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How Can Economists Help?

How Can Economists Help?

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Russ Roberts claims that if someone asks whether he’s a doctor, he tells them “yes, but not the kind that helps people.”

That’s not true; Russ has helped me a lot. I’ve been a regular listener of Econtalk for many years. I can’t tell you how many books I’ve read after listening to one of his author interviews, but it has to average at least two a year. I can tell you that Russ’s book How Adam Smith Can Change Your Life completely changed the way I think about Adam Smith and made a big difference in how I think about economics.

Maybe I find Russ especially helpful because he and I are in the same business. But there are many millions of downloads of his podcast every year. He must have helped all kinds of people.

The question of whether economists help people has been on my mind a lot lately. This is an extraordinary time. People need help and, as Russ likes to remind us, one of Adam Smith’s most important insights is that “man naturally desires not only to be loved but to be lovely.” Most of us genuinely want to help. But we don’t know how to hook up a ventilator, we don’t have the local knowledge necessary to deliver fresh milk to the store and most of us wouldn’t even be very good at stocking the cooler once the milk arrives. Do economists have anything to offer?

I think so. Here are my 9 suggestions.

Focus on teaching, not problem solving. Good economists spend most of their time either teaching or being taught. And I don’t just mean teaching in the classroom. A good teacher takes information from many different sources, finds what is relevant, figures out how the various bits of information are connected and then presents them that in a way others will understand. A good teacher helps others understand how economic data and the economic way of thinking can inform the problems the students need to solve.

In academics we pretend there’s a sharp line between teaching and research and we often attach higher status to research. But there’s not really much of a boundary. Think about some idea that had a big influence on you. Ronald Coase’s theory of the firm is my example. His seminal paper didn’t solve a problem or discover some new fact. Firms and transactions costs existed long before Coase. But Coase explained the link between the two in a way that satisfies our curious minds and, judging by the paper’s enduring success, in a way people must find useful. The Theory of the Firm is a lesson. It may answer a question but it does not solve a practical problem.

This is not to say that economists shouldn’t try to solve the problems created by this pandemic. Many of us are good at modeling and data analytics. More importantly, economics teaches us to understand tradeoffs and to look for unintended consequences. These are useful skills. Even if we can’t solve a problem, teaching people the lessons of economics will be very helpful.

Teach like an Austrian. I don’t mean teach the classic texts and thinkers that are labeled “Austrian economics,” that’s up to you. I mean honor Friedrich Hayek’s famous dictum: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

It doesn’t matter whether you’re a Marxist or an anarcho-libertarian, if you’re an economist you understand the overwhelming complexity of social organization. There are 7.8 billion people in the world. We each have an economic relationship with countless millions of those people.

Economists get teased for the simplistic ‘assume a can opener’ nature of our models. But what choice do we have? It’s not our fault that the average human has 85 billion neurons and absolutely no interest in behaving like an ant or a bee. Many of us could have become perfectly competent entomologists, studying orderly and predictable social insects. We thought economics would be more interesting than that. I still think so, but I understand that along with that interest comes a lot of frustration. There are many, many things I don’t understand. We need to remind policy makers that they don’t get it either.

But at the same time, don’t carry this Hayekian humility too far. His famous quote, after all, warns against overconfidence in imagining what we can design. That’s good to know, but at the end of the day, somebody has to design something. Economics can offer some good advice to the designers. Which leads me to my next few thoughts.

Teach people that they can’t avoid tradeoffs. As the COVID-19 crisis in New York City was growing, Governor Andrew Cuomo said “My mother is not expendable… We’re not going to accept a premise that human life is disposable. We’re not going to put a dollar figure on human life. We are going to fight every way we can to save every life that we can. Because that’s what I think it means to be an American.”1

“The real tradeoffs require balancing various kinds of risk, including risks to life. Everybody crosses the street….”

As long as politicians think they’re obligated to say things like that, economists are obligated to tell them they’re wrong. Of course, it is immoral to fling virgins into volcanos. But appeasing the gods with human sacrifice isn’t at all similar to the real tradeoffs we have to make. The real tradeoffs require balancing various kinds of risk, including risks to life. Everybody crosses the street. Not everybody thinks about how the decision to cross involves a tradeoff with existential risk on one side of the scale. In ordinary times that’s fine. We will usually make sensible tradeoffs by relying on habits and the example of others. But in this extraordinary time, we need to think carefully about the costs and consequences of our decisions. That’s exactly the kind of thinking economists do every day.

