Tim Harford The Undercover Economist

Articles published in May, 2020

The virus picks us off unevenly, and an efficient response must recognise that

It is the end of the beginning: lockdowns after the first wave of coronavirus are being tentatively lifted. It is not a step we are taking with any great confidence of success. Rather, we’re easing the lockdowns because we can’t bear to wait any longer. That will mean some difficult decisions ahead, in particular about how we look out for each other in a world where our experiences and the risks we face are dramatically diverging.

It is clear enough that the virus could easily rebound: a systematic study conducted by the Office for National Statistics suggested that 100,000 to 200,000 people in England alone were still infected with the virus in early May. The lockdown has merely bought us time.

One hope is that we can now contain the virus through widespread testing, contact tracing and the supported isolation of infected people. One cogent plan for this comes from the Safra Center at Harvard University.

But the UK seems in no position to implement anything like this plan. Boris Johnson, the prime minister, has promised a contact-tracing system by June 1 that will be “world-beating” — an obnoxious synonym for “excellent”. I do not believe him, particularly since his government has repeatedly misrepresented its record on testing.

The Safra Center plan calls for 2 per cent to 6 per cent of the population being tested every day. In the UK, that would be 1.3m to 4m people daily; we are currently testing well under 100,000 a day. For now, then, we are stuck trying to maximise the benefits of reopening while minimising the risk. That suggests drawing bright lines between those who should unlock and those who should not.

We have long accepted that a supermarket is more of a priority than a restaurant, but other dividing lines would be uncomfortable. Would we be happy for London to reopen while Manchester stays closed, or vice versa? There is a powerful moral case that we should all be going through the same sacrifices at the same time, but if we seek to save the greatest number of lives while destroying the fewest livelihoods, we may have to start drawing distinctions that make us squirm.

The most obvious such distinction would be to ease the lockdown only for the young. In the five weeks from late March to the start of May, nearly 29,000 people over the age of 65 died from Covid-19 in England and Wales. Only 375 people aged under 45 died in the same period. Late boomers and Gen-Xers like me, aged 45-64, are in the middle: nearly 3,500 of us died.

Could we countenance a plan to allow the under-40s back into pubs and restaurants, while the rest of us stick to Zoom and Ocado? Then if signs of herd immunity emerged, we could send in the reserves — the 40-somethings like me.

Is this really a good idea? I am genuinely unsure. Perhaps the practical objection is insuperable: it might be impossible to protect vulnerable people while allowing the virus to run riot in the young. But I suspect the real objection is not practical, but moral. Something about sending half the population out while the other half stays indoors feels unfair. That is true even if it is not entirely clear which side of the age divide is worse off — the ones enduring boredom and isolation inside, or the ones facing the virus.

And what of people who find themselves able to drink in public one day, then banned from their own 40th birthday party the next? Clear distinctions on a spreadsheet or graph start to seem absurd in everyday life.

And it could be much worse. Ethnic minorities are at greater risk; are we to advocate whites-only restaurants and whites-only public transport on the grounds that it is not safe for those with dark skin? The idea is self-evidently repugnant.

Yet the virus does not care about our moral intuitions. It picks us off un­evenly, and an effective response must recognise that. We are going to have to develop a language of social solidarity even as our individual experiences diverge. Even during the lockdown, many people have continued to experience the freedoms and anxieties of going to work as normal. The very nature of the lockdown means it is easy to forget that other people are leading very different lives. One doctor friend of mine, on a video call a fortnight ago, asked: “So . . . have the rest of you really just been at home, seeing only your families, for the last six weeks?” Yes. We really have.

We must develop new ethical codes. “Stay at home, protect the NHS” was a start, but over the coming months we must look for principles that offer the same moral force but far more practical subtlety. “Grandparents: stay home so that your grandchildren can go back to school.” “Home workers are heroes too,” because they reduce density in the big cities. We are all in this together.

And yet increasingly, we are all in this separately. That is a challenge we have yet fully to confront.

Written for and first published in the Financial Times on 22 May 2020.

My NEW book The Next Fifty Things That Made the Modern Economy is NOW OUT. Details, and to order on Hive, Blackwells, Amazon or Watersones. Bill Bryson comments, “Endlessly insightful and full of surprises — exactly what you would expect from Tim Harford.”

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Book(s) of the Week 20: The Next Fifty Things That Made The Modern Economy

Okay, this week I’m plugging my own brand new book, The Next Fifty Things That Made The Modern Economy. 

At least, a little bit. But I have some other books to tell you about too.

One of the joys of writing this book was to be able to pick up two or three wonderful books on each topic, learn all about the history and the characters involved, and then try to figure out how to use what I’d learned to tell a story with a particular lesson about how the economy works. In the case of the Langstroth Beehive, for example, I was able to talk about the Nobel laureate James Meade and his discussion of ‘positive externalities’, the long obsession of economists with bees, as well as the long-standing relationship between bees and humans.

Or when it came to the QWERTY keyboard I could discuss the raging controversy over the topic of ‘technological lock-in’, a crucial issue in the debate over how to regulate big tech companies – while at the same time puncturing some myths about the invention of the typewriter.

I loved writing this book and I hope you’ll love reading it. Click here for more information and links to buy from Hive, Amazon, Blackwell’s or Waterstones. (If you are reading in North America, sorry – only the previous book Fifty Inventions That Shaped The Modern Economy is available.)

