Month: March 2020

Which are the safest restaurants to eat in?

by  Tyler Cowen in

This is my subjective impression, not based on scientific sampling.  Nonetheless, I think you should prefer cooked, hot food from a cuisine whose associated country already has had a traumatic experience with coronavirus.  They will take the risk more seriously.  You should avoid uncooked salads from lackadaisical countries that have been slow to respond.

In other words, I believe Chinese food is safest.  Furthermore, entry restrictions have been on Chinese people for some time, so the chance that your cook or waiter picked up the coronavirus from China and is still carrying it is very small, whereas Italians have been free to come and go with no real questioning at the airport.

Chinese restaurants also tend to be in the suburbs, and they pack in the tables less closely.

The British approach to coronavirus

by  Tyler Cowen in

Not sure how aware you are of what’s happening here but the British government is taking a decidedly different approach to most other nations. They are not shutting schools or cancelling large gatherings or recommending self-isolation. They’re taking a longer view and saying if that happens it will be a way off yet. The policy is led by the scientists.

It’s a very bold approach, the govt is coming under a lot of pressure to do what other nations are doing, there’s a lot of shouting to DO MORE, but so far they’re ignoring it. It’s kind of fascinating to see it play out. If you have time, today’s press conference is really worth a watch, the chief scientific and health advisers give a pretty detailed explanation of what they’re doing (Johnson introduces and then the scientists start talking at 31.50). They don’t say this explicitly but their bet is that what China and South Korea are doing is not economically or psychologically sustainable and will just lead to another peak. (My friend has drawn a cute visual explanation of the thinking here).

In this press conference they also make a pretty persuasive case that cancelling large gatherings is pointless and may be counter-productive.

…One more thing – good summary of the arguments the govt scientists made in that press conference, in this Guardian report. eg “closures would have to be at least 13 weeks long to reduce the peak of Covid-19 by 10-15%. Measures such as self-isolation for seven days for those with symptoms … have been modelled and are shown to be much more effective”

That is from an Ian Leslie email.  I am skeptical about this approach (is it politically sustainable?), but we will know more soon.  Here is another good explanation, by another guy named Ian:

3. A UK starting assumption is that a high number of the population will inevitably get infected whatever is done – up to 80%. As you can’t stop it, so it is best to manage it. There are limited health resources so the aim is to manage the flow of the seriously ill to these.

4. The Italian model the aims to stop infection. The UKs wants infection BUT of particular categories of people. The aim of the UK is to have as many lower risk people infected as possible. Immune people cannot infect others; the more there are the lower the risk of infection

And here is a polemic critique of the British strategy.  Continuing…

Friday assorted links

by  Tyler Cowen

1. The culture that is Texas: ““If you have meth with you, please get it tested [for Covid-19] prior to use,” the post says, offering addresses where people can take their drugs for testing.”

2. “Three separate studies suggest the unprecedented mass quarantine measures taken to limit the spread of the deadly coronavirus in China may have changed its genetic course, potentially making it more ‘insidious’ and harder to detect…that resulted in milder symptoms of the pneumonia-like illness, or no initial symptoms at all in the early stage of infection.”  Link here.  Speculative.

3. By no means is all of the vulnerable class old people.

4. France’s first political candidate with Down Syndrome.

5. Empty spaces amid coronavirus.

6. Why case testing still is slow.  And good pandemic advice from Greg Mankiw.

Quick and dirty data — underrated?

by  Tyler Cowen

Given that testing is only slowly ramping up, we should be pushing for transparent time series data on daily total admissions of people with apparent pneumonia for each large SMSA city.  My guess is such big Data would be one way of observing possible breakouts of serious cases, and show where it is urgent to get testing and quarantines.  Correlates of the virus should be observed and made publicly available.

That is from my colleague John Nye.  So who is going to do this?

