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.

13 thoughts on “General update, May 4”

  1. “Most of the change in behavior comes from individual decisions. At the margin, the government restrictions are probably stupid.”

    Respectfully disagree. Never underestimate the impact of government policy and the media on the median voter.

    My anecdote: one week, no one was wearing masks. In the following week, after the government changed policy and the media parroted it, literally 80% of the population was wearing masks. That’s a huge change!

  2. #5 “We should use prices in a crisis”

    Don’t disagree, but also don’t think that your average citizen will be able to tolerate it.

    Given that the average citizen won’t go for it, the second best strategy is rationing.

    Most of the major retailers are already doing this rationing. E.g. went to Target today and found both face masks and hand sanitizer on the shelf. Limit 1 each per customer.

    Problem somewhat solved by the retailers (aka market)?

  4. #4 someone pointed out that Sweden is suffering from a decline in international trade. In other words, Sweden is doing better than they would with a lockdown policy, but their economy is still suffering from a decrease in international trade.

    Thailand, for example, has taken a huge hit from the loss of international tourism, a major pillar of the economy. Thailand has a lockdown. One could conclude that the lockdown alone grievously injured the Thai economy, but obviously the loss of international tourism was a major blow also.

    • Thanks for addressing an issue that has been troubling me….

      Libertarian writers have been saying that ‘the government shut down the economy’. and implying that this was a stupid decision that harmed 30 million workers to extend the lives of maybe 250,000 geezers.

      Well, there have been a lot of stupid decisions, but the narrative is imperfect.
      Here is a list of states with the most rapid rise in unemployment:

      1. New Hampshire

      Increase in unemployment claims: 6011.75%
      2. Louisiana

      Increase in unemployment claims: 5250.58%
      3. Georgia

      Increase in unemployment claims: 4801.07%
      4. Kentucky

      Increase in unemployment claims: 4545.70%
      5. North Carolina

      Increase in unemployment claims: 4497.23%
      6. Virginia

      Increase in unemployment claims: 4486.67%
      7. Michigan

      Increase in unemployment claims: 4404.61%
      8. Indiana

      Increase in unemployment claims: 4212.75%
      9. North Dakota

      Increase in unemployment claims: 4131.58%
      10. Florida

      Increase in unemployment claims: 3951.01%

      This obviously is not tied to overly active shutdown orders.

      I suspect that the key factor is how many workers in each state were tied to the hospitality industry and the oil industry.

  5. Is there any indication that “price gouging laws” are the cause of Bryans woes?

    I’ve read some things about this being the case for large buyers in the PPE market in some cases, but often not because a law is being violated. Mostly, the buyer doesn’t want to be seen as being “taken advantage of” (the buyer being the hospitals bean counter, who knows he won’t be fired for not overpaying 10x). Also, the sellers really want cash up front, not credit on delivery, which is a big reason these hospitals have missed out compared to other buyers, not price.

    This other stuff…not buying it.

    I think Bryan is arrogant to believe that he has a better handle for reputational risk firms risk by “price gouging”. Why does he know better? The best answer he can offer is that he’s an emotionless aspie and they are too good hearted normies? More reason to believe he doesn’t have good judgement on this.

    You know I just listened to a podcast on Amazon. Seemed to me that Bezos was extremely focused on customer experience, was willing to run huge losses to change behavior, and valued reputation over immediate profit. I don’t think he views this as an opportunity to make a fast buck, but as a once in a lifetime chance to fundamentally change shopping patterns. Is he going to screw that up to make a few bucks on toilet paper.

    How much of this is Bryan’s whining that his above average income isn’t enough to get more toilet paper than the plebs.

  6. 1. Stephen M. Hedrick wrote in 2004,
    —
    Nice catch. I was looking for that date. The earliest I was seeing was 2012.

  7. We need to rebrand “price gouging” as “hoarding prevention.”

    Regarding the purchase of masks for US healthcare workers, I think it would’ve been reasonable for the federal government to have declared a pandemic emergency and helped with purchasing of masks centrally. Hospitals had down payment issues, which Roberts blames on bureaucracy, but the government could’ve easily have stepped in, taken market prices (or maybe negotiated a bulk discount), and then re-sold to hospitals at cost. Maybe not very libertarian, I guess, but seems like public health should be among the few areas a national government could reasonably help out with.

  8. #5 Economists do the topic a disservice when they pretend the issue is straightforward. Of course, i understand the logic behind higher prices. But there are many exceptions to the rule. Most notably 1) where higher prices may not increase supply, 2) where timing is relevant (if we develop a vaccine should the wealthiest get it first?).

    They’d win more converts if they presented the issues as the complicated one it is.

  9. 5. “Price gouging is a clear violation of the basic Jewish Torah value that “its paths are the ways of pleasantness.” – Rabbi Berel Wein
    6. “Our academical Pharisees” – Thomas Babington Macaulay

  10. Your basic premise is that temporary high prices wiil bring forth more supply.
    virus mask
    I think that is an invalid assumption.

    Name a single firm producing mask now because of higher prices. I see some middlemen charging much higher prices, but I do not see a single manufacturing company that waited till prices were high before they started making masks.

    Please name one firm that did what your theory calls for.

    It is like after a hurricane, the big box retailers like Walmart and Home Depot rush truckloads of goods into the hurricane areas at everyday prices. People raising prices are such an extremely small exception to the rule that they really have no significant impact on supply and do not induce manufactures to expand output.

    Name a documented exception!!!

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