The Deadliest Virus Ever Known and the US Innovation System

The two main topics this week are quite expansive, so we will just weak our proverbial beaks. The first is the great influenza epidemic of 1918, which you have undoubtedly heard about. The Gladwell article is fascinating and Garrett provides us with a glimpse of the economic research. There are a number of excellent papers that use this event to study the effects of “non-pharmaceutical interventions,” the macro economic effects of pandemics, the exacerbating effects of air pollution on mortality rates, and the like.

The second main topic is innovation and public policy, which is essentially a course in and of itself. The Gans book seems to be as good of a starting point as any, and you can go from that to looking at the prospects for a CoVID-19 vaccination.

The “Flu”

• Malcolm Gladwell, “The Deadliest Virus Ever Known.” The New Yorker.  September 29, 1997.
• Garrett, Thomas A. “Pandemic economics: The 1918 influenza and its modern-day implications.” Federal Reserve Bank of St. Louis Review 90.March/April 2008 (2008).

Two Videos on Innovation from Marginal Revolution University

• “The Economics of Ideas,” 
• “Patents, Prizes, Subsidies“
• Joshua Gans, “Rallying Innovation,” Chapter 7 of Economics in the Age of CoVID-19, MIT Press

Vaccines

• Ewen Callaway, E. “The race for coronavirus vaccines: a graphical guide.” Nature 580.7805 (2020): 576.
• Roxanne Khamsi, “Can the World Make Enough Coronavirus Vaccine?” Nature (2020).
• “Can the world find a good covid-19 vaccine quickly enough?”  The Economist, April 16, 2020

Student Presentations

More on the 1918 Flu

• Robert J. Barro, José F. Ursúa, and Joanna Weng. “The coronavirus and the great influenza pandemic: Lessons from the “Spanish flu” for the coronavirus’s potential effects on mortality and economic activity,” w26866. National Bureau of Economic Research, 2020. 
• Robert J. Barro, “Non-Pharmaceutical Interventions and Mortality in U.S. Cities during the Great Influenza Pandemic, 1918-1919,”  w27049 National Bureau of Economic Research, 2020. 
• Elizabeth Brainerd and Mark V. Siegler. “The economic effects of the 1918 influenza epidemic.” Mimeo. (2003).
• Karen Clay & Joshua Lewis & Edson Severnini, 2018. “Pollution, Infectious Disease, and Mortality: Evidence from the 1918 Spanish Influenza Pandemic,” The Journal of Economic History, vol 78(04), pages 1179-1209 

Congressional Dominance?

• Matt E. Ryan “Allocating infection: The political economy of the Swine Flu (H1N1) vaccine.” Economic Inquiry 52.1 (2014): 138-154.

The Flu Today

• Sara Markowitz, Erik Nesson, and Joshua J. Robinson. “The effects of employment on influenza rates.” Economics & Human Biology 34 (2019): 286-295. 
• Chalres Stoecker, Charles, Nicholas J. Sanders, and Alan Barreca. “Success Is something to sneeze at: Influenza mortality in cities that participate in the Super Bowl.” American Journal of Health Economics 2.1 (2016): 125-143.  
• Steve Cicala et al. “Expected Health Effects of Reduced Air Pollution from COVID-19 Social Distancing.” University of Chicago Becker-Friedman Institute Working Paper. (2020). 

Misc

• Austin Wright et al. “Poverty and economic dislocation reduce compliance with covid-19 shelter-in-place protocols.” University of Chicago, Becker Friedman Institute for Economics Working Paper 2020-40 (2020). 

Crisis Policymaking and A Sample of Epidemic Diseases (The Italian Cholera cover up, Tuberculosis, and the 20th-century plague)

This is a pretty big week in terms of piecing together epidemic dynamics, principally developing a framework for thinking about political decision making and political power. We have seen some big examples already of the politicization of epidemics, including the co-emergence of the city-state and defensive measures to mitigate the spread of the plague. This week I provide you with three possibilities. The first is the median voter theorem, which shows why we would expect policy formation to flow from the center of the electorate (Cowen, Thomas, Spaniel, Gerard). The second models are versions of the various economic theories of regulation, which also identify demand-side factors in policy formation (Dudley & Brito). Finally, Robert Higgs sees crisis policy formation coming from the supply-side, and there is certainly no shortage of material on the remarkable executive crisis powers (Goitein, Bakke et al.). Higgs demonstrates that we should expect more that a few of these powers to go from crisis powers to permanent powers.