Teach people that the tradeoffs never involve money. We can’t do economics without money. Without some unit of account it’s impossible to think about tradeoffs. But we need to explain that behind the veil of money are real people with real needs, hopes, and desires. Governor Cuomo said, “we’re not going to put a dollar figure on human life.” It’s easy to understand why a politician would say that. If it was really a tradeoff with suffering humans on one side of the scale and bales of cash on the other, all decent people would side with the humans. But that’s not the real trade off. What looks like dollars are really other humans. The way New York prioritized COVID-19 measures meant that kids couldn’t go to school and that women with suspicious mammograms couldn’t get biopsies. Those things may be worth giving up, but they are real and important things. They’re not dollar bills.

Teach people what markets can and can’t do. Economists think of markets as the greatest supercomputer ever invented. Markets collect information from every nook and cranny of the world and then summarize that information in a language everyone can understand. Higher market prices are a signal that somewhere in the world someone needs a little extra help. Lower market prices mean that somewhere in the world someone is wasting precious resources. And even better, prices nudge the most likely helpers in the right direction. Most economists think that’s awesome.

But most people only think about markets when the market tells them something they don’t want to hear. Every crisis brings with it massive shifts in demand and supply, followed by predictably dramatic changes in price. Some prices go up (N95 masks). Other prices plummet (crude oil). And just as certain, these price changes will be met with self-righteous demands for help. People have been decrying “price gouging” for weeks, and as I write this the Texas Railroad Commission is debating whether to order oil producers to restrict output in an attempt to boost prices. We need to teach people that interfering with the market disrupts the flow of critical market signals. Our job as economists is to tell people that while they may hate the message, they shouldn’t shoot the messenger.

This is not to say that economists should become simple-minded cheerleaders for free markets. We understand market failures caused by poorly defined property rights, transaction costs, asymmetric information, political interference and the rest. We should acknowledge those possibilities while at the same time explaining that sometimes even imperfect markets are better than the alternative. We should also acknowledge that considerations of human autonomy, human dignity, and other fundamental values may trump the market.

Teach people to trust their moral intuitions but not their economic intuitions. This is in some ways a variant of Hayek’s counsel of humility. But if we make a serious effort to teach this lesson, we might nudge public discourse in a helpful direction. Take, for example, the question about the value of a $15 minimum wage. You can certainly find good economists on either side of the debate. You can’t find good economists who start from the premise that they are morally superior to those who prefer a different policy. First of all, that’s probably not true. People are much more likely to share moral intuitions than to reach common conclusions about complex economic issues. Second, attacking someone’s moral foundations just isn’t a good way to get them to agree with you. Logic and evidence—the kinds of things good economists depend on as persuasion—are much more likely to resolve differences. Economists know this. We should demonstrate it when we teach.

Teach people to trust science but be skeptical of research. On April 11 a group of researchers, most from Stanford University, presented results from an “antibody seroprevalence” survey of a sample of people from Santa Clara County, California. They concluded that “the population prevalence of SARS-CoV-2 antibodies in Santa Clara County implies that the infection is much more widespread than indicated by the number of confirmed cases.” If true, that is very, very good news. It means that denominator in the distressingly high case fatality rate (CFR) for COVID-19 is much larger than previously believed and hence the CFR is much lower.

In a crisis people like good news. The Stanford study was the subject of much conversation in both social media and mainstream media. On April 17 the Wall Street Journal featured an op-ed with the headline “New Data Suggest the Coronavirus Isn’t as Deadly as We Thought: A study finds 50 to 85 times as many infections as known cases—meaning a far lower fatality rate.”2 The study had huge implications in the debate over whether extreme social distancing mandates should be relaxed.

Unfortunately, the study also had huge problems. About the same time the Wall Street Journal was publishing this good news editorial, others trained in science and statistics were discovering massive flaws in the Santa Clara study. No one has said that the reported numbers are just wrong. But questions about the reliability of the test for antibodies coupled with questions about bias in the sample indicate that the results can’t be trusted.

