Economic Research on COVID-19

The past 12 months has been dominated by COVID-19, the related recession, the government response, and other matters. But it has not just dominated our lives, it has also dominated new research, including research by economists!

Working papers from the National Bureau of Economic Research are one place to track on-going research by economists. While not all economic research is released as an NBER working paper (there are other series, and some economists just post them on their own website or department page), the volume of NBER papers should tell us something about the trends.

Here’s a chart showing the weekly NBER working papers that are in some way related to COVID-19. The first batch of three papers was released in late February, one long year ago. The second batch of nine papers came one month later. Since then, there have been papers released every single week, with the exception of the week of Christmas.

In total, there have 373 papers released that relate to COVID-19. The peak comes in late May and early June, with 61 papers released in a 4-week period and 21 of those papers coming out on May 25 alone. Since the May-June peak, we’ve seen a slow decline in papers on COVID-19, and we are now at our lowest level, with just 14 papers released in the past 4 weeks.

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Emily Oster on Vaccines in February 2021

My third post on Covid data heroes features Dr. Emily Oster. Emily is a mom. Lot’s of economists are moms, but few have incorporated it quite as much into their careers. Emily has written a book on pregnancy and a new one on what to do with the kids after they are born. She does a great job explaining scientific research in a way that is easy to understand.

Emily made a big push to collect data on schools and covid back when there was crippling uncertainty about how dangerous it is to let children go to school in person.

She has a great email newsletter and substack. Her latest post is called “Vaccines & Transmission Redux Redux”. In this post, she distills the latest research to give practical advice on when kids can see grandparents once the vaccines are out.

For a long time now, some families have been avoiding close contact with elderly relatives. When can we go back to normal?

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Going back to the gym?

Who doesn’t want to be stronger? You can get on the floor and do 5 pushups right now. Did you do it? Probably not. (If you did, great work.) For most people, nothing is stopping you from getting strong, except yourself.

I just keep sitting around. Going to a gym and meeting with an instructor in person used to be a way around this problem. This takes our human foibles and makes them work to our advantage. The sunk cost fallacy can work for us.

If you bought a stock and it’s a loser, you should sell! Too many people keep holding and go down with the ship.

However, knowing themselves, many people also go to the gym and sign up for a class. Not wanting to walk away from their investment, they actually do the classes.

The WSJ reports that many gyms are closing after Covid-19 forced the customers out. The article describes the machines people have brought into their homes to replace gyms. The Peloton is a signature of the year 2020. The new trend brings a live human trainer into the process of exercising alone at home.

The new machines can collect data on the user. This data is transmitted to instructors and maybe even friends. Now, from the comfort of your own home, you can “sign up for a class” again.

Had Covid struck in 1980, people might have bought fitness machines for their basements and they might even have bought a VHS to pop in and exercise with. But they would have been missing the link to a human who knows where they are supposed to be, which apparently provides more motivation.

The market has loved Peloton and smart money seems to think it will continue to do well, even with a vaccine already rolling out.

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Vegetarians and Profits

Like most people, vegetarians have some weird opinions. Let’s assume that they have the ultimate goal of fewer live-stock deaths and less chattel cattle. Ask a vegetarian what they are achieving by choosing not to eat meat and you’ll hear the explanations let loose. By abstaining from meat they’re “reducing factory farm profits” or “helping to keep the price of beef low and unprofitable”. While being a vegetarian may save more cows from the butcher’s blade, it’s not at all clear that vegetarians have a good understanding of their sometimes perpetual boycotts.

What do vegetarians even do?

The decision to consume meat or not falls nicely into the supply-and-demand framework. Fewer people willing to eat meat means fewer purchases of meat products – no matter the price. A decline in meat demand lowers both the number of cows that ranchers will raise a slaughter and the price that they receive. There you have it. By lowering demand for meat, vegetarians reduce both the quantity and price of meat, reducing profits for those evil, animal-carving businessmen.

Not so fast.

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Excess Mortality in 2020

My last post of 2020 tried to end the year on an optimistic note: the rapid innovation of a new vaccine was truly a marvel. But I also warned you that I would have a post in the new year talking about the deaths of 2020 during the pandemic. And here it is.