Once you are through that, take a look at Oster and Cowen, both of who suggest that this will end when “the public” wants it to end. So for at least one aspect of the current pandemic, the MVT may well prevail. Oster laments that fact that the risk information is incomplete, and so people who cannot make optimal choices are left without guidance on the second best. Probably a big mistake.

That’s a lot to take in, certainly, and once you have, let’s deepen our historical background by learning about the scourges of cholera, tuberculosis, and the reemergence of the plague on US shores. Who knew? I highly recommend the Snowden lecture, who Detective Columboes his way to uncover a cover up of a cholera outbreak in Naples in 1911. Unbelievable.

Introduction to Political Economy & Public Choice 

• Tyler Cowen, “Why Politics is Stuck in the Middle,” New York Times,  February , 2010
  • Diana Thomas, “Why Do Politicians All Sound the Same?” visual of median voter theorem at Learn Liberty website
  • William Spaniel, “The Median Voter Theorem, Turnout, and the Democratic Primary,” video at Game Theory 101 website
  • Gerard on spatial models, MVT (video, 15 minutes)
• Susan Dudley & Jerry Brito, “Theories of Regulation ,” Chapter 2 of Regulation: A Primer, The George Washington University Regulatory Studies Center. 2012.

Political Economy in Crisis

• Robert Higgs “Crisis, bigger government, and ideological change: Two hypotheses on the ratchet phenomenon.” Explorations in Economic History 22.1 (1985): 1-28.  (what are his two hypotheses? Is this a “supply” or a “demand”-side argument)

• Elizabeth Goitein “The Alarming Scope of the President’s Emergency Powers.” The Atlantic, January/February 2019  (read intro, read/skim to taste)
• Elizabeth Goitein, “Trump’s Reasonable—And Yet Still Worrisome—Emergency Declaration,” The Atlantic, March 16, 2020 (read intro, then read/skim to taste)
• Kristin M. Bakke, Neil J. Mitchell and Hannah M. Smidt, “Governments around the world are restricting rights, using the pandemic for cover,” Washington Post, May 6, 2020

Food for Thought (Pick one, both recommended)

• Emily Oster, “The ‘Just Stay Home’ Message Will Backfire,” Atlantic Monthly, May 14, 2020 
• Tyler Cowen, “Did we lockdown some parts of America too early?”  Marginal Revolution, May 10, 2020 

Winners and Losers:

• Matt Stoller, “Here’s How CoVID-19 is Boosting Monopolization and Market Power,” Pro-Market blog, May 6, 2020

Those Who Don’t Know History (Choose at least two)

• Frank Snowden, “Asiatic Cholera: Personal Reflections,” from Yale Open Courses. (recommended!)

• Frank Snowden, “Tuberculosis in the Unromantic Era of Contagion,” Chapter 15 of Epidemics and Society, Yale University Press (pp. 292-301 and 321-31)
• Frank Snowden, “The Third Plague Pandemic, Hong Kong and Bombay,”  Chapter 16 of Epidemics and Society, Yale University Press

Targeted Policies and The Pox of Liberty

This is both less and more reading than it looks like.  The Mulligan et al. piece is just out and lays out a straightforward explications of economist on CoVID-19 policy. Next up is a very provocative MIT piece by Daron Acemoglu and his colleagues that tweaks the SIR model and gives some astonishing results — you can watch Prof. Acemoglu present the basic results in the Princeton seminar video. Finally for this section, what do you think of Paul Romer’s argument about soda v. testing?   In his Q&A pay close attention to what he has to say about digital tracing.   

After getting through that, it’s time to get back to our historical survey, and this week we do that with Werner Troesken’s work.  What is the thesis of his book?   How does it relate to what Acemoglu et al. and Romer had to say?    

