Economics of pandemics (2)

Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes

Crucial contribution from key economists. A must read.

Outline:

Introduction
Richard Baldwin and Beatrice Weder di Mauro

1 So far, so good:  And now don't be afraid of moral hazard
2 Flattening the pandemic and recession curves
3 Limiting the economic fallout of the coronavirus with large targeted policies
4 Italy, the ECB, and the need to avoid another euro crisis
5 The EU must support the member at the centre of the COVID-19 crisis
6 Helicopter money: The time is now
7 What the stock market tells us about the consequences of COVID-19
8 Ten keys to beating back COVID-19 and the associated economic pandemic
9 Saving China from the coronavirus and economic meltdown: Experiences and lessons
10 China's changing economic priorities and the impact of COVID-19
11 Singapore's policy response to COVID-19
12 The experience of South Korea with COVID-19
13 COVID-19: Europe needs a catastrophe relief plan
14 The COVID-19 bazooka for jobs in Europe
15 The monetary policy package: An analytical framework
16 Bold policies needed to counter the coronavirus recession
17 Europe ís ground zero
18 Economic implications of the COVID-19 crisis for Germany and economic policy measures
19 Finance in the times of COVID-19: What next?
20 How COVID-19 could be like the Global Financial Crisis (or worse)
21 Protecting people now, helping the economy rebound later
22 Policy in the time of coronavirus
23 Containing the economic nationalist virus through global coordination
24 The case for permanent stimulus

Security policies in front of a new molecular vision of life

Pandemics, Pills, and Politics. Governing Global Health Security

The goal of this book in one sentence:

This volume reveals the major challenges involved in securing populations pharmaceutically and explores how governments are designing extensive new medical countermeasure regimes to overcome those challenges. At the heart of this pharmaceutical turn in security policy, I argue, lies something deeper: the rise of a new molecular vision of life that is reshaping the world we live in—including the way we now imagine and practice security.

The author explains the pharmaceutical defenses for a global pandemic, and specially describes the case of Tamiflu.

 The idea of “medical countermeasures” is also fascinating, secondly, because of the terminology it musters. The concept textually embodies the progressive epistemic fusion of the two professional fields of medicine (“medical”) and security (“countermeasures”), attempting to seamlessly blend key vocabularies from both communities into a single notion. Here the term begins to form a fascinating intersection, or bridge, between these two different social fields, giving rise in the process to a fascinating new and interdisciplinary policy space where the respective concerns of pharmaceuticals and security begin to interpenetrate each other, and can also come into direct tension with one another.

The chapter 4 is specially of interest: The Margin Call for Regulatory Agencies and explains what was done in the Tamiflu case.

A cursory review of the FDA approval processes for Tamiflu paints a fairly uneventful picture. In fact, the sequence of events leading up to FDA approval for Tamiflu can be quickly summarized. A month after the Swiss approval, on 27 October 1999, the FDA approved Tamiflu for “the treatment of uncomplicated acute illness due to influenza infection in  adults who have been symptomatic for no more than 2 days” (FDA 1999b). This marketing approval process unfolded rapidly according to the priority review procedure—within six months—following Roche’s initial application for FDA approval on 29 April 1999.

 Again, the case of Tamiflu has been highly instructive. It showed that this new pharmaceutical intervention could only be designed after scientists had first gained a much better understanding of the precise molecular processes involved in viral replication unfolding inside the human body—especially the role played by the influenza virus’s surface proteins such as neuraminidase. Once scientists had understood the vital role played by the neuraminidase and decoded its precise molecular structure, they discovered a “static” site that could form the basis for a new drug target. Scientists could then set about the task of deliberately designing an “artificial” molecule that would bind to that critical site in the neuraminidase and that could inhibit its key role in the process of viral replication. In that sense, our technical ability to develop new pharmaceutical defenses is itself  dependent upon a prior—and deeper—scientific understanding of the life processes unfolding at the scale of the molecular.

The case of covid-19 began without any countermeasure, because molecular knowledge started mid-January once it was sequenced. Nowadays, we can only wait for a successful vaccine and therapy.

