Economics and epidemiology in the time of COVID-19

15 May 2020

By Jonathan Portes (Professor of Economics and Public Policy, Kings College University London)

“Assume a can-opener”.  The old joke about the economist on a desert island (look it up!) sums up one view of economists, and by extension other social scientists – their theories may be interesting, but they aren’t of much use in a crisis, when we need “real” scientists. In the joke, that’s engineers and physicists – today, it’s virologists and epidemiologists; although their models turn out to be just as dependent on assumptions as ours.

Unfortunately, this attitude seems to be reflected in the membership of the government’s now-notorious Scientific Advisory Group on Emergencies (SAGE).  When it comes to the pandemic, the remit of the group isn’t confined simply to medical science; much of the group’s recent advice relates to the public acceptability and sustainability of various interventions, such as restrictions on public gatherings.  So while it does include behavioural scientists, it seems odd not to have input on these issues from sociologists and experts on public opinion, as well as virologists and statisticians

By contrast, some commentators argue that in formulating its response to COVID-19 the government has paid too much attention to advice based solely on health considerations and should instead be placing the economic impacts front and centre.  This argument has taken two forms: first, that because the government failed to take account of the economic costs of lockdown, it has overreacted; and second, that the economic damage inflicted by the lockdown will cost more lives indirectly than it will save directly.

These arguments have not in the main been made by mainstream economists, who overwhelmingly disagree with these positions, but rather by professional contrarians like Toby Young, or fringe figures from other disciplines. Since those making them don’t understand the basic tools economists use to approach such issues, like cost-benefit analysis, and are typically unfamiliar with the evidence, they are trivially easy to debunk.  Unfortunately, however, their prominence discredits the use of economics more generally – and in particular, the language of trade offs and opportunity costs, which, given that government is now faced by a range of highly unattractive options, is essential to charting the path back to some sort of normality.

So how should social scientists, inside and outside government, contribute? One obvious point is that our first duty should be to ensure that bad analysis isn’t allowed to get traction on policy.  We don’t know the full story behind the claims that the initial reluctance of the government to ban sporting events and large social gatherings was driven by “nudge theory.” But it is obvious to those familiar with behavioural science and psychologists (including many of those on SAGE) that findings based largely on lab experiments were likely to be of limited applicability to current circumstances, and that a wider framework was necessary

That obligation goes beyond simply not giving bad advice, or publishing bad analysis, but in challenging those who misinterpret that of others.  Explaining why the economics of Young , Dan Hannan et al isn’t just another point of view – indeed isn’t economics at all – but is actively misleading and potentially damaging, is what I call “intellectual garbage disposal”. While it’s sometimes a thankless task, it’s a necessary act of hygiene for our discipline.

But we do also have something positive to contribute. And here I think the key failure – in government and without – is the separation, analytic and professional, that is often made between social science and “hard” science.  The mental model and framework within which policy appears to have worked is one in which epidemiologists model the spread of the virus under different options, economists and policy officials try to estimate – and then plan to mitigate – the economic consequences, and policymakers and politicians try to assess which combination is then the best way forward, often using some model – explicit or implicit- based on cost-benefit analysis.

But this ignores numerous interactions and feedback loops.  Epidemiological models aren’t enough on their own to model the epidemiology of a pandemic; a pandemic, by definition, happens in a society. And what happens in a society – in terms of the policy response, the economic implications, and how individuals, families and communities change their behaviour – is a question for social scientists.  As Devi Sridhar, herself a public health specialist – a discipline that straddles the boundaries  – says: “No discipline has all the answers, and the only way to avoid “groupthink” and blind spots is to ensure representatives with diverse backgrounds and expertise are at the table when major decisions are made.”

For example, it took the economics editor of the Financial Times to point out that a government strategy based on a mechanistic approach designed to minimise the number of deaths (a crude form of cost-benefit analysis) failed the basic test of political time-consistency. Equally, both economists and social scientists could have pointed out that the “periodic lockdown” strategy suggested at one point by the Imperial College modelling (under which restrictions would be relaxed as the initial outbreak was contained, but then reimposed) might appear preferable in terms of trading off pressures on the NHS with the total length of lockdowns; but would likely fail economically and socially both because of its political and public unsustainability, and because of the likely impacts on business and consumer confidence.

A narrow cost-benefit framework also implicitly incorporates assumptions which, while normally justifiable, may not be appropriate in current circumstances. It’s one thing to use a standardised value of life, or NICE’s QALY framework, to judge the cost-effectiveness of safety regulations for seatbelts or a new cancer drug.  These are important and difficult issues, but limited – “marginal” in the economic sense – and where uncertainty, while certainly present, is usually quantifiable.  COVID-19 and the policy response aren’t like that; we are making political and moral choices that affect the entire economy and society, with a new disease, and economic impacts, direct and indirect, that depend both on the course of the pandemic and how businesses and households react.

So where do we go from here? The government claims that it is “following the science”, as we move towards a phased relaxation of the lockdown. I suppose we should be vaguely comforted that this phrase must have tested extremely well with focus groups, judging from its incessant repetition by Ministers and subservient journalists acting as their mouthpiece.  No doubt we can all endorse Professor Brian Cox’s rebuttal; “if you hear a politician say “we’re following the science”, what that means is that they don’t really understand what science is.”  But equally we don’t want Ministers or the press simply to pick and choose which science they follow, or which disciplines they privilege.

For me, that means recognising that we are stronger and more useful together. We have a number of urgent tasks: presenting the consensus view within specific disciplines while being honest about where there is genuine disagreement or uncertainty, debunking those who would claim the imprimatur of science to push their own agendas, and most importantly working together across disciplines to help analyse and address the crisis and its impacts.

All this will be even more important during the next phase of this crisis.  Balancing the risks and benefits of relaxing the restrictions – and how we share, not just in an economic sense but more widely, the costs – raises a host of complex, interrelated issues. For example, what are the respective rights and responsibilities of government, employers and workers when we decide under what circumstances factories, offices, schools and workplaces can reopen?  The Prime Minister’s appeal to  “good solid British common sense” will only go so far: making this work will require experts in industrial relations, lawyers, and education, just for starters.

Economists – I would say this, of course – have a particular responsibility, and a particular set of skills, that can help here.  In the aftermath of the financial crisis, I wrote that what economists brought to the analysis of public policy was not primarily economic forecasting or modelling, but rather useful conceptual frameworks: opportunity costs, general equilibrium effects, and causal relationships.  All these give us an advantage in integrating analysis of the wide range of difficult issues now in play – not just the short-term health and fiscal impacts, but the longer term impacts across dimensions ranging from children’s health and education to industrial structure and income distribution.  That doesn’t mean we’ll be able to give politicians – or the public – answers; indeed, it would be wrong for us to do so. But it will help them ask the right questions.

Visit the hub of the social science community’s response to COVID-19

 

Professor Jonathan Portes is Professor of Economics and Public Policy, King’s College London. He is also a Senior Fellow of the Economic and Social Research Council’s ‘UK in a Changing Europe’ initiative. He was the Director of the National Institute of Economic and Social Research, as well as Chief Economist to the Department for Work and Pensions and the Cabinet Office.

The perspectives expressed in these commentary pieces represent the independent views of the authors, and as such they do not represent the views of the Academy or its Campaign for Social Science.

This article may be republished provided you place the following statement and link at the top of the article:
This article was originally commissioned and published by the Campaign for Social Science as part of its Covid-19 programme https://campaignforsocialscience.org.uk/hub-of-hubs-social-sciences-responding-to-covid-19/.