Pulling it Together & Moving Forward:  Policy Options out of Chicago, MIT

• Casey B. Mulligan, Kevin M. Murphy, and Robert H. Topel, “Some basic economics of COVID-19 policy,” Chicago Booth Review,  April 27, 2020
• Daron Acemoglu, Victor Chernozhukov, Iván Werning, and Michael D. Whinston  A Multi-Risk SIR Model with Optimally Targeted Lockdown, NBER Working Paper 27102, May 2020  
• Princeton BCF Webinar with Daron Acemoglu  https://youtu.be/NqtS8MZBuZ0?t=409 

• Paul Romer, “If Virus Tests Were Sodas,” Paul Romer’s blog, April 28, 2020
• Issac Chotiner, “Paul Romer’s Case for Nationwide Coronavirus Testing,” New Yorker, May 3, 2020 

Smallpox and a Provocative Theory

• Werner Troesken “Introduction,” Chapter 1 in The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection. University of Chicago Press, 2015.
• Werner Troesken “The Pox of Liberty,” Chapter 4 in The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection. University of Chicago Press, 2015.

• Keith Humphreys Twitter thread, possible concilliance (optional, relevant, brief)
• Tyler Cowen, “Forced Quarantines Are Not the American Way,” Bloomberg News, May 13, 2020 (optional, also relevant, could that have been any more timely?)

Professor Snowden’s take:

• (Optional) Frank Snowden, “Smallpox before Edward Jenner,” Chapter 6 of Epidemics and Society , Yale University Press, 2019. 
• (Optional) Frank Snowden, “The Historical Impact of Smallpox,” Chapter 7 of Epidemics and Society, Yale University Press, 2019. 
• (Optional) Frank Snowden, “Smallpox: The Speckled Monster,” and ” Smallpox: Jenner, Vaccination, and Eradication,” Lectures fromYale Open Courses.

The Plague

With Reading Period coming up, I thought I would give you some reading.   We start this week with Christopher Moore from the Santa Fe Institute that R₀ is just an average, and the same initial conditions can lead to wildly different outcomes (which is why average thinking can be so dangerous). Be able to articulate why two areas starting with the same R₀ can lead to such different outcomes. And, importantly, think about the implications of a high variance on public policy measures.

Also for this week, we will think about the archetypal pandemic, the Plague! Yikes.  You can read the chapters out of Snowden’s book or watch his lectures to get the basic idea. Make sure you read The Economist piece on dear labour and internalize the logic there — does it map to the basic story of the Jordà, Singh, and Taylor time-series results?

Also, take a look at the piece by Cliff, Smallman-Raynor, and Stevens on the defensive measures Italy too to stave off the plague. Did you know about those? Then take a quick trip across the Adriatic to modern-day Dubrovnik, great pics from the BBC give you the sense that maybe life in quarantine wasn’t so bad!

There is a lot of other stuff here, some you may be more interested in than others.   I had no idea plague hit the US shores, and certainly not in the 20th century!  And, unfortunately, there is no dearth of scapegoating, then and now, and probably later, too, running the gamut from discouraging to horrifying to even worse than horrifying.  I’ve posted a few recent examples from the Washington Post.

Average Thinking Gets You in Trouble (Santa Fe institute)

• Christopher Moore, “R-naught is just an average,” Santa Fe Institute blog, April 27, 2020

The Plague

• Frank Snowden, “Overview of the Three Plague Pandemics: 541 to ca. 1950,” Chapter 3 of Epidemics and Society, Yale University Press, 2019. (good stuff, read/skim to taste)
• Frank Snowden, “Plague as a Disease,” Chapter 4 of Epidemics and Society, Yale University Press, 2019. (skim, look at pictures) 
• Frank Snowden, “Responses to Plague,” Chapter 5 of Epidemics and Society, Yale University Press, 2019. (Responses to Plague!) 

Alternatives:  Snowden “Responses and Measures,” and “Illustrations and Conclusions” from Yale Open Courses.