A new proposal for coronavirus rebound

by  Tyler Cowen in

The $8 billion emergency spending bill to deal with coronavirus includes $3 billion that can be used for the research and development of a coronavirus vaccine or treatment. There’s a better way: The U.S. government should take advantage of the recent stock market plunge to incentivize firms to develop a coronavirus cure, vaccine, or other approaches.

We call this proposal the Epidemic Market Solution or EMS. The government should offer each of 10 firms stock options worth ten billion dollars if the Dow Jones increases by 15 percent over the next six months, and maintains that average increase over a month.

A coronavirus cure or vaccine would generate such an increase. For example, if a firm has $10 billion in options based on index funds, and a new cure or progress towards a cure causes the stock market to rise by 15 percent, the firm would make a profit of $1.5 billion. An even better response might be an increase in the market by 20 percent; in this case, the firm would make a profit of $2 billion.

That is from my old colleagues Linda Cohen and Ami Glazer at UC Irvine, and yes that is the Ami Glazer of Glazer’s Law.  Here is the full proposal.

$1 million plus in Emergent Ventures Prizes for coronavirus work

by  Tyler Cowen in

I believe that we should be using prizes to help innovate and combat the coronavirus. When are prizes better than grants? The case for prizes is stronger when you don’t know who is likely to make the breakthrough, you value the final output more than the process, there is an urgency to solutions (talent development is too slow), success is relatively easy to define, and efforts and investments are likely to be undercompensated. All of these apply to the threat from the coronavirus.

We do not know who are the most likely candidates to come up with the best tests, the best remedies and cures, the best innovations in social distancing, and the best policy proposals. Anyone in the world could make a contribution to the anti-virus effort and it won’t work to just give a chunk of money to say Harvard or MIT.

Progress is urgent. I am still keen on talent development for this and other problems, but the situation is worse every week, every day. It is important to incentivize those who are working on these problems now.

The innovators, medical professionals and policy people at work on this issue are unlikely to receive anything close to the full social value of their efforts.

I therefore am grateful that I have been able to raise a new chunk of money for Emergent Ventures — a project of the Mercatus Center — for ex post prizes (not grants) for those who make progress in coronavirus problems.

Here are the newly established prizes on offer:

1. Best investigative journalism on coronavirus — 50k

2. Best blog or social media tracking/analysis of the virus — 100k

3. Best (justified) coronavirus policy writing — 50k

4. Best effort to find a good treatment rapidly — 500k, second prize 200k

5. Best innovation in social distancing — 100k

6. Most important innovation or improvement for India — 100k

What might be an example of a winning project?  What if this attempt to build scalable respirators succeeded?  That would be a natural winner.  Or a social distancing innovation might be the roll out of more meals on wheels, little libraries, online worship, easier ways to work from home, and so on.  The vision is to give to people whose work actually will be encouraged, not to give to Amazon (sorry Jeff!), no matter how many wonderful things they do.

These are not prizes you apply for, they will be awarded by Emergent Ventures when a significant success is spotted.  (That said, you still can propose a coronavirus-related project through normal channels, with discretionary amounts to be awarded as grants per usual procedures.)  And typically the awards will apply to actions taken after the release of this announcement.

I would love to be able to offer more second and third prizes for these efforts, and also to increase the amounts on offer, and perhaps cover more countries too. Or perhaps you have an idea for an additional category of prize. So if you are a person of means and able to consider making a significant (tax-deductible) contribution, please email me and we can discuss.

In the meantime, the rest of you all need to get to work.

MRU and the Coronavirus

by  Alex Tabarrok in

Many universities are moving rapidly to teach online. Tyler and I and the entire team at MRU want to do everything we can to help make the process as successful as possible not just to improve education but to help to reduce the threat from COVID-19.

First, we have created a Resources Page on Teaching Online at that page you can also find a Facebook Community Page where educators are providing lots of tips and resources not just on videos but on how to use Zoom and other tools. Here, for example, is an excellent twitter thread on teaching online from Luke Stein that covers hardware, software, and techniques.