Throughout 2020, I have tried to keep up with the most recent data, not only on officially coded COVID-19 deaths, but also on other measures. An important one is known as excess mortality, which is an attempt to measure the number of deaths in a year that are above the normal level. Defining “normal” is sometimes challenging, but looking at deaths for recent years, especially if nothing unusual was happening, is one way to define normal. The team at Our World in Data has a nice essay explaining the concept of excess mortality.

One thing to remember about death data is that it is often reported with a lag. The CDC does a good job of regularly posting death data as it is reported, but these numbers can be unfortunately deceptive. For example, while the CDC has some death data reported through 51 weeks of 2020, but they note that death data can be delayed for 1-8 weeks, and some states report slower than others (for reasons that are not totally clear to me, North Carolina seems to be way behind in reporting, with very little data reporting after August).

So there’s the caution. What can we do with this data? Since 2019 was a pretty “normal” year for deaths, we can compare the deaths in 2020 to the same weeks of data in 2019. In the chart at the right, I use the first 48 weeks of the year (through November), as this seems to be fairly complete data (but not 100% complete!). The red line in the chart shows excess deaths, the difference between 2019 and 2020 deaths. From this, we can see that there were over 357,000 excess deaths in 2020 in the first 11 months of the year, or about a 13.6% increase over the prior year.

Is 13.6% a large increase? In short, yes. It is very large. I’ll explain more below, but essentially this is the largest increase since the 1918 flu pandemic.

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Economists Watching Vaccines Every Day

EWVED could be our new name. Americans worked so hard to develop a vaccine (here’s Jeremy’s ode to development) and now we are seeing the distribution become painfully slow.

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2020 Holiday Viewing

Forget “The Christmas Prince” or “The Prince Christmas” or whatever is on Netflix. Why not spend your holiday refreshing this new vaccine dashboard?

Here’s the announcement:

I personally know a few health care workers who got their shots (do not say “jab” to me) this past week. It’s all very exciting! Here at University of Alabama at Birmingham (UAB), the medical community has freezers, fortunately.

Here’s VP Mike Pence getting his vaccine:

Jeremy and Doug have both talked about allocation this week. Economists get really jazzed about allocating scarce resources. It’s been frustrating to watch first tests and now vaccines not be available on a market. Excellent points are also made every week over at Marginal Revolution on how we are missing an opportunity to get the incentives right. Supply. Curves. Slope. Up. (Thousands. Dying. Every. Week.)

Allocating the vaccines: central planning or the free market?

In the short term, there are only a few million doses of the COVID vaccines available, but well over 100 million adults in the US that want to take the vaccine if offered for free to the consumer. There are also billions worldwide that would like the vaccine.

So who should get it first? In practice in the US, the allocation method has already been determined politically: the federal government will allocate vaccines to the states, and states will allocate them to individuals based on a priority list: health workers and the most vulnerable first, then teachers, etc. The NY Times has a tool that shows you your probable place in line.

But essentially the allocation method being used is central planning.

John Cochrane has proposed a “free market” solution: sell the vaccine to the highest bidder. Or at least, sell some doses to the highest bidder.

As an economist, there is always some appeal in thinking about a free market solution. But there is a problem in this case: there are positive externalities from taking the vaccine. It not only benefits me, but it also benefits others. My willingness to pay only reflects the benefit to me, the private benefit. The social benefit is mostly ignored by a simple auction, and in the aggregate for a vaccine most of the benefits are likely to be social benefits. But positive externalities don’t imply we need to use central planning!

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Third Quarter Check-In: COVID and GDP

How have countries around the world fared so far in the COVID-19 pandemic? There are many ways to measure this, but two important measures are the number of deaths from the disease and economic growth.

Over the past few weeks, major economies have started releasing data for GDP in the third quarter of 2020, which gives us the opportunity to “check in” on how everyone is doing.

Here is one chart I created to try to visualize these two measures. For GDP, I calculated how much GDP was “lost” in 2020, compared with maintaining the level from the fourth quarter of 2019 (what we might call the pre-COVID times). For COVID deaths, I use officially coded deaths by each country through Nov. 15 (I know that’s not the end of Q3, but I think it’s better than using Sept. 30, as deaths have a fairly long lag from infections).

One major caution: don’t interpret this chart as one variable causing the other. It’s just a way to visualize the data (notice I didn’t try to fit a line). Also, neither measure is perfect. GDP is always imperfect, and may be especially so during these strange times. Officially coded COVID deaths aren’t perfect, though in most countries measures such as excess deaths indicate these probably understate the real death toll.