Do please consider buying, gifting and/or reviewing the book. It’s not an easy time to be publishing a book – or to be a bookseller – and early support makes a big difference.

Now, I promised OTHER books. Here are some of the many, many books that I consulted while writing The Next Fifty Things and which stuck in my mind.

On Bricks: Brick: A World History by James Campbell and Will Pryce – gorgeous coffee-table photographs of brick structures from around the world.

On Beehives: The Hive by Bee Wilson. Quick, accessible history of the long and ever-changing relationship between humans and bees.

On Tulips: Tulipmania by Anne Goldgar (perfectly punctures the tulipmania myths) and Tulipomania by Mike Dash (further great stories and colourful details).

On GPS: PinPoint by Greg Milner, a book that will also be familiar to fans of Cautionary Tales.

On the ChatBot: The Most Human Human by Brian Christian. One of my favourite books of the decade.

On the Bicycle: The Mechanical Horse by Margaret Guroff. Full of telling social observations.

Lots of others that there is no time to discuss here – but the references tell all.

Stay safe, thanks for reading this post – and if you’ve decided to buy my book, thank you for that, too.

 

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27th of May, 2020MarginaliaOther WritingComments off

The statistical detective work required to lift the lockdowns

Anyone prone to cynicism about “damned lies and statistics” should be prompted to think again by the pandemic. Admittedly, distorted or fictional statistics have been press-ganged into their familiar roles of spin and propaganda.

But the real thing — statistical information, carefully gathered — can save lives.

The UK Office for National Statistics has announced a new survey of 25,000 people, designed to test a demographically representative cross-section of the UK population for infection and antibody response. Given that the UK already tests many tens of thousands of people a day for infection, that news might provoke a shrug. But it is an example of the data detective work that we desperately need if we are to find our way through the crisis.

Consider the question we’re all desperate to have answered: when is the right time to lift the lockdowns? Without delay? In a week or two? Months from now? The answer depends on how much weight we put on livelihoods versus lives, and on how quickly we can prepare ourselves to carry out mass testing and contact tracing.

But it also depends on just how deadly the virus really is, something we do not yet know. Clearly, Covid-19 is dangerous. It has already killed more people than the Indian Ocean tsunami of 2004, and nobody is asking whether tsunamis are dangerous. But the degree of risk remains unknown.

This is the most important question in the world right now: what is the “infection fatality rate”, the number of infections — measured or unmeasured — which end in death? It is a hard thing to judge.

We do not know how many people have died of Covid-19: official figures overcount in some ways, by attributing deaths to this virus that would have happened at much the same time without it; they undercount in others, when people are killed by the virus at home or in a care home without a formal diagnosis.

In the UK, for example, Financial Times research suggests that there have been more than 50,000 excess deaths in this epidemic, and many are plausibly attributable to Covid-19.

More problematically, we are still guessing at how many infections have occurred below the radar. Everyone agrees that the official global case-count of more than 3.5m misses many mild or even asymptomatic cases. But much hinges on just how many of those undetected cases there are.

Let’s explore two possible scenarios, then. If the true infection fatality rate in the UK is 1 per cent, an estimate consistent with much of the alarming early modelling, then that suggests up to 5m people have been infected, 60m people have not, and an incautious relaxation of lockdown could cause a second wave of deaths even worse than the first.

In contrast, if the true infection fatality rate is around 0.1 per cent, as asserted by the veteran Swedish epidemiologist Johan Giesecke, then that implies that the clinical cases are the tip of the iceberg. It would also mean that up to 50m people have been infected in the UK, enough to confer herd immunity on the entire country, and the lockdown should be lifted now.

Knowing the truth would be of enormous value — which is why systematic serological surveys are now so vital. Serological tests look for the antibodies that suggest a person has already been infected. These antibody tests should give more clarity but the early results remain a statistical patchwork for now.

A serological study conducted in Santa Clara, California, suggests an infection fatality rate as low as 0.12 to 0.2 per cent. That would be very good news, if true.

But serological data from New York City, in contrast, suggests an infection fatality rate above 0.5 per cent and perhaps even close to 1 per cent. If so, the frightening forecasts of hundreds of thousands of deaths if the virus was not suppressed in the UK were not far wrong. A study from Germany points somewhere in the middle.

Which is correct?

None of this work has been peer reviewed and, as much as I would love to believe the Santa Clara results, they seem fragile. One problem is that participants were recruited on Facebook. The study might be packed with people who signed up because they were convinced they’d been infected; that would overstate the prevalence of the virus and understate the true death rate.

The New York data, regrettably, look more plausible. But they are hardly conclusive. New York City’s death rate may be unusually high due to nursing homes being centres for viral outbreaks — a fate other places might avoid.

Tempting as it is to adjudicate, we need more and better surveys, from all over the world — such as the one now in progress from the ONS. The results will help us make informed decisions as we lift the lockdowns.

Because the threat we face is both serious and novel, there is no hope of producing a well-calibrated response without this kind of information. We need solid statistics to blow away the fog of this epidemiological war.

Written for and first published in the Financial Times on 8 May 2020.

In a few days my NEW book The Next Fifty Things That Made the Modern Economy is out in the UK. It is available to pre-order – pre-orders help other people find the book and are a huge help.