Second, If you are using Modern Principles, our textbook, and want to move online, Macmillan will do that for you for free, very rapidly, and including online tests, homework etc. If you want to move online from a different book, send Tyler or myself an email and we can discuss the best ways to do that.

Third, MRU has hundreds of videos which are free for anyone to use. Most notably our courses on Principles of Microeconomics and Principles of Macroeconomics but a lot more as well. You can search for MRU videos here. Here is a “greatest hits” list.

MRU is, of course, not the only source of excellent teaching material. Here are some others:

One place to begin might be to explain to your students the mathematics of why universities and schools are closing despite relatively few deaths to date in the United States. As always, this 3Blue1Brown video is excellent.

Addendum: See also Tyler’s important announcement on EV Prizes.

If I believed in Austrian business cycle theory, 2020 edition

by  Tyler Cowen in

If I believed in Austrian business cycle theory, I would think that the Fed lowering interest rates and flooding the system with liquidity, post-2008, was a disastrous decision, associated with a cascade of corporate debt, an equity bubble, and massive indirect subsidies to inefficient, now-doomed-to-fail smaller companies.

The restructuring or bankruptcies of inefficient retail, high production cost energy companies, and bad European banks were postponed, but now the bloodbath will come.  The coronavirus will be seen as the immediate cause, but it also will turn out to have been the mere messenger of inevitable structural changes.

This will become clear as, post-coronavirus, so many of the companies from those sectors simply do not come back, nor will they birth more liquid replacements or counterparts.  We will end up with much more “big business,” and much more on-line commerce, and the status quo ex ante will have been revealed to be full of malinvestment.

Fortunately, I do not believe in Austrian business cycle theory.  And for those relatively new to MR, here is my 2005 post If I Believed in Austrian Business Cycle Theory.

Massive US Government Failure

by  Alex Tabarrok in

NPR: Ashish Jha, who runs the Harvard Global Health Institute, says the response to the coronavirus has varied dramatically around the world.

…So how has the United States’ response been?

“Our response is much, much worse than almost any other country that’s been affected,” Jha says.

He uses the words “stunning,” “fiasco” and “mind-blowing” to describe how bad it is.

“And I don’t understand it,” he says incredulously. “I still don’t understand why we don’t have extensive testing. Vietnam! Vietnam has tested more people than America has.” (He’s citing data from earlier this week. The U.S. has since started testing more widely, although exact figures still aren’t available at a national level.)

…Jha believes that the weekslong delay in deploying tests — at a time when numerous other tests were available around the world — has completely hampered the U.S. response to this crisis.

“Without testing, you have no idea how extensive the infection is. You can’t isolate people. You can’t do anything,” he says. “And so then we’re left with a completely different set of choices. We have to shut schools, events and everything down, because that’s the only tool available to us until we get testing back up. It’s been stunning to me how bad the federal response has been.”

I too am stunned .

Michael Strain and Scott Gottlieb have policy proposals for coronavirus

by  Tyler Cowen in

Congress should make direct cash payments—mailed checks or direct deposits—to low-income households in places with severe outbreaks. Hourly wage workers should not feel compelled to show up to work sick because they need to pay bills. Congress can help these Americans recover and keep other people healthy by financing their time away from work.

In states experiencing severe outbreaks, Congress should waive the requirement that people receiving unemployment insurance payments look for work. Better that such unemployed workers receive financial assistance for rent, mortgages and groceries than to risk spreading the virus by applying and interviewing for jobs. Congress should also waive work requirements in the food-stamp program.

Children in low-income families will miss subsidized meals if schools are closed. Federal subsidies to those households should be increased to account for lost breakfasts and lunches. This might help relieve some of the pressure on low-income parents, who might otherwise feel the need to go to work even if ill.

Cash-strapped states may be reluctant to divert spending from other priorities toward health care, especially as more people use services. States that experience outbreaks may also lose tax revenue. Congress should increase the share of Medicaid spending financed by the federal government to alleviate the budget pressure.

