27 Nov Bryan Caplan on the cost of Covid
Here is Bryan’s post, here is one bit:
Taking quality of life into account, how many life-years has the reaction to COVID destroyed?…
Upshot: The total cost of all COVID prevention has very likely exceeded the total benefit of all COVID prevention.
I don’t agree with Bryan’s numbers, but the more important point is one of logic. The higher the costs of reaction to Covid, the stronger the case for subsidizing vaccines, therapeutics, and other corrective measures. Would you accept this Bryan? You have numerous posts about risk overreaction, but not one (if I recall correctly) calling for such subsidies. Furthermore we just did some of those subsidies, through Operation Warp Speed, and they worked and they will fix the relevant incentives and lead to a resumption of normal life. So the “subsidies will prove counterproductive” argument doesn’t seem strong here. The subsidies are the (much) quicker path back to what you desire.
A second question is whether moral suasion — “don’t overreact to Covid!” — is likely to prove effective. As I’ve already linked to, risk explains mobility reductions far more than do lockdown policies. Or consider Sweden, which had a relatively non-panicky Covid messaging, no matter what you think of their substantive policies. Sweden didn’t do any better on the gdp front, and the country had pretty typical adverse mobility reactions. (NB: These are the data that you don’t see the “overreaction” critics engage with — at all. And there is more where this came from.)
How about Brazil? While they did some local lockdowns, they have a denialist president, a weak overall response, and a population used to a high degree of risk. The country still saw a gdp plunge and lots of collateral damage. You might ponder this graph, causality is tricky and the “at what margin” question is trickier yet, but it certainly does not support what Bryan is claiming about the relevant trade-offs.
I keep on hearing this point again and again, about overreaction. What kinds of reaction are you expecting or viewing as feasible and attainable? If overreacting is indeed a public bad, why think you can talk people down out of it? How much do you think you can talk them out of it? What if someone suggested that we try to talk people out of their irrational voting patterns, as analyzed by Bryan’s The Myth of the Rational Voter? How sanguine would he be about that enterprise? I believe he instead stressed changes in relative prices.
And this is the huge flaw behind so much of the discourse about the “costs of lockdowns” — they can cite the stupidity of closing the parks in March, yes, but they don’t and indeed can’t tell you how most of those costs were to be avoided, given how the public reacts to risk.
If we instead look to the relevant changes in relative prices, that means subsidies for vaccines and tests, most of all through advance market commitments, but not only. And a full-scale commitment to implementing testing and masks and therapeutics.
The more you push home points about overreaction, the more you ought to favor these subsidies. Libertarians out there, do you? This chicken has come home to roost, so please fess up and give the right answer here. Do you favor these subsidies, not just murmured into your closet at night but in plain black and white for the world to read? Moral suasion against risk overreaction is a red herring, fine enough for cutting back on one part of the problem by maybe a few percentage points, but serving mainly to distract from the very real economic questions at hand and the need to admit that one’s libertarian ideology doesn’t fit around this problem as nicely as one might wish.
Read the Full Article here: >Marginal Revolution