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The Next Fifty Things That Made the Modern Economy – book and talk

“Endlessly insightful and full of surprises — exactly what you would expect from Tim Harford.”

Bill Bryson

I’m delighted to announce the launch of my new book, The Next Fifty Things That Made the Modern Economy. It’s a sequel to the original in which I presented a selection of fifty radical inventions that changed the world – in the form of surprising, instructive and untold stories about the people and ideas behind these technologies.

Now, in this new book, I’m back with another array of remarkable, memorable, curious and often unexpected ‘things’ – inventions that teach us lessons by turns intimate and sweeping about the complex world economy we live in today.

They range from the brick, blockchain and the bicycle to fire, the factory and fundraising, and from solar PV and the pencil to the postage stamp.

Hopefully it won’t be too long before you can stroll into a bookshop and pick up a copy, but you can also pre-order online at Amazon, Blackwell’s, Hive and Waterstones.

 

More? You want more? Okay. I’ll be speaking at the Hay Festival online on Monday 25 May at 4pm UK time. Because of the times we live in I’ll focus in particular on What the Pandemic Teaches Us About Innovation. Come along!

At the moment the book is not available in the US – sorry – but you can always pick up the first in the series, the US title being Fifty Inventions That Shaped The Modern Economy.

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21st of May, 2020Other WritingComments off

Book of the Week 19: Humankind, by Rutger Bregman

Rutger Bregman’s new book, Humankind: A Hopeful History, makes a simple argument: most people, most of the time, are decent. Whether this strikes you as absurd, or obvious, may depend on what side of bed you got out of. Bregman makes a strong case that we’ve been groomed to think the worst of each other by books such as The Lord of The Flies and The Selfish Gene, and a diet of grim stories in the daily news. The book is wide-ranging, and while it is most definitely a polemic – Bregman writes to persuade – it is also full of the most fabulous storytelling. I loved reading it.

Some of the material I knew – for example, the ever-growing question marks over Zimbardo’s prison simulation have become infamous, re-interprerations of Milgram’s shock machine were popularised on RadioLab, and if I recall correctly the urban myth that nobody came to help Kitty Genovese was debunked in Freakonomics. It’s all woven together rather wonderfully here, though.

Other tales, in particular the story of the real-life Lord of the Flies, were completely new to me. The book is spellbindingly well written and you should read it. You’ll learn a lt (I did) and you’ll have good reason to feel better about the human race.

UK: Blackwell’sAmazon

US: Powell’sAmazon

While you’re here – my NEW book The Next Fifty Things That Made the Modern Economy is out in two weeks. Please consider ordering online or at your local bookshop, which will be sorely in need of your support.

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18th of May, 2020MarginaliaResourcesComments off

To combat climate change, release the brake

A couple of years ago, the Nobel-Prize winning psychologist Daniel Kahneman spoke to a distinguished group of social scientists, and shared with them what he regarded as “the best idea I ever heard in psychology”. The idea derived from Kurt Lewin — described by Prof Kahneman as “my intellectual grandfather”.

Lewin was a great German-born psychologist who — thankfully, given his Jewish origins — escaped to the US in 1933. Lewin described behaviour as a balance between driving forces and restraining forces: the accelerator and the brake, if you will. We often try to change behaviour, especially that of other people, by pushing harder on the accelerator. The proposition that so impressed Prof Kahneman was that it is better to try to release the brake.

The vehicular metaphor has seemed particularly apt of late, as my wife and I ponder replacing our disintegrating diesel car. A friend urged us to buy a Tesla: “Sometimes you just need to do the right thing,” he opined, although I suspect the “right thing” probably involves the bicycle and the train rather than an energy-hungry vehicle perfectly capable of causing accidents and traffic jams. Still, let us accept the premise for the sake of argument. What could induce us to “do the right thing” and buy an electric car?

The UK government seems to favour loading on the incentives — it taxes fuel and subsidises electric cars to the tune of up to £3,500. But as Lewin might have observed, rather than asking, “How can I get them to buy an electric car?”, perhaps the British government should be asking, “What’s stopping them?”

What is stopping us, in brief, is a lack of charging points. We live in Oxford and the good news is that Oxford City Council is on the case. The bad news is that they have been on the case since we first contacted them in 2017. They say they plan to install a “super-rapid charging hub” at a park-and-ride car park. That won’t happen until 2022 and it will be impractically far away — 20 minutes’ drive across a congested city. There’s a slower charger in the neighbourhood, but that would require parking, walking 10 minutes home, and then walking 10 minutes back again to collect it some hours later — a regular chore we could do without, although I suppose it’s no worse than walking a dog.

We asked the council if we could run a cable from our house power supply through a drainage channel that already exists. “Not an idea the council will consent to”, came back the reply, citing a “dangerous trip hazard”. That leaves us no closer to doing the right thing than we were three years ago.

Local councils have been hamstrung by deep spending cuts, and Tim Schwanen of Oxford university’s Transport Studies Unit told me that this is by no means just an Oxford problem. Despite Prime Minister Boris Johnson’s pledge to make sure that no one is ever more than 30 miles from a charging point, the government’s willingness to fund the infrastructure is doubtful. The business model for private charging is unclear. This is not insuperable, but it is a problem nonetheless.