Protect yourself and you protect others

PANDEMICS: WHAT EVERYONE NEEDS TO KNOW

Selected messages from a descriptive and useful and concise book by the winner of the Nobel Prize for Medicine, 1996 :

• Our capacity to deal with and live through pandemic situations is continually improving. We should not be fearful, but we should be aware, watchful and prepared. 
• There are steps that we can take to protect ourselves, our families, and our communities, but these need to be thought through ahead of time. Fostering sound personal habits related to cough etiquette, hand/face contact, and hand sanitation is a good place to start.
• As with any form of defense, it takes political will and financial resources (both public and private) to maintain the integrity of national borders (quarantine), support the professionals who serve in the public health field services and laboratories, and fund the research that leads to greater diagnostic

Safeguarding our lives and our livelihoods

Covid-19 Briefing Materials

Great report by McKinsey, for the files. A must read

ePandemic

Digital Health And The Fight Against The COVID-19 Pandemic

Pandemic storytelling

Pandemics, Publics, and Narrative

How people interpret messages to guide action during a pandemic. This is the topic of this book. The effects of storytelling in health communication are crucial and the book starts with the presumed contagion of swine flu by David Cameron.

Our analysis placed engagements with pandemic storytelling across public life in dialogue with the narratives on the enactment of expert advice. This dual approach helped to establish perspectives on how narratives influence publics to take action, or not. We took the view that narrative does not simply mediate pandemic knowledge and advice by helping to structure it intelligibly and meaningfully. We also questioned the idea that narratives persuade in and of themselves in ways that are not very far removed from now discredited notions of linear, hypodermic communications on matters
of health. We adopted the view that media are thoroughly entangled with experience and that pandemic narratives found there help to constitute subjects and the relationships they have with the expert knowledge systems that underpin public health efforts to manage microbial threats

 Unlike states of illness, which depend on determinate biomedical diagnosis and the related transformation of identity and relationality, pandemic experience was most often indeterminate due to the infrequency with which influenza infection is diagnosed in a laboratory and the great variation in influenza symptoms between people, between influenza outbreaks, and even over the course of a particular influenza pandemic.

 Pandemic narratives are placeholders for rich metaphors of life under threat. The metaphorical properties of contagion and immunity give pandemic narratives biopolitical resonance, connecting as they do: political imperatives to do with the production of life; the self defined and protected against the other; the milieu interieur scene for commune with microbial invaders and friends; the tensions implied in proximity and distance; and the coconstruction of narrative and knowledge.

Somebody will have to write a book about current covid-19 pandemic and the title could be: "We are all soldiers against covid". Nothing to add.

Unprepared for a pandemic

Unprepared. Global health in a time of emergency

A book that we forgot to read, but it may help (at least for the next time).

This book tells the story of how the fragile and still-uncertain machinery of global health security was cobbled together over a two-decade period, beginning in the early 1990s. It is neither a heroic  account of visionary planning by enlightened health authorities, nor a sinister story of the securitization of disease by an ever-expansive governmental  apparatus. Rather, it is a story of the assemblage of disparate elements— adapted from fields such as civil defense, emergency management, and international public health—by well-meaning experts and officials and of response failures that have typically led, in turn, to reforms that seek to strengthen or refocus the apparatus.9 The analysis centers on the ways that authorities—whether public health officials, national security experts, life scientists, or other privileged observers—conceptualize and act on an encroaching future of disease emergence. This uncertain future can be taken up and made into an object of present intervention according to multiple rationalities: as an object of probabilistic calculation, as a specter that must be avoided through precautionary intervention, or as a potential catastrophe that cannot be evaded but can only be prepared for.10 In the chapters that follow, we see how these various logics come into tension or combine in response to actual and anticipated disease emergencies.

