The phantom risk of Covid-19

That is the topic of my latest Bloomberg column, here is one excerpt:

…here is why I am not yet an unreconstructed economic optimist. Covid-19 cases have acquired a stigma, and that stigma is likely to persist above and beyond the dangers associated with the virus itself.

If, say, 20 Covid-19 cases were identified within a high school today, there is a very real risk that those infected students would carry the virus home and infect older and more vulnerable people. There is also a small risk that the students would sustain damage themselves. Not surprisingly, most schools won’t reopen because they cannot deal with the burden — institutionally, legally or otherwise — of being connected to significant numbers of Covid-19 cases.

The question is how this stigma ends. If rates of death and possible long-term damage fell to half of their current levels? One-third? Less? I strongly suspect these same schools still would be unwilling to reopen, due in part to phantom risk.

If rates of death and damage fell to one-fifth of their current level, perhaps, there would be more reopenings — but there would still be a lot of reluctance to restore previous levels of attendance. How about one-tenth the level of mortality? It is hard to say when people will feel comfortable once again.

Along these lines, as long as clusters of reported cases are possible — regardless of mortality rates — many high-rise office buildings will not let workers and visitors simply pile into their elevators.

Many sites likely to experience identifiable, traceable clusters of cases will keep their doors shut, or open them on only a very limited basis. Further declines in the mortality rate won’t help much, because “37 Covid-19 Cases Identified at UC-Berkeley” is enough of a headline to create reputational risk and an institutional response. Even if everyone makes a speedy recovery, that won’t get the same kind of media coverage.

There is much more at the link, and my point will grow increasingly relevant, first of all in NYC and environs (partial herd immunity there, at least for the time being).