And obstacles abound elsewhere: motorway service owners, for example, grumble that the electricity distribution network operators are the bottleneck for fast-charging stations.

It is an exciting prospect to think that electric vehicles will unleash the potential of renewable energy sources. Wind and solar offer a clean — and increasingly cheap — way to top up their batteries. Meanwhile a large pool of electric cars, connected to a robust smart grid, could use their batteries to smooth out fluctuations of wind and sun. Affordable electric cars are arriving, but that smart renewable-powered grid still seems some way off.

Governments are capable of focusing on brakes rather than accelerators; the question, “How can we make it easy?” is at the heart of the “nudge” approach to policy. In the spring of 2012, for example, the UK’s Department of Energy and Climate Change and the Behavioural Insights Team, known as the “nudge unit”, experimented with offering some people inexpensive insulation for their attics while others were offered a higher price for insulation but it came coupled with a loft clearance service. For homeowners who opted for clean-up, a crew of workers removed the stuff from the attic, giving the household a chance to go full Marie Kondo. The insulation was installed, and then the crew recycled or donated unwanted items and put back family heirlooms. It was a clever idea, based on the insight that a major obstacle to installing the insulation was not price, but the daunting prospect of sorting through a loft full of junk. Did it work? Quite possibly, but the study was too small and the results too shaky to be sure. The political spotlight moved elsewhere.

That is a shame. We should be thinking harder about such opportunities. Too often we are stamping on the accelerator with the handbrake on. When we switch from asking, “How can I persuade them to do the right thing?” to, “Why aren’t they doing the right thing already?”, empathy and insight begin to flow.

Written for and first published in the Financial Times on 28 February 2020.

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Why we fail to prepare for disasters

You can’t say that nobody saw it coming. For years, people had warned that New Orleans was vulnerable. The Houston Chronicle reported that 250,000 people would be stranded if a major hurricane struck, with the low-lying city left 20ft underwater. New Orleans’s Times-Picayune noted the inadequacy of the levees. In 2004, National Geographic vividly described a scenario in which 50,000 people drowned. The Red Cross feared a similar death toll. Even Fema, the Federal Emergency Management Agency, was alert: in 2001, it had stated that a major hurricane hitting New Orleans was one of the three likeliest catastrophes facing the United States.

Now the disaster scenario was becoming a reality. A 140mph hurricane was heading directly towards the city. More than a million residents were warned to evacuate. USA Today warned of “a modern Atlantis”, explaining that the hurricane “could overwhelm New Orleans with up to 20ft of filthy, chemical-polluted water”.

The city’s mayor, Ray Nagin, begged people to get away. He was reluctant to make evacuation mandatory because more than 100,000 people had no cars and no way of leaving. The roads out were jammed, anyway. Thousands of visiting conference delegates were stranded; the airport had been closed. There were no emergency shelters. Nagin mooted using a local stadium, the Louisiana Superdome, as a temporary refuge — but the Superdome was not necessarily hurricane-proof and Nagin was warned that it wasn’t equipped to be a shelter.

But then, the storm turned aside. It was September 2004, and New Orleans had been spared. Hurricane Ivan had provided the city, and the nation, with a vivid warning. It had demonstrated the need to prepare, urgently and on a dozen different fronts, for the next hurricane.

“In early 2005, emergency officials were under no illusions about the risks New Orleans faced,” explain Howard Kunreuther and Robert Meyer in their book The Ostrich Paradox. But the authorities did not act swiftly or decisively enough. Eleven months later, Hurricane Katrina drowned the city — and many hundreds of its residents. As predicted, citizens had been unable or unwilling to leave; levees had been breached in over 50 places; the Superdome had been an inadequate shelter.

Surely, with such a clear warning, New Orleans should have been better prepared to withstand Hurricane Katrina? It’s easily said. But as the new coronavirus sweeps the globe, killing thousands more people every day, we are now realising that New Orleans is not the only place that did not prepare for a predictable catastrophe.

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In 2003, the Harvard Business Review published an article titled “Predictable Surprises: The Disasters You Should Have Seen Coming”. The authors, Max Bazerman and Michael Watkins, both business school professors, followed up with a book of the same title. Bazerman and Watkins argued that while the world is an unpredictable place, unpredictability is often not the problem. The problem is that faced with clear risks, we still fail to act.

For Watkins, the coronavirus pandemic is the ultimate predictable surprise. “It’s not like this is some new issue,” he says, before sending over the notes for a pandemic response exercise that he ran at Harvard University. It’s eerily prescient: a shortage of masks; a scramble for social distance; university leaders succumbing to the illness. The date on the document is October 12 2002. We’ve been thinking about pandemics for a long time.

Other warnings have been more prominent. In 2015, Bill Gates gave a TED talk called “The next outbreak? We’re not ready”; 2.5 million people had watched it by the end of 2019. In 2018, the science journalist Ed Yong wrote a piece in The Atlantic titled “The Next Plague Is Coming. Is America Ready?” Now we know the answer, and it wasn’t just the Americans who were unprepared.