And the key message

The widely acknowledged failure of global health security to adequately manage the Ebola outbreak led to multiple inquiries, commission reports, and recommendations for reform, but it did not put in question the strategic logic underlying the framework. Rather, reformers raised the question of how to better meet the demand for preparedness in time for the next global health emergency. As an internal World Health Organization (WHO) report warned, the frequency and magnitude of such events was increasing but “the world is not adequately prepared to respond to the full range of emergencies with public health implications”—whether disease outbreaks, natural disasters or violent conflict. The report concluded that WHO’s response to Ebola and other recent emergencies “lacked the speed, coordination, clear lines of decision making and dedicated funding to optimize implementation, reduce suffering and save lives.” Given the scale and complexity of anticipated future emergencies, it advised, “WHO must substantially strengthen and modernize its emergency management capacity.”

So what? We have to confront right now the emergency and WHO reform is still pending...

To test or not to test (for coronavirus) (3)

Current situation on test results

Daily report 30/3/2020

Available models

Latest data

Covid-19 Incidence: 212 per 100.000 inhabitants

Spreading rate: 0,6

This is good news!

Psychology of pandemics

The Psychology of Pandemics: Preparing for the Next Global Outbreak of Infectious Disease

The patterns of psychological reactions to pandemics are complex. Whereas some people are resilient to stress, other individuals become highly distressed when confronted with threatening events such as pandemic infection. Thus, people vary widely in their reactions to threatened or actual pandemics. Some react with indifference or resignation while others become highly fearful or anxious, and some develop emotional disorders such as PTSD. Some people recover from these emotional problems once the pandemic threat passes, while other people have enduring emotional reactions. Social disruptive behaviors such as rioting can also occur under particular circumstances, although prosocial behaviors appear to be more common during times of pandemic. Immune reactions may explain some of the emotional responses in infected people but these fail to account for widespread fear and social disruption in people who have not yet been infected. To better understand the reasons behind these diverse psychological reactions it is important to understand their motivational roots and vulnerability factors.

This book is devoted precisely to this issue, to understand psychological reactions and its roots.

The new science of contagion

The Rules of Contagion. Why Things Spread — and Why They Stop

In chapter 2 of this book, Adam Kucharski explains the details about R, the crucial parameter in any epidemic. Right now it seems that we are at 2,3 and waiting to decrease below 2.

 R is a more intuitive – and general – way to think about contagion. It simply asks: how many people would we expect a case to pass the infection on to? As we shall see in later chapters, it’s an idea that we can apply to a wide range of outbreaks, from gun violence to online memes.
R is particularly useful because it tells us whether to expect a large outbreak or not. If R is below one, each infectious person will on average generate less than one additional infection. We’d therefore expect the number of cases to decline over time. However, if R is above one, the level of infection will rise on average, creating the potential for a large epidemic.
Some diseases have a relatively low R. For pandemic flu, R is generally around 1–2, which is about the same as Ebola during the early stages of the 2013–16 West Africa epidemic. On average, each Ebola case passed the virus onto a couple of other people. Other infections can spread more easily. The sars virus, which caused outbreaks in Asia in early 2003, had an R of 2–3.
R therefore depends on four factors: the duration of time a person is infectious; the average number of opportunities they have to spread the infection each day they’re infectious; the probability an opportunity results in transmission; and the average susceptibility of the population. I like to call these the ‘DOTS’ for short. Joining them together gives us the value of the reproduction number:
R = Duration × Opportunities × Transmission probability × Susceptibility

PS. The statistics of contagion

Policymakers neglecting science in coronavirus times

Experts’ request to the Spanish Government: move Spain towards complete lockdown

Scientific community in The Lancet:

We urge the Spanish Government to implement, as swiftly as possible, more drastic measures to minimize the impact of the pandemic on the Spanish population.

Policymakers:

The answer is: "We are all soldiers against the virus"!!!
as if the covid-19 was a war...

This is exactly the level of cinism while people are dying from covid-19.

Smart testing in coronavirus pandemic

We need smart coronavirus testing, not just more testing

Key messages by Mostashari and Emanuel:

The first two questions, which will be key to guiding policymakers on whether the extreme measures taken to suppress the outbreak are working, are these: Is the Covid-19 outbreak in a city or state getting better or worse? And how fast?

To know if Covid-19 is getting better or worse, we need to know how the percentage of positive cases — not the number — changes day by day, accounting for delays in testing and reporting and how the percentages change in response to public health measures such as sheltering-in-place or suppression. This will tell us how effective these measures are in curtailing the spread of SARS-CoV-2 and thus whether when social restrictions could be relaxed or additional policies might need to be implemented.

