D, I’ll assume that very few* people outside China were infected before 1 February, which gives D = 84 as of April 25. I’m less clear about d, but 14 days appears to be the standard estimate for asymptomatic cases. That gives D/d = 6.
The big problem is p. Most places are only testing people who are at high risk because of symptoms or known contacts. Iceland gave 1800 tests to randomly selected volunteers in March, and got a positive rate of 1 per cent, suggesting that the proportion ever exposed would be 6 per cent. That’s a lot of people, but nowhere near enough to make herd immunity a relevant possibility.
Any ideas?
- Some were, it’s clear, but if the numbers had been large, we would have seen many more deaths.
Are the IMF’s forecasts too pessimistic?
That’s the headline for my recent piece in Inside Story, responding to statements from the IMF that “the world is about to experience the worst recession since the Great Depression”. My complaint isn’t so much about the numerical estimates made by the IMF (which are actually optimistic) but about the framing in terms of the Great Depression. It’s almost certain that we will see a larger decline in global income and output in 2020 than we did in the GFC year of 2008. However, if things are managed well, we should see a substantial recovery in 2021, unlike the years of austerity that followed the GFC in many countries. The comparison is also distorted by the fact that growth rates in China and India have been slowing for some time for reasons independent of the pandemic.