Officialdom had also been sounding the alarm. The World Health Organization and the World Bank had convened the Global Preparedness Monitoring Board (GPMB), chaired by Elhadj As Sy of the Red Cross and Gro Harlem Brundtland, a former director of the WHO. The GPMB published a report in October warning of “a cycle of panic and neglect” and calling for better preparation for “managing the fallout of a high-impact respiratory pathogen”. It noted that a pandemic “akin to the scale and virulence of the one in 1918 would cost the modern economy $3 trillion”.

Alongside these authoritative warnings were the near misses, the direct parallels to Hurricane Ivan: Sars in 2003; two dangerous influenza epidemics, H5N1 in 2006 and H1N1 in 2009; Ebola in 2013; and Mers in 2015. Each deadly outbreak sparked brief and justifiable alarm, followed by a collective shrug of the shoulders.

It is understandable that we have too few doctors, nurses and hospital beds to cope with a pandemic: spare doctors are expensive. It is less clear why we have so few masks, are so unprepared to carry out widespread testing and didn’t do more to develop coronavirus vaccines after the Sars epidemic of 2003, which involved a strain related to the current outbreak. (There was a flurry of activity, but interest waned after 2004.) We were warned, both by the experts and by reality. Yet on most fronts, we were still caught unprepared. Why?

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Wilful blindness is not confined to those in power. The rest of us should acknowledge that we too struggled to grasp what was happening as quickly as we should. I include myself. In mid-February, I interviewed an epidemiologist, Dr Nathalie MacDermott of King’s College London, who said it would likely prove impossible to contain the new coronavirus, in which case it might well infect more than half the world’s population. Her best guess of the fatality rate at the time was a little under one per cent. I nodded, believed her, did the maths in my head — 50 million dead — and went about my business. I did not sell my shares. I did not buy masks. I didn’t even stock up on spaghetti. The step between recognising the problem and taking action was simply too great.

Nor did the broadcast of my radio interview with MacDermott on the BBC seem to spark much in the way of disaster planning. Psychologists describe this inaction in the face of danger as normalcy bias or negative panic. In the face of catastrophe, from the destruction of Pompeii in AD79 to the September 11 2001 attacks on the World Trade Center, people have often been slow to recognise the danger and confused about how to respond. So they do nothing, until it is too late.

Part of the problem may simply be that we get our cues from others. In a famous experiment conducted in the late 1960s, the psychologists Bibb Latané and John Darley pumped smoke into a room in which their subjects were filling in a questionnaire. When the subject was sitting alone, he or she tended to note the smoke and calmly leave to report it. When subjects were in a group of three, they were much less likely to react: each person remained passive, reassured by the passivity of the others.

As the new coronavirus spread, social cues influenced our behaviour in a similar way. Harrowing reports from China made little impact, even when it became clear that the virus had gone global. We could see the metaphorical smoke pouring out of the ventilation shaft, and yet we could also see our fellow citizens acting as though nothing was wrong: no stockpiling, no self-distancing, no Wuhan-shake greetings. Then, when the social cues finally came, we all changed our behaviour at once. At that moment, not a roll of toilet paper was to be found.

Normalcy bias and the herd instinct are not the only cognitive shortcuts that lead us astray. Another is optimism bias. Psychologists have known for half a century that people tend to be unreasonably optimistic about their chances of being the victim of a crime, a car accident or a disease, but, in 1980, the psychologist Neil Weinstein sharpened the question. Was it a case of optimism in general, a feeling that bad things rarely happened to anyone? Or perhaps it was a more egotistical optimism: a sense that while bad things happen, they don’t happen to me. Weinstein asked more than 250 students to compare themselves to other students. They were asked to ponder pleasant prospects such as a good job or a long life, and vivid risks such as an early heart attack or venereal disease. Overwhelmingly, the students felt that good things were likely to happen to them, while unpleasant fates awaited their peers.

Robert Meyer’s research, set out in The Ostrich Paradox, shows this effect in action as Hurricane Sandy loomed in 2012. He found that coastal residents were well aware of the risks of the storm; they expected even more damage than professional meteorologists did. But they were relaxed, confident that it would be other people who suffered.

While I realise some people are paranoid about catching Covid-19, it’s egotistical optimism that I see in myself. Although I know that millions of people in the UK will catch this disease, my gut instinct, against all logic, is that I won’t be one of them. Meyer points out that such egotistical optimism is particularly pernicious in the case of an infectious disease. A world full of people with the same instinct is a world full of disease vectors. I take precautions partly because of social pressure and partly because, intellectually, I know they are necessary. But my survival instinct just isn’t doing the job, because I simply do not feel my survival is at stake.

The fact that the epidemic started in China, among ethnically Asian people, can only have ­deepened the sense of personal invulnerability in the west. As epidemiologist Neil Ferguson told the FT: “What had happened in China was a long way away, and it takes a certain type of person to take on board that this might actually happen here.”

The virus started to feel real to Europeans only when Europeans were suffering. Logically, it was always clear that the disease could strike middle-class people who enjoy skiing holidays in Italy; emotionally, we seemed unable to grasp that fact until it was too late.

A fourth problem, highlighted by Meyer’s co-author Howard Kunreuther, is what we might call exponential myopia. We find exponential growth counterintuitive to the point of being baffling — we tend to think of it as a shorthand for “fast”. An epidemic that doubles in size every three days will turn one case into a thousand within a month — and into a million within two months if the growth does not slow.