Despite the seductive appeal of “data driven science,” data seldom settles a question. Economic and medical data have something in common: they both measure a small set of characteristics of a complex system. Even if the measurement is accurate—and it never is—a handful of numbers can’t fully capture the complexity. That’s why much research is simply wrong, and all research is incomplete.

Teach people to (mostly) ignore point estimates. A point estimate is almost always a simple answer to a complicated question. If the question matters, that’s not good enough. Ideally, the answer to our question would involve probability distributions and confidence intervals. This is different, by the way, from reporting a series of point estimates. Again, it is impossible to generate credible point estimates without a credible understanding of the underlying distribution(s). Of course, we often don’t know much about the underlying distribution. That’s too bad, and all we can do is admit our ignorance. But we should fight like crazy to keep the point estimate from becoming the headline.

Teach yourself to become more than a scientist. Economists can safely ignore taunts about how we all suffer from “physics envy.” That tiresome cliché never had much substance. We need to worry about science envy. It’s true that much of what we do can quite properly be described as science. We formulate and then test hypotheses using the same rules of logic and standards of proof as most other sciences. That’s a good thing. We’re all struggling to understand reality, and the scientific method forces us to be honest with each other and more importantly, honest with ourselves.

But we’re not studying atoms or molecules or cells. We’re studying humans. That means we have to struggle with human nature. Now maybe you believe that human nature is just another kind of nature and that nature follows certain laws that only science can describe. Understand the laws of nature and you can understand human nature. Who knows, you might be right. Maybe someday scientists will have the final say about who we are.

But long before humans invented science, humans struggled to understand themselves. The legacy of that struggle is everywhere to be seen—in history, art, religion, and the gritty details of everyday life. If you ignore that legacy, you cut yourself off from an incredible source of insight and inspiration.

This is certainly the most remarkable crisis any of us have seen. All of us are confused but we’re reacting in different ways. Some are sheltering in the same intellectual places they’ve always lived. If they believe in the power of the government to moderate shocks, they want more government. If they believe in markets, freedom and individual autonomy, they want more of that. Others, though, are studying new things and thinking about the world in a different way. I’ve been impressed by how quickly some of the brightest minds in our discipline—people like Daron Acemoglu, Paul Romer, Glen Wyle, John Cochrane and their co-authors—have integrated the insights from epidemiology, virology, and other disciplines into their economic analysis.

But why stop there? Why not look outside of science for help in answering economic questions? Historians have been studying the Spanish flu for 100 years. How many of us have looked at any of this literature? If economists are to evaluate competing policies, we have to think about the value of human life and the duty we owe to others. Theologians have been thinking about those things for a very long time. But how many of us have read the great religious texts?

That’s my list. I think it’s good advice for me. We’ll see how well I can follow it. Let me know if it works for you.


* Michael L. Davis is a senior lecturer in business economics at the O’Neil Center for Global Markets and Freedom at Southern Methodist University’s Cox School of Business.

For more articles by Michael L. Davis, see the Archive.


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“The Real President Is Whoever Controls The Teleprompter”: Musk Delivers Scathing Criticism Of Biden

"The Real President Is Whoever Controls The Teleprompter": Musk Delivers Scathing Criticism Of Biden

Authored by Jack Phillips via The Epoch…

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"The Real President Is Whoever Controls The Teleprompter": Musk Delivers Scathing Criticism Of Biden

Authored by Jack Phillips via The Epoch Times,

Tech billionaire Elon Musk this week warned that the United States must take steps to address inflation or it will end up like socialist Venezuela.

Musk, who is currently in the process of acquiring Twitter, told a virtual conference that he believes the government has printed too much money in recent years.

“I mean, the obvious reason for inflation is that the government printed a zillion amount of more money than it had, obviously,” Musk said, likely referring to COVID-19 relief stimulus packages worth trillions of dollars that were passed in recent years.

U.S. inflation rose by 8.3 percent in April, compared with the previous year. That’s slightly lower than the 8.5 percent spike in March, but it’s still near the 40-year high.

“So it’s like the government can’t … issue checks far in excess of revenue without there being inflation, you know, velocity of money held constant,” the Tesla CEO said.

