The recent Covid-19 epidemic in the USA is a tragic cautionary tale. The respiratory disease, for everything we know, is similar to a severe, pandemic flu. The symptoms are similar, and the death rate according to the initial estimate of the Centers for Disease Control is between 0.16% and 0.33% (later estimates don’t provide a unique IFR, but a range of different IFR for different age groups show an extremely strong age gradient after 70 and an exceedingly low death rate for those younger than 40). A comprehensive review of all antibody studies done so far by world-renowned epidemiologist John Ioannidis found that the average death rate of Covid-19 is about 0.27%, with some regional variations.
This is certainly higher than the seasonal flu, but very close to a severe pandemic flu, like the one the world experienced in 1957 and 1968 (without doing anything to “tackle” them). Indeed Dr. Anthony Fauci himself, the President’s principal scientific adviser for epidemics, in co-authorship with Dr. Robert Redfield, director of the Centers for Disease Control, published a paper in the New England Journal of Medicine on March 26th of 2020, saying: “If one assumes that the number of asymptomatic or minimally symptomatic cases is several times as high as the number of reported cases the case fatality rate may be considerably less than 1. This suggests that the overall clinical consequences of COVID-19 may ultimately be more akin to those of a severe seasonal influenza (which has a case fatality rate of approximately 0.1%) or a pandemic influenza (similar to those in 1957 and 1968) rather than a disease similar to Spanish flu, SARS or MERS, which have had case fatality rates of 9% to 10% and 36%, respectively.”
An overwhelming majority of people who died of Covid were older than 70 and already had other significant ailments like heart disease, diabetes or obesity. Among children and young people the disease is much less severe than seasonal flu. Additionally, children are far less likely to transmit the virus than older people, which is in stark contrast to the flu, where children are the main spreaders and sufferers.
WHICH of the following is the more reasonable approach a society might take in the outbreak of an epidemic?
· To quarantine the sick and take reasonable precautions to stop those who are identified as vulnerable from contracting the illness.
· To attempt to ‘control the virus’ by preventing millions of healthy people from having contact with other healthy people.
To any society before 2020, it would have been obvious that the first approach is not only logical and proportionate, but the one least likely to have other unintended and highly destructive consequences. However, to my continued astonishment, many in our society not only believe that the answer is the second, but they somehow believe it to be based on established science.
With the Covid-19 pandemic, we have seen the problem Coase discussed unfurl at rapid speed. Lockdowns, business closures, and even deaths were justified by politicians as necessary to contain the pandemic. Enterprising economists jumped at the opportunity to use the market failure model to justify said lockdowns: governmental actions were necessary to bring social costs in line with social benefits.
But these justifications contained the very problem Coase discussed 60 years ago: they ignored the steps people were already taking to limit the spread. Indeed, as my AIER colleague Phil Magness has documented numerous times, many of the models (such as the Imperial College model) explicitly refused to take people’s behavior into context. In a new working paper, Abigail Devereaux, Nathan Goodman, Roger Koppl, and I document other such failures of expert advisors. Thus, the predictable result occurred: policy was too onerous even by its own standards and has failed to achieve its goals.