Donald Trump’s boast, on March 9, that there had been only 22 deaths in the US, was ill-judged in light of what we know about exponential growth, but he is hardly the only person to fail to grasp this point. In 1975, the psychologists William Wagenaar and Sabato Sagaria found that when asked to forecast an exponential process, people often underestimated by a factor of 10. The process in that study was much slower than this epidemic, doubling in 10 months rather than a few days. No wonder we find ourselves overtaken by events.

Finally, there’s our seemingly limitless capacity for wishful thinking. In a complex world, we are surrounded by contradictory clues and differing opinions. We can and do seize upon whatever happens to support the conclusions we wish to reach — whether it’s that the virus is being spread by 5G networks, is a hoax dreamed up by “the Dems” or is no worse than the flu.

Both Robert Meyer and Michael Watkins made an observation that surprised me: previous near misses such as Sars or Hurricane Ivan don’t necessarily help citizens prepare. It is all too easy for us to draw the wrong lesson, which is that the authorities have it under control. We were fine before and we’ll be fine this time.

This, then, is why you and I did not see this coming: we couldn’t grasp the scale of the threat; we took complacent cues from each other, rather than digesting the logic of the reports from China and Italy; we retained a sunny optimism that no matter how bad things got, we personally would escape harm; we could not grasp what an exponentially growing epidemic really means; and our wishful thinking pushed us to look for reasons to ignore the danger.

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The true failure, however, surely lies with our leaders. We are humble folk, minding our own business; their business should be safeguarding our welfare, advised by expert specialists. You or I could hardly be expected to read Gro Harlem Brundtland’s October Global Preparedness Monitoring Board report, and if we did, it is not clear what action we could really take. Surely every government should have someone who is paying attention to such things?

Margaret Heffernan, the author of Uncharted, warns that the same mental failings that blind us to certain risks can do the same to our leaders.

“We hang around with people like ourselves and if they’re not fussed, we’re not fussed,” she says. “Gro Harlem Brundtland lives inside a global health institution, so she cares. Most politicians don’t.”

While politicians have access to the best advice, they may not feel obliged to take experts seriously. Powerful people, after all, feel sheltered from many everyday concerns.  Heffernan argues that this sense of distance between the powerful and the problem shaped the awful response to Hurricane Katrina. Leaked emails show the response of Michael Brown, then the director of Fema.

One subordinate wrote: “Sir, I know that you know the situation is past critical. Here some things you might not know. Hotels are kicking people out, thousands gathering in the streets with no food or water… dying patients at the DMAT tent being medivac. Estimates are many will die within hours…”

Brown’s response, in its entirety, was: “Thanks for update. Anything specific I need to do or tweak?” That’s a sense of distance and personal impunity distilled to its purest form.

Sometimes, of course, the feeling of invulnerability is an illusion: in early March, the British Prime Minister Boris Johnson jovially declared that people would be “pleased to know” that he was shaking hands with everybody at a hospital tending to patients with coronavirus, and inviting people to make their own decisions about such matters. It was a shamefully irresponsible thing to say — but it also spoke volumes about his misplaced intuition that he could come to no harm. Within weeks, the story of Johnson had become a classical tragedy, the hero laid low by his own larger-than-life qualities.

*

We should acknowledge that even foreseeable problems can be inherently hard to prepare for. A pandemic, for example, is predictable only in broad outline. The specifics are unknowable. “What disease? When? Where?” says Heffernan. “It’s inherently unpredictable.”

The UK, for example, ran a pandemic planning exercise in October 2016, dubbed “Exercise Cygnus”. That forethought is admirable, but also highlights the problem: Cygnus postulated a flu pandemic, perhaps a strain of the H1N1 virus that killed tens of thousands in 2009, and many millions in 1918. Covid-19 is caused by a coronavirus instead, a relative of the Sars-Cov strain from the 2003 outbreak. Some of the implications are the same: we should stockpile personal protective equipment. Some, such as the danger of flu to young children, are different.

In any case, those implications seem broadly to have been ignored. “We learnt what would help, but did not necessarily implement those lessons,” wrote Professor Ian Boyd in Nature in March. Boyd had been a senior scientific adviser to the UK government at the time. “The assessment, in many sectors of government, was that the resulting medicine [in terms of policy] was so strong that it would be spat out.”

Being fully prepared would have required diverting enormous sums from the everyday requirements of a medical system that was already struggling to cope with the nation’s needs. The UK’s National Health Service was short of staff before the crisis began, seems to have had woefully inadequate stores of protective equipment for doctors and nurses, and has long pursued a strategy of minimising the use of hospital beds.

It’s this quest for efficiency above all else — in the NHS, and modern organisations in general — that leaves us vulnerable. The financial crisis taught us that banks needed much bigger buffers, but few carried the lesson over to other institutions, such as hospitals.

“On a good day, having 100 per cent of your intensive care beds in use looks efficient. The day a pandemic strikes is the day you realise the folly of efficiency. You’ve got to have a margin,” says Heffernan.

These margins are hard to maintain, though. In 2006, Arnold Schwarzenegger — then governor of California — announced an investment of hundreds of millions of dollars in medical supplies and mobile hospitals to deal with earthquakes, fires and particularly pandemics. According to the Los Angeles Times, emergency response teams would have access to a stockpile including “50 million N95 respirators, 2,400 portable ventilators and kits to set up 21,000 additional patient beds wherever they were needed”.  It was impressive.