• Julia Flynn Siler, “Black Death at the Golden Gate Review: San Francisco Plague Years,” Wall Street Journal, May 5, 2019

Oh, Dear

• “Plagued by dear labour,” Economist, October 21, 2013 (Read)

• Andrew D. Cliff, Matthew R. Smallman-Raynor, and Peta M. Stevens. “Controlling the geographical spread of infectious disease: Plague in Italy, 1347-1851.” Acta medico-historica Adriatica 7.2 (2009): 197-236.  (Read 197-208 and skim rest)
• Kristin Vuković “Dubrovnik: The medieval city designed around quarantine,” BBC.com, 22 April, 20 (skim to taste)

Scapegoating (I chose the WaPo as a potentially neutral outlet for these types of contemporaneous assessments of racist attitudes and actions;  because it is a subscription site, you might have to read it in an Incognito or Private browser).  

• Robert Griffin, John Sides and Michael Tesler “Negative views of Asian people have risen in both parties,” Washington Post, April 8, 2020  
• Anna Fifeld, “Africans in China allege racism as fear of new virus cases unleashes xenophobia,” Washington Post, April 13, 2020 (skim to taste)
• Joanna Slater and  Niha Masih “As the world looks for coronavirus scapegoats, Muslims are blamed in India,” Washington Post, April 23, 2020 (skim to taste)
• Mica Soellner “Asian Americans grow fearful of xenophobic attacks, especially in small communities,” Appleton Post Crescent, April 7, 2020 (skim to taste)

The Long Sweep of History

This is a pretty straightforward week, and if we didn’t actually have a pandemic right now, this might reasonably fit neatly into an introductory week to a pandemics course. 

Professor Frank Snowden seems to be pretty well known for the open access course he offers from Yale that he hasparlayed into what is essentially a (pretty good) textbook.  The chapter and the video are pretty close substitutes. The chapter from Damir Huremović is a brief, readable introduction to the long line of infectious diseases, including SARS, HIV/AIDS, and Ebola. The Bell and Lewis paper from World Economics nicely complements these works. You should find the first few pages interesting, and then you can skim to taste. For your homework this week, you will need to keep track of the claims Bell & Lewis make on pp. 10-21.  

Perhaps not surprisingly, epidemics and pandemics often have highly unequal effects, and I have included a piece from this week’s Wall Street Journal that discusses CoVID-19s highly unequal effects on African Americans.

We will also take a look at the longer-run impacts of epidemics on the natural rate of interest. Jordà, Singh, and Taylor provide some interesting time-series results that demonstrate that effects of epidemics can persist for 20+ years and that the sign of the effect goes in the exact opposite direction of warfare!

There is some excellent intuition to be had here, and the 495 students will get a chance to match theory and evidence! 

• Frank M. Snowden, “Introduction,” Epidemics and Society: From the Black Death to Present, Yale University Press, 2019.  (video alternative here)
  • Infographic: Visualizing the History of Pandemics, Visual Capitalist, March 14, 2020
• Damir Huremović “Brief History of Pandemics (Pandemics Throughout History),”  Chapter 2 of Psychiatry of Pandemics: A Mental Health Response to Infection Outbreak, Springer. 2019.
• Clive Bell and Maureen Lewis. “The Economic Implications of Epidemics Old and New.” World Economics. 2004.
• Lauren Weber, “A Top Immunologist on Why Coronavirus Is Killing More African-Americans,” Wall Street Journal, April 22, 2020

Naturally

• Òscar Jordà, Sanjay R. Singh, and Alan M. Taylor, “Longer-Run Economic Consequences of Pandemics,” NBER Working Paper 26934, April 2020

What is the natural rate of interest again? (pick one, find your own, or ask Prof Fitz!): 

• Michael Ng and David Wessel, “The Hutchins Center Explains:  The Neutral Rate of Interest,”  Brookings Institute blog, October 22, 2018
• “A natural long-term rate,” The Economist, October 26, 2013

Measuring Benefits and Costs, Roadmaps to Reopening (and what’s with negative oil prices?)

This week we address the issue of the (potential) tradeoffs between the economy and health. We kick off with Joshua Gans’ introductory chapter from his forthcoming book that uses a production possibilities model where the shock from the epidemic introduces a convexity into the frontier, upending our traditional thinking. We will likely revisit Gans when we talk about innovation and the development of medical technologies.

The Conover and Thomson-DeVeaux pieces provide a pretty interesting overview on how quantifying the willingness to pay to reduce mortality risk translates into the unfortunately-titled value of a statistical life (VSL).

