The Pandemic Monkey Trap
Back in 2007 I said “cut medicine in half”, as its marginal value is too low. (Since then, US spending is up 40%!) But prestigious health economists said yes on average marginal value is low, but don’t I agree that some identified treatments have high value, and as there must be more like that, we should wait and not cut until we can identify which are high vs low. I say cut now, and only add back good things once you can identify them. Those hidden good treatments are the nut in a medical monkey trap, which prevents us from letting go of a larger gourd of wasteful spending.
My colleague Bryan Caplan says we should cut school spending, as its social value is on average low. Many critics say yes value may be low now, but it must be possible to create high value school programs, and so instead of cutting we should work on figuring how to increase school value. Caplan says to cut now, and only add back spending when you can actually identify high value programs.
Regarding pandemic prevention spending, both Caplan and I say that we seem to be spending way too much, and so we should cut back.
Me in October:
I’m comfortable with … an estimate of 3.0 [for the ratio of life-year value over annual income]. But … [that gives] $1.08T and $0.64T for covid death and impairment harms, which gives a prevention to harm cost ratio of 5.31. (Which is close to the 5.2 median estimate from my most recent poll.) And its crazy to think that on average we are getting a 5.31% cut in covid harm for each 1% increase in prevention cost we pay! But that’s what it would take to justify this level of prevention spending.
Bryan Caplan on Tuesday:
total loss comes to about 37 million years of life. That’s about 15 times the reported estimate of the direct cost of COVID. … If normal life had continued unabated since March, how many additional life-years would have been lost? … fifteen times? No way. Upshot: The total cost of all COVID prevention has very likely exceeded the total benefit of all COVID prevention.
Tyler Cowen today:
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. …
A second question is whether moral suasion — “don’t overreact to Covid!” — is likely to prove effective. … Sweden didn’t do any better on the gdp front, and the country had pretty typical adverse mobility reactions. … Brazil … have a denialist president, a weak overall response, and a population used to a high degree of risk. … 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? … they don’t and indeed can’t tell you how most of those [overreaction] 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?
Cowen seems to divide pandemic prevention into two categories, the first of which is ineffective but simply cannot be avoided, while the second is highly effective and can in fact be changed, if only people like Bryan would speak up. In this case, the more there is of unavoidable ineffective prevention, the more valuable it is to spend more on effective prevention.
I question Cowen’s arbitrary claim that we intellectuals can only influence spending on very effective kinds of treatment, but not on others. We see variations in both kinds of policy across space and time, due both to private and government choices, all of which seem modestly influenceable by intellectuals like Caplan, Cowen, and I. There are people out there arguing to cut ineffective prevention, as well as people arguing to expand effective prevention, and both groups deserve our support. (“Spending” includes all choices that induce opportunity costs.)
But we should also consider the very real possibility that the political and policy worlds aren’t very capable of listening to our advice about which particular policies are more effective than others. They may well mostly just hear us say “more” or “less”, such as seems to happen in medical and education spending debates. In this case, we should consider the value of more or less prevention spending overall, holding constant the relative proportions of different kinds of spending. And in this case the clear answer seems to be: less; we should do less. Let go the nut of effective treatment in the pandemic-money-trap gourd of over-prevention. Don’t you agree Tyler?
Added 8pm: Though Tyler criticizes Caplan and my posts which are directly on the topic of overall covid over-prevention, he refuses to say if we are spending too much overall; he simply rejects the “framing” of this question. Seems a question he’d rather not talk about.