The other two questions that need answers are essential for guiding doctors in their medical decision making: Who is getting Covid-19? And what are their outcomes?

First, as a condition of receiving approval and test kits, laboratories should be required to submit basic information like age, county of residence, and testing site on every person tested — not just the positives.

Second, we need a sero survey of multiple communities. Such studies test blood samples from randomly chosen individuals in a defined population. This is the way to assess the real percentage of people in a community who test positive for recent coronavirus infection. This gives a picture that is wider than just the individuals who are bringing themselves in for testing. Right now we simply have no idea how many Americans are infected with the coronavirus. This will be a key input to models trying to predict when herd immunity can begin to blunt the outbreak.

PS. An epidemic calculator 
PS. Current situation of the pandemic in our country.

On rationing (ventilators) (2)

Fair Allocation of Scarce Medical Resources in the Time of Covid-19

The four fundamental values for allocating resources, according Ezequiel Emanuel and colleagues are those included in this article:

Maximizing the benefits produced by scarce resources, treating people equally, promoting and rewarding instrumental value, and giving priority to the worst off. Consensus exists that an individual person’s wealth should not determine who lives or dies.

And,

Maximization of benefits can be understood as saving the most individual lives or as saving the most life-years by giving priority to patients likely to survive longest after treatment. Treating people equally could be attempted by random selection, such as a lottery, or by a first-come, first-served allocation. Instrumental value could be promoted by giving priority to those who can save others, or rewarded by giving priority to those who have saved others in the past. And priority to the worst off could be understood as giving priority either to the sickest or to younger people who will have lived the shortest lives if they die untreated.

The proposals for allocation discussed above also recognize that all these ethical values and ways to operationalize them are compelling. No single value is sufficient alone to determine which patients should receive scarce resources.24-33 Hence, fair allocation requires a multivalue ethical framework that can be adapted, depending on the resource and context in question.

Here you'll find some reflections on how to put this into practice.

Eating in pandemic times

Designing a market for lab tests in a pandemic

THE HANDBOOK OF  MARKET DESIGN

Who gets What - and Why

Alvin Roth in his book sheds light on the field known as Market design. Given a set of agents, market design seeks to identify the game rules that might be implemented and that would produce the desired behaviors in the players. In some markets, prices may be used to induce the desired outcomes—these markets are the study of auction theory. In other markets, prices may not be used—these markets are the study of matching theory.

Until recently, economists often passed quickly over matching and focused primarily on commodity markets, in which prices alone determine who gets what. In a commodity market, you decide what you want, and if you can afford it, you get it.The price does all the work, bringing the two of you together at the price at which supply equals demand.

The first question is, can we consider lab tests for a pandemic a commodity?. My impression is that once a virus pandemic has appeared, we need the sequencing for the genome of the virus and after that, several suppliers may offer different options with a high level of uncertainty. Buyers are blind about the options for testing. Suppliers don't know about the extent of the outbreak and the need of tests. The market is rising. In such situations the criteria should be to allocate most of the production to the place where the outbreak has started, in order to prevent contagion. Price may distort this allocation because other countries and buyers may strategically move first to achieve strategic reserves.

Alvin Roth says:

The first task of a successful marketplace is bringing together many participants who want to transact, so they can seek out the best transactions. Having a lot of participants makes a market thick.

Congestion is a problem that marketplaces can face once they’ve achieved thickness. It’s the economic equivalent of a traffic jam, a curse of success. The range of options in a thick market can be overwhelming, and it may take time to evaluate a potential deal, or to consummate it. Marketplaces can help organize potential transactions so that they can be evaluated fast enough that if particular deals fall through, other opportunities will still be available. In commodity markets, price does this well, since a single offer can be made to the entire market (“Anyone can buy a pint of my raspberries for $5.50”), but in matching markets, each transaction may have to be considered separately.

