The UK covid19 crisis kicked off with forecasts of the epidemic with and without mitigation measures like lockdowns. They were ultimately alarming enough to persuade the government to lockdown. The forecasts joined epidemiological insights with social science – evidence on the propensity of different groups to contact each other. But they did not tread further into economics. Economists like Toxvaerd and Fenichel, and subsequently many others who joined in after covid19 emerged [including Moll, Werning, Acemoglu, Eichenbaum, Trabandt, Rebelo and more] showed how to take this extra step. In a variety of relatively simple models these authors study how behaviour responds to the progression of the epidemic; how the risk of infection affects incentives to work and consume. The
Tony Yates considers the following as important: Uncategorized
This could be interesting, too:
FRED Blog writes The state of the economy, weekly
The UK covid19 crisis kicked off with forecasts of the epidemic with and without mitigation measures like lockdowns. They were ultimately alarming enough to persuade the government to lockdown.
The forecasts joined epidemiological insights with social science – evidence on the propensity of different groups to contact each other. But they did not tread further into economics. Economists like Toxvaerd and Fenichel, and subsequently many others who joined in after covid19 emerged [including Moll, Werning, Acemoglu, Eichenbaum, Trabandt, Rebelo and more] showed how to take this extra step.
In a variety of relatively simple models these authors study how behaviour responds to the progression of the epidemic; how the risk of infection affects incentives to work and consume. The contribution of private social distancing; how behaviour differs across groups differently affected by the health risks; the benefit and costs of lockdowns.
Since the opening salvo of epidemiological policy models with no economics, we have had a lot of economics coming out of government and other economic institutions [like the Bank of England, the OBR and others] with no epidemiology.
The Government’s lockdown release program – seemingly motivated by the desire to get the economy going again – has been rhetorically and probably analytically disconnected from a scientific analysis of the consequences for the epidemic, and thus aftewards for the economy itself. We restarted some social contacts. Allowed more exercise. The formation of bubbles. Opened pubs. Then gyms and swimming pools. None of this was done with open and coherent analysis of its economic and epidemiological consequences. Yet it was done!
The policy decisions taken affect all of us, and a small minority, tragically. Each alternative path for reopening and restarting connections implies a predicted number of contacts and hospitalisations, and subsequent disability and death. How much death should we choose? How much disability? Every month that goes by with restricted economic activity and schooling hits the young and those who are not earning, and those who will ultimately fork out the taxes to pay the debt incurred to fund the income support schemes. How much poverty and missed education should we choose?
These decisions were not made on a sound analytical basis, or at least all the evidence is that they are not. It might be that the analysis is being done and kept secret, but I doubt it.
Institutions like the OBR and the BoE and other macro oriented non-Governmental economics bodies are not equipped and have been understandably reluctant to cross into epidemiology. But someone needs to do it.
It would fulfill an urgent policy need if we were to have a new research institution for economics and epidemiology. Relative to the sums required to support vaccine and therapy development, which run into the tens of billions, such an institution would be very cheap. £5-10m would fund it for a few years easily. In the grand scheme of things, this is not peanuts, it is mere dust. And given the phenomenal gaps – at the interface between econ and epidemiology – in the heart of policymaking, and policymaking scrutiny, I think the returns would be very large.
This is not a task that can be bolted onto academic economic or epidemiology jobs unproblematically. You can’t get publications out of questions like ‘what will happen if we open gyms and swimming pools and should we do it?’. Many of the questions will arrive and have to be turned around at high frequency. The methods used to answer them will soon become unoriginal and mundane, but the answers needed all the same. [See, for example, the outputs of macro models, which rarely generate journal articles].
But then again you will need the economic and scientific heft and to tempt people who have it in to such work [analogously to recruiting economists who can operate at the frontier in a central bank] you will have to offer them research time, especially since staff who spend time in a place like this will probably want to have the option to go [back?] to academia or a similar destination afterwards.
Academic economists are turning in numbers towards epidemiology, seemingly. [Some of them have been ploughing the furrow for a long time!] But they are always going to have to prioritize first of all publications in peer reviwed and high ranking journals.
Such an institution would need to have good access to, and be oriented at economic/epidemiological policy.
It would probably be best if it were parochial; the urgent questions are specific to UK government policies; and to UK specific information about the spatial dimension to our social and economic behaviour. An international centre in Geneva, or wherever, is not going to prioritize simulating the effects of a Leicester lockdown on the midlands economy. Even better, of course, if there were a network of similar bodies elsewhere to share experience, staff and expertise.
It would need to be responsive to but independent of government, and completely transparent, with code, forecasts, policy analysis, minutes and so on all openly available.
Given our new ways of working, it would be relatively straightforward to set such an institution up quickly. One would not need premises to begin with. Intensive computing resources, as Twitter followers with more up to date IT than I told me, can be bought from the cloud. All that is needed is a very small amount of money – small relative to the investment in vaccines, and relative to the sums that can be wasted with policy errors – and the will.
We would have been in a better position had such a body existed at the start of the outbreak. But it is not too late for such an effort to make a difference.
The government made a hash of the lockdown – moving far too late – and seem to be making a hash of the reopening – taking unwarranted risks. So the chances are the virus will be with us for a long time yet. Even with a vaccine or therapy, this will take time to deliver; may well not give complete immunity, or be avoided by many, and may not reach large populations in the rest of the world. And, as we are all very aware, this is probably not going to be the last pandemic.