Category Archives: PSST and Macro

General update, May 6

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1. Six years ago, I threw a dance party for myself. I got to select the program of dances. My children were all there. Life was better then.

2. Russ Roberts sent me three pointers. The first one is a Twitter thread from Dr. Muge Cevik. She seems to be another John Alcorn. Her conclusions from various case cluster studies of the transmission process include:

these studies indicate that close & prolonged contact is required for #COVID19 transmission. The risk is highest in enclosed environments; household, long-term care facilities and public transport.

these studies so far indicate that susceptibility to infection increases with age (highest >60y) and growing evidence suggests children are less susceptible, are infrequently responsible for household transmission, are not the main drivers of this epidemic.

these studies indicate that most transmission is caused by close contact with a symptomatic case, highest risk within first 5d of symptoms.

She links to this interesting meta-analysis.

The findings from this systematic review do not support the claim that a large majority of SARS-CoV2 infections is asymptomatic.

3. The next pointer is to John Mandrola, MD.

in one year, will the virus be 1) gone, or 2) less contagious, or 3) less deadly?

He makes the case that the answer is no. In which case, perhaps people should just live their lives as best they can. This is worth a longer comment, which I will try to make later in the week.

4. His third pointer is to Neil Monnery.

Easily the best results to date are from the stringent ‘isolate, test, trace and quarantine’ strategies used by Taiwan, Singapore, Hong Kong, Australia and South Korea. It is an approach that requires great preparation, organisation and execution. The key risk is how these countries will do if there is a second or subsequent wave. If that does not occur, or they manage it, even at many multiples of their deaths to date, they will be the key place to look for future learnings.

As you know, I am skeptical that testing and tracing are what is effective. The tests are so unreliable. Tracing is so hard. I am inclined to credit isolation and mask-wearing. And keep in mind that since most of the deaths are among the elderly, how you handle the elderly is likely to matter more than how you handle the spread among those under 50.

5. Robin Hanson writes,

In a pandemic that might be contained, isolating yourself helps others, keeping them from infection. But if pandemic will end with herd immunity, isolating yourself hurts others, pushing them more to be part of the herd that gives everyone immunity. The externality changes sign!

We need to raise the status of Risky Randy and lower the status of Anti-fragile Arnold.

6. Daniel Goldman writes,

However, given that simply reducing the average contact rate by 50% is enough to significantly reduce the rate of spread of the infection, a few minor decisions are all it would take. Moderately reducing frequency and lengths of outings, and being increasingly aware of one’s surroundings are all it would take to significantly reduce average contact rate. It is also likely that during periods where there are reports of high levels of infectious load, employers would be more willing to let an employee stay home and or cut back services.

His idea is that the government should undertake testing to let people know of impending “hot spots,” and then let people make their own decisions in response. Pointer from John Alcorn.

7. Jose Maria Barrero, Nick Bloom and Steven J. Davis write,

the COVID-19 shock caused 3 new hires in the near term for every 10 layoffs. These sizable new hires amidst a tremendous overall contraction align well with our anecdotal evidence of large pandemic-induced increases in demand at certain firms. Weekly statistics on gross business formation derived from U.S. administrative data also point to
creation and gross hiring activity, even in the near-term wake of the pandemic.

… Drawing on our survey evidence and historical evidence of how layoffs relate to recalls, we estimate that 42 percent of recent pandemic-induced layoffs will result in permanent job loss.

This is a strong blow to the GDP-factory thinking about this crisis. In fact, it is a PSST story.

8. Doc Searls looks at various industries classified using a matrix I suggested a while back. Can’t really excerpt. I strongly recommend the whole post.

Lockdown socialism watch

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Timothy Taylor writes about the Fed getting into the corporate bond market,

The Fed is starting with $50 billion for the “Primary” fund and $25 billion for the “Secondary” fund. The idea is to then leverage this amount with debt in a 10:1 ratio so that it could end up financing $750 billion in purchases.

