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A Solution if We Act

Summary:
Many simulations have been run in recent weeks using standard epidemiological models and the emerging consensus, as I read it, is that test, trace and isolate can be very effective. Paul Romer’s simulations are here and he notes that a COVID-19 test does not have to be especially accurate for the test, trace and isolate strategy to work. Indeed, you don’t even need to trace, if you test enough people. Linnarsson and Taipale agree writing: We propose an additional intervention that would contribute to the control of the COVID-19 pandemic and facilitate reopening of society, based on: (1) testing every individual (2) repeatedly, and (3) self-quarantine of infected individuals. By identification and isolation of the majority of infectious individuals, including the estimated 86% who are

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Many simulations have been run in recent weeks using standard epidemiological models and the emerging consensus, as I read it, is that test, trace and isolate can be very effective. Paul Romer’s simulations are here and he notes that a COVID-19 test does not have to be especially accurate for the test, trace and isolate strategy to work. Indeed, you don’t even need to trace, if you test enough people. Linnarsson and Taipale agree writing:

We propose an additional intervention that would contribute to the control of the COVID-19 pandemic and facilitate reopening of society, based on: (1) testing every individual (2) repeatedly, and (3) self-quarantine of infected individuals. By identification and isolation of the majority of infectious individuals, including the estimated 86% who are asymptomatic or undocumented, the reproduction number R0 of SARS-CoV-2 would be reduced well below 1.0, and the epidemic would collapse….Unlike sampling-based tests, population-scale testing does not need to be very accurate: false negative rates up to 15% could be tolerated if 80% comply with testing, and false positives can be almost arbitrarily high when a high fraction of the population is already effectively quarantined.

Similarly, Berger, Herkenhoff and Mongey conclude:

Testing at a higher rate in conjunction with targeted quarantine policies can (i) dampen the economic impact of the coronavirus and (ii) reduce peak symptomatic infections—relevant for hospital capacity constraints.

This is exactly the strategy I discussed in, Mass Testing to Fix the Labor Market, where I wrote “Testing, isolating and tracing will [get the economy back on track] much faster and cheaper than dealing with a prolonged recession.”

I want to expand on the costs because it’s clear that a mass testing regime will require millions of tests. Is that cost-effective? Yes. The two types of tests we have are a RT-PCR test for COVID-19 (there are several versions) which costs something like $100 but could probably be much less as we ramp up. (We can cut costs and greatly increase throughput, for example, by pooled testing.) The second test, a blood test for antibodies, is, as best as I can tell, in the realm of $10. Both types are useful. I am going to be very conservative and say that we use a combination of tests at $75 per test. To test the entire US population, therefore, it would cost on the order of $25 billion dollars. Coincidentally, $25 billion is about what we spent on the Manhattan Project in current dollars. Thus, I am proposing a Manhattan Project for testing.

Twenty five billion dollars to test the entire US population. Now suppose the pandemic knocks 5% off US GDP over the next year or two, that’s roughly a trillion dollars lost. Or to put it differently, $3 billion a day. Thus, if mass testing reduces the number of days we are away from work by 9, it pays for itself. Let’s again be conservative and say that testing will also require a $25 billion fixed cost to build the enzyme factories and so forth, for a total cost of $50 billion. 18 days and it’s worth it.

We would also save medical costs by suppressing the virus. (The focus on ventilators has perhaps been overdone given that ventilators in no way guarantee survival–better to stop people needing ventilators.) We would also save lives. Thus, a program of mass testing seems like a no-brainer. Yet, there is no direct funding for anything like this in the $2.2 trillion CARES bill which is stunning. Here’s Austan Goolsbee:

We literally put in a tax break for retailers and restaurants to expand their capacity but not money for production of more COVID tests.

Here’s Paul Romer:

We have an economic crisis because it is not safe for people to work or consume. Our Congress just passed a bill that will spend $2.2 trillion to deal with the crisis. Can anyone identify any spending in this bill devoted to making it safe for people to work and consume?

As I wrote:

We need to attack the virus with test, isolate, and trace. More money for counter-attack!

Objections will no doubt be raised. Isn’t there a shortage of reagents? Do we have the personnel to test everyone? To which I answer, $50 billion solves a lot of problems. We won’t know how many till we try. We don’t need all of final testing capacity at once and even poor tests like simple temperature checks will help but we need to move rapidly in the right direction. The main constraint is time. Social distancing and lock downs are starting to have an effect. I expect the emergency will peak in mid-April and then things will slowly start to get improve. Even when the worst of the emergency passes, however, we will still need lots of testing. This virus will be with us and the world for some time. Let’s get on it.

The post A Solution if We Act appeared first on Marginal REVOLUTION.

Alex Tabarrok
Alex Tabarrok is Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University and a professor of economics at George Mason University. He specializes in patent-system reform, the effectiveness of bounty hunters compared to the police, how judicial elections bias judges, and how local poverty rates impact trial decisions by juries. He also examines methods for increasing the supply of human organs for transplant, the regulation of pharmaceuticals by the FDA, and voting systems.

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