But after a brutal recession, Schwarzenegger’s successor, Jerry Brown, cut the funding for the scheme, and the stockpile is nowhere to be found. Brown isn’t the only one to look for something to cut when funds are tight. Managers everywhere have long been promoted on their ability to save money in the short term.

I spoke to a friend of mine, a senior NHS consultant who had contracted Covid-19 as he tended his patients. Recovering in self-isolation, he reminisced about the days that he was told to find cuts of five to 10 per cent — and the fact that his hospital was no longer providing coffee for staff meetings as a cost-saving exercise. That seems like a memo from another era — but it was just a few weeks ago. As the cost-saving measures were being introduced in the UK, Italians had started to die.

*

The pandemic has offered us few easy choices so far. Nor are there many easy answers to the general problem of preparing for predictable catastrophes. It is too tempting to look at a near miss like Hurricane Ivan or Sars and conclude that since the worst did not happen then, the worst will not happen in the future. It is tempting, too, to fight the last war: we built up reserves in banking after the financial crisis, but we did not pay attention to reserve capacity in health, vaccine production and social care.

Preparedness is possible. Margaret Heffernan points to Singapore, a tiny country with front-line experience of Sars, acutely aware of its geographical vulnerability.

“The foresight unit in Singapore is the best I’ve ever encountered,” she says. “There are serious people working through very serious scenarios, and there’s a diversity of thinking styles and disciplines.”

Serious scenarios are useful, but as the UK’s Exercise Cygnus demonstrated, serious scenarios are no use if they are not taken seriously. That means spending money on research that may never pay off, or on emergency capacity that may never be used. It is not easy to justify such investments with the day-to-day logic of efficiency.

Singapore isn’t the only place to have prepared. Almost four years ago, philanthropists, governments and foundations created the Coalition for Epidemic Preparedness Innovations. Cepi’s mission is to support and develop technologies and systems that could create vaccines more quickly. While the world chafes at the idea that a vaccine for the new coronavirus might take more than a year to deploy, such a timeline would have been unthinkably fast in the face of earlier epidemics. If such a vaccine does arrive within a year — there is no guarantee it will arrive at all — that will be thanks to the likes of Cepi.

Still, we are left wondering what might have been if Cepi had existed just a few years earlier. In October 2019, for example, it started funding vaccine “platform” technologies to enable a more agile, rapid response to what it called “Disease X… a rapidly moving, highly lethal pandemic of a respiratory pathogen killing 50 [million] to 80 million people and wiping out nearly 5 per cent of the world’s economy”. That’s preparedness; alas ­Disease X may have arrived just a little too soon for the preparedness to bear fruit.

*

And what of New Orleans? In the summer of 2017, it was underwater again. A vast and expensive system of pumps had been installed, but the system was patchy, under-supplied with power and unable to cope with several weeks of persistent rain. It does not inspire confidence for what will happen if a big hurricane does strike.

Robert Meyer says that while the city has learnt a lot about preparation, “Katrina was not close to the worst-case scenario for New Orleans, which is a full category-five storm hitting just east of the city”.

The same may be true of the pandemic. Because Covid-19 has spread much faster than HIV and is more dangerous than the flu, it is easy to imagine that this is as bad as it is possible to get. It isn’t. Perhaps this pandemic, like the financial crisis, is a challenge that should make us think laterally, applying the lessons we learn to other dangers, from bioterrorism to climate change. Or perhaps the threat really is a perfectly predictable surprise: another virus, just like this one, but worse. Imagine an illness as contagious as measles and as virulent as Ebola, a disease that disproportionately kills children rather than the elderly.

What if we’re thinking about this the wrong way? What if instead of seeing Sars as the warning for Covid-19, we should see Covid-19 itself as the warning?

Next time, will we be better prepared?

Written for and first published in the FT Magazine on 18/19 April 2020.

My NEW book The Next Fifty Things That Made the Modern Economy is out in the UK in two weeks and available to pre-order; please consider doing so online or at your local bookshop – pre-orders help other people find the book and are a BIG help.

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9th of May, 2020HighlightsOther WritingComments off

How to stop our economies from falling like Humpty Dumpty

The peak of the pandemic is passing in Europe, but at a grievous economic cost. If we reopen, there is every reason to expect coronavirus will come surging back. What then? Another lockdown?

The difficulty is that we are looking at two exponential processes pitted against each other. Before social distancing measures, cases were doubling every few days, meaning a week’s difference in the timing of lockdowns in March might well have represented the difference between a healthcare system idling below capacity, and one being utterly overwhelmed.

It is reasonable to guess that the economic cost of lockdowns also grows exponentially — if not addressed by policy. One day’s lockdown is little more than a public holiday. Two weeks’ lockdown threatens those who are already in a precarious position. Three months’ lockdown can do widespread damage that lasts for years.

Economic distress is contagious, too. A shuttered restaurant creates jobless waiters and cooks, landlords with no rental income and food suppliers in distress for lack of clients. Let’s not even think about the impact of a worldwide pandemic-induced default on too-clever-by-half debt-backed derivatives.

The economy has fallen off the wall — pushed, deliberately, for good reason. We need it to spring back like Jackie Chan, not crack like Humpty Dumpty. The aim must be to prevent temporary economic injury from causing permanent scars.