You might remember that Congress put all sorts of conditions on giving loans to small business. They had to promise to keep employees and do other things. You can bet that the big boys are going to get their money no matter how many people they lay off.

General update, May 5

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1. A reader writes, “epidemiology as GDP-factory-ism”

So many epidemiology models seem to use THE value for R, or THE case fatality rate (CFR) or THE infection fatality rate (IFR). But these rates differ for different people and different circumstances. It seems the same kind of simplification that treats output as a single something. The simplification can be useful some times but there is such a temptation to use it without asking that question.

If you want to know why I am so adamant and ornery about the models, that is it. They remind me of macroeconometric models, which I am confident are misguided.

The modelers are still at it. The NYT reports,

The daily death toll will reach about 3,000 on June 1, according to an internal document obtained by The New York Times, nearly double the current number of about 1,750.

I would like to make the following bet with these modelers. I bet that the daily death toll in the last two weeks of May averages less than 2500. Whoever loses the bet has to shut up. If I lose, I stop blogging about the virus. If the modelers lose, then they have to stop reporting results from their models.

Note that Daron Acemoglu and others have disaggregated the typical model into more than one risk bucket. Tyler Cowen enthuses, “I would say we are finally making progress.” I say it’s just more social-engineering drunks searching under the lamppost.

2. Another reader points to an essay by Sean Trende. Difficult to excerpt, the essay seems quite rational to me.

No states are on anything resembling an exponential growth trajectory, almost all states are past a peak, and most states are substantially so. This would suggest that in many states, the question really should be how to reopen while keeping hospitals from being overwhelmed again.

As Tyler Cowen once predicted, we went from insufficient fear to excess fear. With excess fear, it will be difficult to re-start the economy. Even if restrictions are lifted, people will not be confident as consumers or entrepreneurs.

3. Alberto M. Borobia and others look at a cohort of patients at a major teaching hospital in Madrid. It is worth poring over the tables at the end. As I read table 3, out of 665 patients under age 50, only 5 died. That is a mortality rate of less than 1 percent among those hospitalized. To compute the overall infection fatality rate for those in that age group, one would have to multiply by the probability that an infected person becomes hospitalized. If the latter is 0.1, for example, then the IFR would be less than 1 in a thousand. Pointer from John Alcorn.

He also points to a study by Zichen Wang and others of patients in three New York hospitals. As I read the tables, obesity does not seem to be associated with a greater likelihood of death, but hypertension does.

And he points to yet another study, in the LA area. They find that a big difference of male vs. female.

One thing I would like to see from these cohort studies is a really careful analysis of the relationship between the risk from age and the risk from comorbidities, given that the high correlation between the two.

4. Robin Hanson writes,

We are starting to open, and will continue to open, as long as opening is the main well-supported alternative to the closed status quo, which we can all see isn’t working as fast as expected, and plausibly not fast enough to be a net gain. Hearing elites debate a dozen other alternatives, each supported by different theories and groups, will not be enough to resist that pressure to open.

Winning at politics requires more than just prestige, good ideas, and passion. It also requires compromise, to produce sufficient unity. At this game, elites are now failing, while the public is not.

I am not rooting for the elites to win. I don’t think any top-down solution is going to work well. Letting individuals decide which risks they are willing to take is probably the best approach. As someone who will be making risk-averse choices, I do not think others’ riskier choices pose a significant threat to me.

5. A commenter writes,

We shouldn’t be trying to conquer fear so we can go back to the old economy. We should be building the new economy that has an order of magnitude fewer casual human interactions.

Maybe this is overstating it. But I do think that we will see new patterns of specialization and trade, and we need a lot of capitalism to get there.