Matthew Yglesias summarizes a poll from the IGM forum on economists’ views of moving forward, and Tyler Cowen at Marginal Revolution pulls together a number of sources addressing these questions. This tees up two research papers that provide some preliminary estimates along these fronts that suggest we should sit tight for a bit. The slides for 4/23 walk through how the Imperial College risk estimates (Ferguson et al., 2020) are integrated with the VSL concept to give a perspective on the value of social distancing and safe-at-home type measures.

Moving forward, we have a series of papers about moving forward. Ed Yong at The Atlantic warns us that we are in this for the long haul: ““I think people haven’t understood that this isn’t about the next couple of weeks.  This is about the next two years.” That notwithstanding, we have two roadmaps for reopening — one from Harvard and one from the American Enterprise Institute. The overlap is considerable.

Finally this week, we saw a bizarre bout of negative oil prices. I suggested we drain the Viking pool and store the oil in there for a bit, but that didn’t go over as well as I thought with the swimmers. James Hamilton knows more about oil markets than most people, and he provides us some insight into what just happened.

Benefits and Costs

• Joshua Gans, “Health Before Wealth,” Chapter 1 of Economics in the Age of COVID-19, MIT Press  (especially the technical interlude)
• Chris Conover, “How Economists Calculate the Costs and Benefits of COVID-19 Lockdowns,” Forbes, March 27, 2020
• Amelia Thomson-DeVeaux “What Should the Government Spend to Save a Life?” FiveThirtyEight, March 27, 2020 (note, it’s not really the government, per se;  a superior title is, “What Costs is the Polity Willing to Incur to Reduce Mortality Risk?)

• Matthew Yglesias, “”Top economists warn ending social distancing too soon would only hurt the economy,” Vox, March 29, 2020
• Tyler Cowen, “Re-starting the economy,” Marginal Revolution blog, April 15, 2020

• Michael Greenstone and Vishan Nigam. “Does Social Distancing Matter?” University of Chicago, Becker Friedman Institute for Economics Working Paper 2020-26 (2020). (summary at Pro-Market blog)
• Linda Thunstrom, Stephen Newbold, David Finnoff, Madison Ashworth, and Jason F. Shogren, “The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19,” Forthcoming Journal of Benefit-Cost Analysis. 

Moving Forward

• Ed Yong, “Our Pandemic Summer,” Atlantic Monthly, April 14, 2020
• Danielle Allen et al., Roadmap to Pandemic Resilience: Massive Scale Testing, Tracing, and Supported Isolation (TTSI) as the Path to Pandemic Resilience for a Free Society, Edmond J. Safra Center for Ethics at Harvard University, April 20, 2020
• Scott Gottleib et al., National Coronavirus Response:  A Road Map to Reopening, American Enterprise Institute, March 28, 2020

Negative Oil Prices

• James Hamilton, “Negative Oil Prices,” Econbrowser, April 21, 2020  (for those of you who wanted a finance course!) 

Did we see this coming? Where is this going?

This week features three sets of readings. The first two are background pieces from general interest magazines. Nicola Twilley describes a simulation exercise for the dreaded Clade X, followed by Ed Yong’s beefy piece on the US pandemic preparation strategies. In this block we also have the Centers for Disease Control’s controlling document. Does it make you feel better or worse when you see all of the US government agencies that have been thinking about this?

Next up, we follow up last weeks material with the piece from Neil Ferguson and his Imperial College crew. It is somewhat of an understatement to say that they have been at the fore of the analytics on projections. Notice how they use our SIR-type models from last week to project SIR-type stuff.  The initial predictions created quite a stir, which as of March 18 is summarized in the post by Tyler Cowen. 

The 20-minute video from 3Blue1Brown shows some SIR simulations and is an extremely good use of your time. Paul Romer provides a short and excellent piece on the role of testing in containment, including some visualizations.

That moves us along as far as disease contagion, but what about the economy? Ed Dolan provides us a nice slide deck that works through the basic dynamics of using an Aggregate Demand-Aggregate Supply model. (If you are not familiar with the AD-AS model, check out the online textbook or the slate of MRU videos).  Dolan emphasizes the potential supply-side impacts, and writing for The Hill, Chris Moore provides some color to this argument. How big of a hit is the “economy” going to take?  YiLi Chien gives us some possibilities.