You can draw your own conclusions from this data, and also bear in mind that right now many countries in Europe and the US are seeing a major surge in deaths. We don’t know how bad it will be.

Here’s what I observe from the data. The countries that have performed the worst are the major European countries, with the very notable exception of Germany. I won’t attribute this all to policy; let’s call it a mix of policy and bad luck. Germany sits in a rough grouping with many Asian developed countries and Scandinavia (with the notable exception of Sweden, more on this later) among the countries that have weathered the crisis the best (relatively low death rates, though GDP performance varies a lot).

And then we have the United States. Oddly, the country we seem to fit closest with is… Sweden. Death rates similar to most of Western Europe, but GDP losses similar to Germany, Japan, Denmark, and even close to South Korea. (My groupings are a bit imperfect. For example, Japan and South Korea have had much lower death tolls than Germany or Denmark, but I think it is still useful.)

To many observers, this may seem strange. Sweden followed a mostly laissez-faire approach, while most US states imposed restrictions on movement and business that mirrored Western Europe. Some in the US have advocated that the US copy the approach of Sweden, even though Sweden seems to be moving away from that approach in their second wave.

Counterfactuals are hard in the social sciences. They are even harder during a public health crisis. It’s really hard to say what would have happened if the US followed the approach of Sweden, or if Sweden followed the approach of Taiwan. So I’m trying hard not to reach any firm conclusions. To me, it seems safe to say that in the US, public policy has been largely bad and ineffective (fairly harsh restrictions that didn’t do much good in the end), yet the US has (so far) fared better than much of Europe.

All of this could change. But let’s be cautious about declaring victory or defeat at this point.

Coda on Sweden Deaths

Are the officially coded COVID deaths in Sweden an accurate count? One thing we can look to is excess deaths, such as those reported by the Human Mortality Database. What we see is that Swedish COVID deaths do almost perfectly match the excess deaths (the excess over historical averages): around 6,000 deaths more than expected.

Some have suggested that the high COVID deaths for Sweden are overstated because Sweden had lower than normal deaths in recent years, particularly 2019. This has become known as the “dry tinder” theory, for example as stated in a working paper by Klein, Book, and Bjornskov (disclosure: Dan Klein was one of my professors in grad school, and is also the editor of the excellent Econ Journal Watch, where I have been published twice).

But even the Klein et al. paper only claims that “dry tinder” factor can account for 25-50% of the deaths (I have casually looked at the data, and these seems about right to me). Thus, perhaps in the chart above, we can move Sweden down a bit, bringing them closer to the Germany-Asia-Scandinavia group. Still, even with this correction, Sweden has 2.5x the death rate of Denmark (rather than 5x) and 5x the death rate of Finland (rather than 10x, as with officially coded deaths).

As with all things right now, we should reserve judgement until the pandemic is over (Sweden’s second wave looks like it could be pretty bad). The “dry tinder” factor (a term I personally dislike) is worth considering, as we all try to better understand the data on how countries have performed in this crisis.

Brighten Your Day with a Light Therapy Lamp

It is that time of year in the Northern Hemisphere when the days are getting shorter, the nights longer, and the sun hangs lower in the sky. Seasonal Affect Disorder (SAD) probably affects all of us to some extent. What to do?

Well, I understand that studies have shown that exposing your retinas to bright light, in the sunlight wavelengths, can improve mood and functioning. A variety of therapeutic lamps are available. Some of the least expensive ones sit on your table or desk, and shine up at a slight angle while you read or watch a movie. An example of this type is the Nature Bright SunTouch Plus ( $49 ), shown below. The lamp is ideally positioned quite close to your eyes, say 12 inches (30 cm), in order to get the recommended photons into them.

Our family has gotten a lot of mileage out of a somewhat more expensive but more versatile lamp. This is the Day-Light Sky lamp  ($113).

It has joints at the top and the bottom of its support arm, so you can use it like a desk lamp, to give strong lighting to some project you are working on, or have it therapeutically shine into your eyes, like this happy camper:

In that mode, you’d want to keep your gaze level or only slightly downward, since not much light would get into your pupils if you had your head down reading. Our family uses this on the counter or table whilst preparing or eating breakfast (it is best to get your photons in early in the day). It also works well positioned beside your shoulder as a cheery reading light.