Fear factor

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In an interview, Paul Romer says,

The key to solving the economic crisis is to reduce the fear that someone will get sick if they go to work or go shop. So it’s really about building confidence. The thing about testing is that it’s easy to explain and it doesn’t frighten people the way digital contact tracing does. It’s not subject to technological and social, political uncertainty the way digital contact tracing is. It doesn’t require the organizational capacity that doing human contact tracing does. It’s really just a very simple, easy-to-explain idea—that to control the pandemic, we need to get a reasonable majority of the people who are infectious into a quarantine, and then we’re good.

I agree with his first sentence. But is mass testing the solution for fear? Clearly, it would work for Paul, and for other people who are fond of abstract theory that has some math to it. But I don’t think my own fear would be any less if there were mass testing. And I can imagine that such a regime would actually stoke fear in a lot of people.

Some other thoughts:

1. Politicians and public officials try to convert fear into Fear Of Others’ Liberty. Their success at this is what expands government and reduces freedom.

2. We are now in a position where anything other than a lockdown causes fear. It takes someone with a lot of pro-Trump mood affiliation or a very disagreeable person like myself to not fear lifting restrictions.

3. Based on what I can infer from my reading, one should really fear being elderly and in a nursing home. One also should fear being elderly and having obesity, heart problems, or hypertension. You should have some fear of being in an enclosed area in which someone else is singing, talking loudly, coughing, or sneezing.

When I need to be in an indoor setting with people other than my wife, I have less fear if everyone, including me, is wearing a face covering. I would not fear being outdoors or touching surfaces touched by others.

But as you know, I wish that public health officials were doing more to verify what to fear and what not to fear, and stop giving us their Bubba Meises and their model forecasts as if they were Science.

General update, May 4

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Many interesting links from Tyler Cowen yesterday.

1. Stephen M. Hedrick wrote in 2004,

Perhaps we should not assume that each and every disease can be controlled by vaccination. Considering the biological invention that has been directed toward thwarting T cell responses and antibody reactions, the possibility exists that for some agents, the acquired immune system is not up to the task. Other avenues of treatment might be more efficacious, but in a more fatalistic vein, one might conclude that the most effective means of controlling disease, as it has always been, is public sanitation, vector control, and education. A parasite can’t replicate in a host to which it has no access. It is antithetical to biomedical science as practiced in western countries, but technology may not be the answer to most of the world’s infectious diseases.

2. David Goldhill sounds like me.

3. Dhal M. Dave and others write concerning shelter in place orders (SIPOs),

using daily state-level measures of social mobility from SafeGraph, Inc., we document that statewide SIPOs were associated with a 5 to 10 percent increase (relative to the pre-treatment period) in the share of the population that sheltered in place completely on anygiven day. This treatment-control differential increases during the first week following SIPO adoption and then remains constant or slightly declines. Next, turning to COVID-19, difference-in-differences estimates show that the adoption of a SIPO had little effect on COVID-19 cases during the five (5) days following its enactment, corresponding to the median incubation period. However, after the incubation period, and intensifying rapidly three weeks or more after the policy’s adoption, SIPO adoption is associated with an up to 43.7 percent decline in COVID-19 cases. Approximately 3 to 4 weeks following SIPO adoption, this corresponds to approximately 2,510 fewer cumulative COVID-19 cases for the average SIPO-adopting state. Evidence from event study analyses is consistent with common pre-treatment trends. . .While statewide SIPOs were negatively related to coronavirus-related deaths, but estimated mortality effects were imprecisely estimated.

My guess is that if they could have shown that government restrictions lower death rates, they would have shouted it from the rooftops.

4. CNBC reports,

data released from the country’s central bank and a leading Swedish think tank show that the economy will be just as badly hit as its European neighbors, if not worse.

Pointer from Scott Sumner. I agree with Scott that this is no surprise.

Lin and Meissner find

Job losses have been no higher in US states that implemented “stay-at-home” during the Covid-19 pandemic than in states that did not have “stayat-home”.

Pointer from John Alcorn.