Decisions that depend on what others are doing are called strategic decisions and are the concern of the branch of economics called game theory. Strategic decision making plays a big role in determining who does well or badly in many selection processes. Often when we game theorists study a matching process, we learn how participants “game the system.” Well-designed matching processes try to take into account the fact that participants are making strategic decisions.

When a market doesn’t deal effectively with congestion and participants may not be able to find the transactions they want, it might not be safe for them to wait for the marketplace to open if some opportunities are available earlier. Even when going early isn’t an option, the marketplace might force participants to engage in risky gambles.

The range of tests may be overwhelming, as it is right now with coronavirus. How can we manage such congestion?

There is a chapter in the Handbook of Market Design by Paul Klemperer about The Product-Mix Auction: A New Auction Design for Differentiated Goods. I've read what he proposes and I think that fits quite well with the market for lab tests in a pandemic. Of course, additional details are needed. The research question is:

How should goods that both seller(s) and buyers view as imperfect substitutes be sold, especially when multi-round auctions are impractical?

 My design is straightforward in concept—each bidder can make one or more bids, and each bid contains a set of mutually exclusive offers. Each offer specifies a price (or, in the Bank of England's auction, an interest rate) for a quantity of a specific "variety." The auctioneer looks at all the bids and then selects a price for each "variety." From each bid offered by each bidder, the auctioneer accepts (only) the offer that gives the bidder the greatest surplus at the selected prices, or no offer if all the offers would give the bidder negative surplus. All accepted offers for a variety pay the same (uniform) price for that variety.

The idea is that the menu of mutually exclusive sets of offers allows each bidder to approximate a demand function, so bidders can, in effect, decide how much of each variety to buy after seeing the prices chosen. Meanwhile, the auctioneer can look at demand before choosing the prices; allowing it to choose the prices ex post creates no problem here, because it allocates each bidder precisely what that bidder would have chosen for itself given those prices. Importantly, offers for each variety provide a competitive discipline on the offers for the other varieties, because they are all being auctioned simultaneously.

Compare this with the "standard" approach of running a separate auction for each different "variety." In this case, outcomes are erratic and inefficient, because the auctioneer has to choose how much of each variety to offer before learning bidders' preferences, and bidders have to guess how much to bid for in each auction without knowing what the price differences between varieties will turn out to be; the wrong bidders may win, and those who do win may be inefficiently allocated across varieties. Furthermore, each individual auction is much more sensitive to market power, to  manipulation, and to informational asymmetries than if all offers compete directly with each other in a single auction. The auctioneer's revenues are correspondingly generally lower. All these problems also reduce the auctions' value as a source of information. They may also reduce participation, which can create "second-round"  feedback effects further magnifying the problems.

The rules of the auction are as follows:
1. Each bidder can make any number of bids. Each bid specifies a single quantity and an offer of a per-unit price for each variety. The offers in each bid are mutually exclusive.

2. The auctioneer looks at all the bids and chooses a minimum "cut-off" price for each variety

3. The auctioneer accepts all offers that exceed the minimum price for the corresponding variety, except that it accepts at most one offer from each bid. If both price offers in any bid exceed the minimum price for the corresponding variety, the auctioneer accepts the offer that maximizes the bidder s surplus, as measured by the offer's distance above the minimum price.

4. All accepted offers pay the minimum price for the corresponding variety—that is, there is "uniform pricing" for each variety

It is easy to include additional potential sellers (i.e., additional lenders of funds, in our example). Simply add their maximum supply to the total that the auctioneer sells, but allow them to participate in the auction as usual. If a potential seller wins nothing in the auction, the auctioneer has sold the sellers supply for it. If a potential seller wins its total supply back, there is no change in its position 

My impression is that lab tests in a pandemic require a market design, current allocation methods are relying in a free market that doesn't allows to create value where it it most needed.
Just a final words by Alvin Roth:

Because economics touches on just about everything, economists have an opportunity to learn something from just about everyone, and I’ve met and worked with some remarkable people in each of the markets I’ve helped design.

Market design is giving new scope to the ancient profession of matchmaking. Consider this book a tour of the matching and market making happening around us. I hope it will give you a new way to see the world and to understand who gets what—and why.