One delightfully crazy plan, popularised on the Marginal Revolution blog, is to take the concept of daylight savings time to an extreme. Governments would simply stop the clock: Thursday 30 April 2020 would become Friday 30 April, then Saturday 30 April. Your rental payment, due on May 1, would — like orphan Annie’s “Tomorrow” — always be a day away, at least until lockdowns end. Your landlord’s mortgage payment would also be postponed indefinitely. The messy co-ordination problems of who will forgive or forbear on debt, from whom and for how long, disappear in a stroke of a pen on a calendar.

This solves a lot of problems. Unfortunately, it creates many new ones. As Joshua Gans puts it in a new book, Economics in the Age of Covid-19, “much of the economy needs to actually keep running — some more intensively than before — which means that just calling a timeout won’t do”. Still, the time-stop idea is on to something: it’s vital to stop a cascade of debt defaults bringing down healthy businesses. Ad hoc forgiveness will not be enough, since landlords and banks have their own frailties to worry about.

Professor Gans argues that governments should be transferring debt obligations to themselves: if a restaurant can’t meet its rent, the government should offer to do so. The restaurant now owes the government, but the manoeuvre buys breathing space. Much later, the government can collect repayment on an income-contingent basis, perhaps through a modest surcharge on business taxes. Like a state-backed student loan, it would be repaid only by those with a solid income.

A company that springs back strongly thanks to the support will be able to repay the loan. Another may limp back into action, unable to repay but able to employ staff, serve customers and pay suppliers. In that case, the government gradually forgives the loan, and the cash injection will have been public money well spent.

The scale of economic support from governments around the world has been encouraging. As with the lockdown itself, in the short term it is better to do too much than too little. However, economic damage will be minimised if we can return to some kind of normality without triggering a second outbreak. Current economic and public health measures have had to be crude, the equivalent of operating with a hacksaw; now we need to figure out how to do keyhole surgery.

One hopeful scenario is that we have already reached herd immunity without realising it. If so, antibody tests will soon make that clear. But since we should plan for the worst as well as hoping for the best, we must energetically plan clever reopening strategies.

The most straightforward require mass testing to trace new outbreaks. If that capacity does not exist, there are workarounds. One idea is to let everyone out for four days, then go back into lockdown for 10 days to wait for any symptoms to emerge. Another, proposed by Philip Clarke, Amanda Adler and others, is that people living in odd-numbered houses are allowed out for a day, then must withdraw, letting even-numbered households take their turn. (The Queen could toss a coin to see who starts.) This quasi-randomised trial would rapidly give us information about the effect of reopening. Or we could release the under-50s early, which would be intriguing in my household, since my wife and I are on opposite sides of that divide.

Each exit strategy has problems, but it’s time to choose one and start planning for it. The Humpty Dumpty economy is still in freefall. It is not too late for us to bounce back.

Written for and first published in the Financial Times on 24 April 2020.

My NEW book The Next Fifty Things That Made the Modern Economy is out in the UK in May and available to pre-order; please consider doing so online or at your local bookshop – pre-orders help other people find the book and are a huge help.

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7th of May, 2020Undercover EconomistComments off

Book of the Week 18: The Unthinkable, by Amanda Ripley

What is it like to be caught up in the middle of an unthinkable disaster? Why are our responses to these extreme and unexpected events themselves often extreme and unexpected? Amanda Ripley began writing this book after interviewing survivors of the 9/11 attacks. “These people had an agenda,” she writes, “They had thinking they wanted to tell other people before the next terrorist attack.”
One of the strengths of the book – which covers not just 9/11 but Hurricane Katrina and various other catastrophes – is the storytelling, often based on interviews with survivors.
But there are other elements, too. Ripley also relies on historical accounts; her opening tale, well-told, is the explosion of the Mont Blanc munitions ship that devastated Halifax in 1917. One of the survivors Samuel Henry Price, went on to become a sociologist who studied our response to disasters.
Ripley occasionally markets the book as a guide to how to survive if you’re ever in a catastrophic situation, and perhaps it would help. That sells the book short, I think: I was fascinated by the storytelling. The science and psychology of disaster responses is less prominent but there was plenty to interest my inner nerd. I have no doubt you’ll see references to Ripley in the next series of Cautionary Tales.
Recommended!
UK: Amazon Blackwell’s
US: Amazon Powell’s

My NEW book The Next Fifty Things That Made the Modern Economy is out in the UK in May and available to pre-order; please consider doing so online or at your local bookshop – pre-orders help other people find the book and are a huge help.

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5th of May, 2020MarginaliaResourcesComments off

Book of the Week 17: Rhialto the Marvelous by Jack Vance

Pure escapism this week – Jack Vance’s Rhialto the Marvelous (Kindle only, I am afraid). Rhialto contains three extended short stories, in each case describing the adventures of Rhialto and a small group of other wizards of the 21st aeon. Rhialto is the conceited, narcissistic and amoral anti-hero of these indescribably delightful tales in which a dozen or so powerful, selfish and conceited sorcerors battle strange foes and – chiefly – try to outwit each other in matters of society and petty politics. These are joyful, cruel and wholly original confections. Enjoy!

 

 

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2nd of May, 2020MarginaliaComments off

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