Most of the change in behavior comes from individual decisions. At the margin, the government restrictions are probably stupid. They keep hospitals from performing helpful procedures on non-virus patients. They restrict access to beaches and parks, when it is likely that fresh air is a good thing nowadays. They impose the greatest change in behavior on the young people with the lowest risk. And they do not have a visible effect on death rates–probably because the people who are at risk and have choices about behavior are already doing what they can to minimize their exposure to the virus.

5. Russ Roberts says that we need to let the price system work in the market for masks.

Markets are failing in America because we’re not letting them work. It’s not a market failure. It’s a policy failure.

. . .You get more stuff when you let the price go up. We should use prices in a crisis, not just in normal times.

6. Bryan Caplan writes,

Populists notwithstanding, there is nothing “dishonorable” about raising prices to eliminate shortages. If governments or customers refuse to see this great truth, there is nothing dishonorable about raising prices in less-visible ways. Businesspeople, you do not merely have a right to “gouge.” As long as shortages persist, gouging is the right thing to do. Gouge is good!

His point is that business owners themselves are too reticent about raising prices.

7. J. Feliz-Cardoso and others write,

The EuroMOMO network monitors weekly all-cause age-specific excess mortality in countries in Europe through a standardised approach.

Can one find anything comparable here? The authors recalculate excess mortality using their own methods. They seem to find that it is concentrated among those over age 65, especially men.

General update, May 3

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1. The WSJ reports,

Public-health experts generally agree that to reopen society safely, communities need widespread testing so officials can be confident that the number of coronavirus cases in the population is low and people who are positive can be quarantined.

The article is still talking about doorknob effects and how long virus can live on surfaces. Meanwhile, nobody has looked for evidence that people get the virus from surfaces.

Consider two policy objectives. One is to protect the health of people who are vulnerable, primarily the elderly in nursing homes. The other is to protect otherwise less vulnerable people from getting something worse than a mild case of the disease.

We do not have the scientific evidence to determine what is necessary or sufficient to achieve either objective. But “public-health experts generally agree” that testing is the answer. I would feel better about public-health experts if they generally agreed that it would be a good idea to run experiments and carefully evaluate hypotheses before pronouncing them.

2. Javiero is back.

First I want to focus on the Wuhan Commercial Vehicles Show (CCVS) that was held between November 1 and November 4 in the Wuhan International Expo Center. Besides Chinese manufacturers present at the show, including of course Dongfeng Trucks, foreign manufacturers present at the show included Mercedes-Benz, Scania, SAIC-IVECO, Michelin, and Palfinger.

Read the whole thing. I like his detective work. As he points out, his analysis implies that the virus was in Wuhan by early November.

Control without information

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One can think of government as playing two roles in the virus crisis. One role is to exercise control, meaning giving orders. The other role is providing information, including reliable data and analysis. My criticism of government can be summarized by saying that it has been too eager to use control, while in the area of information it has been derelict and incompetent.

Here is what I would do if I were in charge of the CDC.

1. I would have one unit focused on providing consistent, accurate information about deaths. Deaths would be reported by date of death. Deaths would be reported in categories: deaths with no relationship to the virus; deaths of people with the virus but caused primarily by pre-existing conditions; deaths that were caused by a combination of pre-existing conditions and the virus; deaths that were caused primarily by the virus. The CDC reporting unit would give clear guidance to health care workers on how to do this classification. Trends would be reported by age and by institutional status (nursing homes, prisons) as well as by geographic area.

2. I would have another unit charged with determining the prevalence of the virus. As you know, there are two types of tests, one for whether someone currently has the virus and another for someone has the antibodies to the virus. For each of the two types of test, the testing unit would use the testing procedures with the highest reliability, including re-testing people if that reduces classification errors. It would use stratified random sampling.

3. I would abandon all models that work with a single spread rate or a single infection fatality rate. Instead, I would work with the Avalon Hill metaphor and have a unit evaluate hypotheses relative to that metaphor. Some of these hypotheses can be tested using healthy volunteers willing to expose themselves to possible infection. Others can best be evaluated by studying cases of infection events and deaths. The idea is to better predict what happens in an encounter between an infected person and a person at risk of becoming infected.

