1. Tyler Cowen offers some unsolicited advice from an economist to epidemiologists. More here.
I applaud epidemiologists for thinking exponentially rather than linearly. I boo them for going with computer models without seeming to appreciate how flawed data and parametric simplification make them unreliable.
I would add that the political process selects economists as advisers based on criteria that are uncorrelated, or perhaps negatively correlated, with wisdom. I could imagine the same thing happening when epidemiology mixes with politics.
2. Reader Aaron Lindsey has posted a 3DDRR spreadsheet that makes it easy to see how that indicator has behaved.
Do you want to understand how difficult it is to make epidemiological forecasts? Squint at the chart from April 1st on. Imagine a trend line from April 1 to April 6 extended to the present. The difference between that trend line and the actual behavior may seem small. But because of that difference, we may have twice as many deaths from the virus compared with what would have happened had the trend from April 1 through April 6 continued.
3. Another reader, John Alcorn, found this article.
We identified 103 possible work-related cases (14.9%) among a total of 690 local transmissions. The five occupation groups with the most cases were healthcare workers (HCWs) (22%), drivers and transport workers (18%), services and sales workers (18%), cleaning and domestic workers (9%) and public safety workers (7%). Possible work-related transmission played a substantial role in early outbreak (47.7% of early cases). Occupations at risk varied from early outbreak (predominantly services and sales workers, drivers, construction laborers, and religious professionals) to late outbreak (predominantly HCWs, drivers, cleaning and domestic workers, police officers, and religious professionals).
Their investigation looked at Asian countries other than China.
4. As economists start to think about how all this new government spending is going to be financed, you might want to re-read this post from 2010.
As of 1946, the ratio of debt to GDP was 108.67 percent. From 1947 to 1970, it fell to 27.96 percent. A substantial amount of the drop was due to the fact that the government ran a primary surplus in all but four of those years (the exceptions were 1953, 1959, 1962, and 1968), for a cumulative primary surplus of 43 percent of the 1946 debt.
I was surprised by this. I had not remembered these surpluses. One reason is that the primary surplus excludes interest payments. Including interest payments, the government mostly ran deficits, particularly in the 1960’s. Another reason may be that the U.S. only began to include Social Security surpluses in the overall Budget late in President Johnson’ second term. Had we used the “unified” budget from the beginning, the deficits would have seemed much smaller and we would have counted more surpluses.
Thanks in part to Social Security, which was running surpluses that were not included in the budgets as reported at the time, we were very fiscally responsible in the 1950s and 1960s, so we paid most of the World War II debt.
In contrast, today mainstream thinking is that “interest rates are low, so why bother worrying about the debt?” Olivier Blanchard, one of the leaders of the economics profession, takes this stance. I have never had much regard for him. Over the next decade, we’ll see who turns out to be right.
5. Tyler asks why Belgium is doing so poorly. I immediately looked for a sociological variable. It turns out that Antwerp and Brussels are two of the European cities with very high Muslim populations. The Netherlands, which has several cities that have large Muslim populations, also has a per capita death rate on the high side.
I am using Muslim population as a crude proxy for ghetto-ized living conditions, equivalent to Hispanics in New York City. I am not trying cast any ethnic aspersions on Muslims or Hispanics. What I picture is a lot of people who do not have the privilege of a social-distancing option. They cannot work in home offices or avoid living in crowded conditions. As the Wikipedia list says, “In Western Europe, Muslims generally live in major urban areas, often concentrated in poor neighborhoods of large cities.”
But Germany, which also has major cities with large Muslim populations, is doing relatively well. Berlin also has a high reliance on mass transit, which deepens the mystery of how Germany is containing the virus. This story credits early implementation of test, track and trace.
6. Some of you have expressed an interest in betting on the fate of colleges and universities. You will want to read this.
“Financially, many colleges have been struggling, facing a perfect storm which is going to be even more difficult now,” Robert Franek, editor-in-chief of the Princeton Review, told Campus Reform. “Their costs are up, but their tuition dollars are down as enrollments trend[s] down. The value of their endowments is also down, and with the economy in [a] downturn, alumni and corporate donations are likely to be less.”
The coronavirus relief bill signed by President Donald Trump on March 27 includes $14.3 billion for higher education, with $12.4 billion split between emergency grants to students and money to colleges “to address needs directly related to coronavirus” and to “defray expenses” from lost revenue, reimbursement, technology for distance learning, and payroll.
Tyler’s dire prediction for colleges is based on what he foresees as their inability to sustain the foreign enrollments that have been a crucial source of revenue. But note the huge bailout voted by Congress, even though it requires Republicans voting to give money to Democratic bastions. The higher education lobby has quietly become one of the most powerful and effective political operations in the United States.
6) “Tyler’s dire prediction for colleges is based on what he foresees as their inability to sustain the foreign enrollments that have been a crucial source of revenue.”
So yeah, I’m willing to bet on this one over a 3 year horizon. But, I don’t know how to propose the terms. Please take my $100.
And, if there is some way for you to confirm that you are from a “Fishtown” type location, then I can make my terms even better…all the better that my funds are going to a much needed cause because no one else seems to care about you.
And, if you’re reading this blog, I’m going to go ahead and bet against your claim that you’re from a “Fishtown” locale, unless of course there is gentrification involved.