The notes for 4/14 contain some information about the Super Foreceaster predictions and the extreme volatility of the IMHE predictions. The consensus view is that there will be more than 2.3 million total US cases over the next twelve months, with most forecasters expecting fewer than 350,000 deaths. The 4/16 notes include a heavy does of the material from Ed Dolan’s slide deck from his Niskanen Center materials.

Preparing for a Pandemic

• Nicola Twilley, “The Terrifying Lessons of a Pandemic Simulation ,” New Yorker, June 1, 2018
• Ed Yong, “The Next Plague is Coming, Is America Ready?” The Atlantic Monthly, July / August 2018 (Optional, pp. 1-7 recommended)
• National Pandemic Strategy, Centers for Disease Control and Prevention
• Pandemic Intervals Framework, Centers for Disease Control and Prevention

Building on Last Week

• Neil Ferguson, et al. “Report 9: Impact of non-pharmaceutical interventions (NPIs) to reduce COVID19 mortality and healthcare demand.” (March 16, 2020). (summary here)  
• Tyler Cowen, ‘Herd Immunity’, Time Consistency, and the Epidemic Yo Yo, Marginal Revolution blog, March 18, 2020

• 3Blue1Brown, “Simulating an epidemic”
• Paul Romer, “Testing People and Targeted Isolation: How to Save More Lives (and the American Economy),” Pro-market blog, March 27, 2020. 
• IGM Forum on testing (read the comments, too)

Macro (AD-AS Basics, preliminary analyses)

• Ed Dolan, “The Coronavirus and the Economy: A Tutorial ,” Niskanen Center blog
• Chris Edwards, “Boost supply, not demand, during the pandemic,” The Hill, March 19, 2020
• YiLi Chien “How bad can it be? The relationship between GDP growth and the unemployment rate,” FRED blog, April 1, 2020

OK, we are going to hit the ground running with some basic theory and background material. Marginal Revolution University has two short videos on what “externalities” are and how we can use this concept to think about contagion. 

Next up, the IGM experts panel from the University of Chicago polls superstar economists on issues of the day.  Notice what question is being asked and whether economists tend to agree or not.   Also out of the University of Chicago we have a short piece by Michael Greenstone.  Take a peek at what questions his colleagues are looking into.  Is there anything there that interests you? 

From there, we move to some epidemiological concepts.  Scott Page walks us through a simple derivation of R₀, the Basic Reproduction Number you’ve undoubtedly been hearing about.  What are the key parameters of these models?  Are they exogenous or endogenous?   Why does that matter?  Once we have seen that, the 495 students should read the Gonclaves piece and 295 can choose between Gonclaves and Yates, flattening the curve and all that.   There is also a handout that contains some basic definitions, and I will quiz you to make sure you know what these mean. 

Finally, I highly recommend the short piece on herd immunity (you should be able to calculate the percentage of the population that needs to be immune using R₀). I have also included the comprehensive, controversial, and wildly variable IMHE projections for your perusal.

Economics: Theory & Data

• “Intro to Externalities,” Marginal Revolution University
• “External Benefits,” Marginal Revolution University

• Policy for the COVID-19 Crisis, IGM Forum
• Michael Greenstone, “Key Economic Facts About COVID-19,” Becker-Friedman Institute, March 31, 2020

Basic Epidemiology and R₀

• Short video introducing R₀ 
• Scott E. Page, “Contagion Models 1: Diffusion,” Model Thinking*
• Scott E. Page, “Contagion Models 2: SIS Model,” Model Thinking

• Basic definitions from Imperial College and elsewhere
• Bruno Goncalves, “Epidemic Modeling 101: Or why your CoVid-19 exponential fits are all wrong,”  (light mathematics)
• Christian Yates, “How to Model a Pandemic,” The Conversation, March 25, 2020
  • R₀ and lethality of various maladies
  • IMHE Projections
• Short piece on R₀ and herd immunity

Some Basic Arithmetic

• Compound growth and the Rule of 70 (it’s actually the Rule of 72, but whatevs)
• Natural logs in economics

Materials for the Week