This unit of the CDC would focus on how both the probability of infection and the severity of disease are affected by the following factors:

4. Characteristics of the person at risk for becoming infected. age; and pre-existing conditions, including obesity. (This cannot be tested experimentally, but the cases that we have seen could be evaluated more closely.)

5. Extent of symptoms of the infected person.

6. Type of contact between the infected person and the person at risk.

7. Duration of contact between the infected person and the person at risk.

8. Distance between the infected person and the person at risk.

9. Masks. Neither person uses a mask; only the person at risk uses a mask; only the infected person uses a mask. Both use masks.

10. Whether contact takes place indoors or outdoors.

My first choice would be for government to provide information on these factors and let individuals and businesses make decisions based on this information. My second choice would be for government to obtain this information and issue orders to citizens based on this information. The current state of affairs is that government issues orders without this information. As I see it, exercising control without information is the least desirable role for government.

General update, May 2

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1. Thomas Meunier writes,

While new medical treatments proposed to cure COVID-19 cases are required to be validated through controlled double blind studies, the benefits and risks of social distancing strategies are not subject to any comparative tests

we show that the available data exhibit no evidence for any effects of the full lockdown policies applied in Italy, Spain, France and United Kingdom in the time evolution of the COVID-19 epidemic. Using a phenomenological approach, we compare the evolution of the epidemic before and after the full lockdown measures are expected to produce visible results. Our approach … is focused on incident rather than cumulative data, and it compares pre-lockdown and post-lockdown trends. However, here, no positive changes are noticed in the trend of the daily death growth rate, doubling time, or reproduction number, weeks after lockdown policies should have impacts.

That is certainly the case with U.S. data on death rates.

Lockdowns have achieved a theatrical purpose. They allow politicians to pose as powerful leaders implementing a cure for the virus.

Pointer from John Alcorn.

2. A study by R.E. Field and others of a cohort of 500 COVID-19 patients at a London hospital. Many interesting findings, including

When the outcome of the ventilated patients is viewed by age and gender … no female over the age of 60 has yet left the intensive care unit alive and nomale over the age of 50 has left the intensive care unit alive.

Another pointer from John Alcorn.

General update, May 1

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1. Jeremy Samuel Faust writes,

there are little data to support the CDC’s assumption that the number of people who die of flu each year is on average six times greater than the number of flu deaths that are actually confirmed. In fact, in the fine print, the CDC’s flu numbers also include pneumonia deaths.

His point is that deaths from the flu in past years are greatly overstated. This reinforces the intuition that the novel coronavirus is worse than the flu.

2. Culture of looting watch, from the WSJ

housing activists in at least 15 cities, including New York and Chicago, are organizing rent strikes. They are calling on tenants to withhold May payments in hopes of provoking federal and state lawmakers to provide more financial support for renters.

3. Ricardo Reis looks to the period right after World War II as a precedent for how fiscal and monetary policy were entangled and then unentangled.

There comes a time when the central bank says that it should be focused on controlling inflation and no longer just on trying to keep rates low just to finance the debt. The finance ministry, of course, does not like that because now its job is going to be much, much harder. Potentially it’s going to have to deal with high interest rates, especially if it does not behave responsibly with respect to its deficits. As a result, this conflict arises. The Accord was, if you like, the peace treaty.

Pointer from Greg Mankiw. The interview with Reis is broad, recommended.

The accord to which he refers is a 1951 agreement that allowed the Fed to set a more independent course, raising interest rates. That was easier to do then, because the government had stopped deficit spending when the war ended.

4. A commenter pointed to a post by editors of The New Atlantis about the extreme differences across states in death rates. I’m not necessarily with them on the analysis, but I pass along the link because the map charts are eye candy.