So far the best proposals I have seen, here is more from the WSJ.  Note that paid sick leave can place a high burden on small and medium-sized businesses, here is a Yelowitz and Saltsman critique of paid sick leave, also WSJ.

COVID-19 Event Risk Assessment Planner

by  Alex Tabarrok

The mathematics for calculating the probability of exposure given the number of carriers in a population and group size aren’t difficult but they can be surprising. Even a low number of carriers can generate a relatively high probability for reasonably sized groups. For example, assume you run a firm of 1000 people in the San Francisco Bay Area (population 8 million.) Let’s suppose that there are just 500 carriers in the area. In this case, assuming random draws, the probability that at least one of your employees is a carrier is 6%. You can run your own calculations at Wolfram Alpha following this format:

p=8000000, c=500, g=1000, 1-1(1-c/p)^g //N

where p is the population size, c is the number of carriers, g is the group size and the //N at the end isn’t a division but a command to Wolfram Alpha to give you a numerical answer.

Joshua Weitz on twitter put together this graphic using the same calculations but for the United States as a whole (population 330 million). It says, for example, that if there are 20,000 carriers in the United States then at a small concert of 1000 people there is a 5.9% chance of at least one carrier attending. At the March Madness final in Atlanta with 100,000 attendees there is a greater than 99% chance that at least one attendee is a carrier.

Now here is the most important point. It’s the size of the group, not the number of carriers that most drives the result. For example, suppose our estimate of the number of carriers if off by a factor of 10–that is instead of 20,000 there are just 2000 carriers in the United States. In this case, the probability of at least one carrier at a big event of 100,000 drops not by a factor of ten but just to 45%. In other words, large events are a bad idea even in scenarios with just a small number of carriers.

What signal are low interest rates sending?

by  Tyler Cowen in

Obviously lower interest rates — ceteris paribus — do indicate the government should borrow more, but as Scott Sumner frequently reminds us: “Never reason from a price change.”

Most of all, it seems that rates, including long rates, have declined because of a flight to safety.  The price change itself is ambiguous, but if you buy that interpretation we should be spending more, and borrowing more, to invest in safety.

Does infrastructure make us safer?  Well, it depends.  Public health infrastructure does, and that is where we should be spending more at the margin.  I would expect that a lot of traditional physical infrastructure does not make us safer at all, and if you think its economic value covaries positively with gdp, it can make us less safe in the relevant portfolio sense.

Also keep in mind that a lot of marginal borrowing we do short-term and then refinance by borrowing short repeatedly, thus incurring ongoing interest rate risk.  That is yet another reason to focus on actual safety rather than on outputs whose values rise sharply with gdp.

Many professional economists are getting this point wrong and thinking we should go longer on those bridges and tunnels.

(Coronavirus) arbitrage

by  Tyler Cowen in

A teenager was sent home from school after being caught selling shots of hand sanitiser to his fellow pupils at 50p a go.

His mother, Jenny Tompkins, from Leeds, posted a picture of him arriving home earlier after his entrepreneurial exploits at Dixons Unity Academy.

In a post on Facebook, she said it was hard to discipline her son when his “dad called to say he was a legend”.

He plans to use the £9 he made to buy a kebab, she added.

Some respondents to the post, which was shared nearly 130,000 times, praised his efforts.

One said “can’t fault his logic”.

Others reminisced about selling cigarettes for £1 a go.

Someone else said: “Bet he gets an A in economics.”

Here is the link, via the under-followed Fergus.

China sentences of the day maybe it is what God intended

by  Tyler Cowen in

Tinder Has Become A News Service About Coronavirus, Which Is Not What God Intended…Setting my tinder to Wuhan so I can get the real scoop on what’s going on,” one user wrote…US-based Twitter user @drethelin tweeted “Setting my tinder to Wuhan so I can get the real scoop on what’s going on” on Jan. 28 — just before the World Health Organization declared COVID-19 was a public health emergency.

Here is the story, via Michael Rosenwald.