“If the federal government writes checks, they never bounce. So that is effectively creation of more dollars. And if there are more dollars created, then the increase in the goods and services across the economy, then you have inflation, again, velocity of money held constant.”

If governments could merely “issue massive amounts of money and deficits didn’t matter, then, well, why don’t we just make the deficit 100 times bigger,” Musk asked. “The answer is, you can’t because it will basically turn the dollar into something that is worthless.”

“Various countries have tried this experiment multiple times,” Musk said.

“Have you seen Venezuela? Like the poor, poor people of Venezuela are, you know, have been just run roughshod by their government.”

In 2018, Venezuela, a country with significant reserves of oil and gas, saw its inflation rise more than 65,000 percent amid an economic crash that included plummeting oil prices and government price controls. The regime of Nicolas Maduro then started printing money, thereby devaluing its currency, which caused prices to rapidly increase.

During the conference, Musk also said the Biden administration “doesn’t seem to get a lot done” and questioned who is actually in charge. 

“The real president is whoever controls the teleprompter,” he said.

“The path to power is the path to the teleprompter.”

“The Trump administration, leaving Trump aside, there were a lot of people in the administration who were effective at getting things done,” he remarked.

Musk’s comment about the White House comes as Jeff Bezos, also one of the richest people in the world, has increasingly started to target the administration’s economic policies. Bezos, in a series of Twitter posts, said the rapid increase in federal spending is the reason why inflation is as high as it is.

“Remember the Administration tried their best to add another $3.5 TRILLION to federal spending,” Bezos wrote on Monday, drawing rebuke from several White House officials. “They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation today is at a 40-year high.”

Tyler Durden Tue, 05/17/2022 - 15:05

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Type-I interferon stops immune system ‘going rogue’ during viral infections

Hamilton, ON (May 17, 2022) – McMaster University researchers have found not only how some viral infections cause severe tissue damage, but also how…

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Hamilton, ON (May 17, 2022) – McMaster University researchers have found not only how some viral infections cause severe tissue damage, but also how to reduce that damage.

Credit: Georgia Kirkos/McMaster University

Hamilton, ON (May 17, 2022) – McMaster University researchers have found not only how some viral infections cause severe tissue damage, but also how to reduce that damage.

 

They have discovered how Type I interferon (IFN) stops the immune system ‘going rogue’ and attacking the body’s own tissues when fighting viral infections, including COVID-19.

 

Their paper was published in the journal PLOS Pathogens today.

  

Senior author Ali Ashkar said IFN is a well-known anti-viral signalling molecule released by the body’s cells that can trigger a powerful immune response against harmful viruses.

 

“What we have found is that it is also critical to stop white blood cells from releasing protease enzymes, which can damage organ tissue. It has this unique dual function to kick start an immune response against a viral infection on the one hand, as well as restrain that same response to prevent significant bystander tissue damage on the other,” he said.

 

The research team investigated IFN’s ability to regulate a potentially dangerous immune response by testing it on both flu and the HSV-2 virus, a highly prevalent sexually transmitted pathogen, using mice. Data from COVID-19 patients in Germany, including post-mortem lung samples, was also used in the study.

 

“For many viral infections, it is not actually the virus that causes most of the tissue damage, it is our heightened immune activation towards the virus,” said Ashkar, a professor of medicine at McMaster.

  

First co-author of the study and PhD student Emily Feng said: “Our body’s immune response is trying to fight off the virus infection, but there’s a risk of damaging innocent healthy tissue in the process. IFNs regulates the immune response to only target tissues that are infected.

 

“By discovering the mechanisms the immune system uses that can inadvertently cause tissue damage, we can intervene during infection to prevent this damage and not necessarily have to wait until vaccines are developed to develop life-saving treatments,” she added.

 

“This applies not just to COVID-19, but also other highly infectious viruses such as flu and Ebola, which can cause tremendous and often life-threatening damage to the body’s organs,” said first study co-author Amanda Lee, a family medicine resident. 

 

Ashkar said the release of harmful proteases is the result of a ‘cytokine storm’, which is life-threatening inflammation sometimes triggered by viral infections. It has been a common cause of death in patients with COVID-19, but treatment has been developed to prevent and suppress the cytokine storm.