Evidence, if any was needed:
https://www.nber.org/papers/w26982.pdf
Social Distancing, Internet Access and Inequality
Lesley Chiou and Catherine Tucker
NBER Working Paper No. 26982
April 2020
ABSTRACT
This paper measures the role of the diffusion of high-speed Internet on an individual’s ability to self-isolate during a global pandemic. We use data that tracks 20 million mobile devices and their movements across physical locations, and whether the mobile devices leave their homes that day. We show that while income is correlated with differences in the ability to stay at home, the unequal diffusion of high-speed Internet in homes across regions drives much of this observed income effect. We examine compliance with state-level directives to avoid leaving your home. Devices in regions with either high-income or high -speed Internet are less likely to leave their homes after such a directive. However, the combination of having both high income and high-speed Internet appears to be the biggest driver of propensity to stay at home. Our results suggest that the digital divide—or the fact that income and home Internet access are correlated—appears to explain much inequality we observe in people’s ability to self-isolate.
“Evidence, if any was needed”
Omgosh! Classic, thank you!
My wife is From Belgium and I go there frequently and (to some extent) can understand the culture. My guesses are
1. Muslim population… yesterday a full fledged riot seemed to break out because a Muslim youth fled police enforcement of the lockdown and was struck and killed by a car.
2. The health care system, like that of much of Europe, really isn’t that good. It gets relatively good results because they have a sane population. But a real crisis like this simply overwhelms the system and shows that they are, in fact, running very lean on things we’d take for granted. For instance, they had high profile failures where they ordered masks and got nothing.
3. They’re very much not oriented toward life extension technologies. Its assisted suicide laws and the generally low standard for giving families the power to euthanize folks is both a cause and an effect of this. Even for someone who favors freedom and assisted suicide, The Belgian approach, which lets people, even young people kill themselves is… unsettling.
4. Somebody has to be the worst. Looking at the graphs Tyler used as a jumping off point it’s unclear that Belgium is really much different, it just started (maybe) earlier, but that’s not surprising for a very open, urban dense country that’s an international hub.
5. Belgians aren’t Germans. The lockdown order was met in many places in Belgium with packing bars until the police showed up and shut them down and then dispersed the crowds outside. This jibes with my sense that there’s a generally lower sense of conscientious. Belgians suck at standing in lines compared to Americans, Germans and Japanese.
Here is a working link to the article about which jobs are risky, at what stage:
https://www.medrxiv.org/content/10.1101/2020.04.08.20058297v1.full.pdf
Stefanos N. Kales et al., “Work-related Covid-19 transmission,” MedRxiv (8 April 2020)
Some straight talk from Fauci: “I think it’s important to point out that it isn’t the model or the result of the model that really led to the decision to have such strong mitigation programs such as physical separation. You don’t even have to look at any model. Take a look at what happened in China. Take a look at what happened in northern Italy, how the hospitals were completely overrun and the draconian methods that had to be taken in China to return down their outbreak.”
A governor looks at his TV screen. He quotes a model, but he’s looking at images.
A mayor announces a policy. She’s going with her gut reaction. The models are PR.
What was on TV? China, not Taiwan. Italy, not Japan. So it’s images that run the world.
The first images are from a dictatorship. So the TV-watchers we call leaders copy the images they see on TV. Monkey see, monkey do. But it’s the media who run the show.
it requires Republicans voting to give money to Democratic bastions.
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And the Democratic bastions wee required to give money to small and medium states. This was a Seanaste vs House deal.
North Dakota, for example, might just die. Iy had accumulated a 10% increase in population via fracking. It was the major employment boom that got us out of 2009. Now, suddenly overnight, all those workers are surplus in North Dakota, they have no replacements and likely will be bankrupt without the stimulus. The small states do not have economies of scale and are very fragile to sudden stops.
Pretty sure those guys in North Dakota are gonna do fine. Domestic energy production (and probably domestic production of stuff in general) is going to be a growth industry.
Universities are going to see a few major changes besides the paucity of foreign students in the near future. First, the young are dumb, but are they foolish enough to go into more debt for a residential college that is both a likely super-spreader site and likely to lock the students out mid-semester? And many students will be reevaluating whether the material is worth the risk. Not to mention all those who just learned the hard way that their majors give them nothing useful to offer when things are dire. A shift to majors that train toward fundamentally useful skills may occur.
Olivier Blanchard, one of the leaders of the economics profession, takes this stance. I have never had much regard for him. Over the next decade, we’ll see who turns out to be right.—ASK
Perhaps better to say, “I have always disagreed with his views on economics.”
Mr. Blanchard may or may not be a nice guy. Unfortunately, The Not-So-Nice-Guys are found evenly sprinkled among all political and ideological persuasions.
It is puzzling to me that the Bank of Japan can buy back so much of that nation’s national debt, an amount about equal to that country’s GDP, without seemingly any impact on inflation or real GDP. Until recently, they had 157 job openings for every job-hunter and yet could not hit a 2% inflation target, that is from the underside. Japan will likely slip back into deflation in 2020.
I find myself uncomfortable with chronic national budget deficits and also with chronic national current-account trade deficits. Depending on who you talk to, and what is academically hip at the time, they either matter or they don’t.
The problems that mid-level universities face will only increase the monopoly power of the elites. With their endowments and their strong reputations they will be able to siphon off more money through their endowments and raise “contributions” from plutocrats and politicians desirous of getting their progeny into the most socially influential places. What a shock to the industry does is to clean out some diploma mills, some marriage schools, and the mid group that are best poised to have competed with the elites. Those will disappear and make the inequality and wealth and influence of the richest privates even stronger.
Expensive private schools that do not have a “unique selling proposition” will fail, being undercut by less expensive state schools, which will get the students instead.
“Muslim” is not really a very useful sociological variable. People from Sudan are mostly Muslim and so are people from Indonesia, but sociologically I don’t think they have much in common. I’m pretty sure most Muslims in Germany are of Turkish origin and most of those in Belgium are Arabs. I don’t think they are particularly similar.
I certainly don’t mean to judge people from any of these countries. I just think “Muslim” is a pretty useless common denominator if we are looking for sociological variables.