 

Ashkar said that steroids like dexamethasone are already used to rein in an extreme immune response to viral infections. The authors used doxycycline in their study, an antibiotic used for bacterial infections and as an anti-inflammatory agent, inhibits the function of proteases causing the bystander tissue damage.

 

Lee added: “This has the potential in the future to be used to alleviate virus-induced life-threatening inflammation and warrants further research.” 

 

The study was funded by the Canadian Institutes of Health Research.

 

-30-

 

Editors:

Pictures of Ali Ashkar and Emily Feng may be found at https://bit.ly/3wmSw0D

  

 

 


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mRNA vaccines like Pfizer and Moderna fare better against COVID-19 variants of concern

A comparison of four COVID-19 vaccinations shows that messenger RNA (mRNA) vaccines — Pfizer-BioNTech and Moderna — perform better against the World…

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A comparison of four COVID-19 vaccinations shows that messenger RNA (mRNA) vaccines — Pfizer-BioNTech and Moderna — perform better against the World Health Organization’s variants of concern (VOCs) than viral vector vaccines — AstraZeneca and J&J/Janssen. Although they all effectively prevent severe disease by VOCs, the research, publishing May 17th in the open access journal PLOS Medicine, suggests that people receiving a viral vector vaccine are more vulnerable to infection by new variants.

Credit: Carlos Reusser Monsalvez, Flickr (CC0, https://creativecommons.org/publicdomain/zero/1.0/)

A comparison of four COVID-19 vaccinations shows that messenger RNA (mRNA) vaccines — Pfizer-BioNTech and Moderna — perform better against the World Health Organization’s variants of concern (VOCs) than viral vector vaccines — AstraZeneca and J&J/Janssen. Although they all effectively prevent severe disease by VOCs, the research, publishing May 17th in the open access journal PLOS Medicine, suggests that people receiving a viral vector vaccine are more vulnerable to infection by new variants.

By March 2022, COVID-19 had caused over 450 million confirmed infections and six million reported deaths. The first vaccines approved in the US and Europe that protect against serious infection are Pfizer-BioNTech and Moderna, which deliver genetic code, known as mRNA, to the bodies’ cells, whereas Oxford/AstraZeneca and J&J/Janssen are viral vector vaccines that use a modified version of a different virus — a vector — to deliver instructions to our cells. Three vaccines are delivered as two separate injections a few weeks apart, and J&J/Janssen as a single dose.

Marit J. van Gils at the University of Amsterdam, Netherlands, and colleagues, took blood samples from 165 healthcare workers, three and four weeks after first and second vaccination respectively, and for J&J/Janssen at four to five and eight weeks after vaccination. Samples were collected before, and four weeks after a Pfizer-BioNTech booster.

Four weeks after the initial two doses, antibody responses to the original SARS-CoV-2 viral strain were highest in recipients of Moderna, followed closely by Pfizer-BioNTech, and were substantially lower in those who received viral vector vaccines. Tested against the VOCs – Alpha, Beta, Gamma, Delta and Omicron – neutralizing antibodies were higher in the mRNA vaccine recipients compared to those who had viral vector vaccines. The ability to neutralize VOCs was reduced in all vaccine groups, with the greatest reduction against Omicron. The Pfizer-BioNTech booster increased antibody responses in all groups with substantial improvement against VOCs, including Omicron.

The researchers caution that their AstraZeneca group was significantly older, because of safety concerns for the vaccine in younger age groups. As immune responses tend to weaken with age, this could affect the results. This group was also smaller because the Dutch government halted use for a period.

van Gils concludes, “Four COVID-19 vaccines induce substantially different antibody responses.”

#####

In your coverage, please use this URL to provide access to the freely available paper in PLOS Medicine:

http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1003991

Citation: van Gils MJ, Lavell A, van der Straten K, Appelman B, Bontjer I, Poniman M, et al. (2022) Antibody responses against SARS-CoV-2 variants induced by four different SARS-CoV-2 vaccines in health care workers in the Netherlands: A prospective cohort study. PLoS Med 19(5): e1003991. https://doi.org/10.1371/journal.pmed.1003991

 

Author Countries: The Netherlands, United States

 

Funding: This work was supported by the Netherlands Organization for Scientific Research (NWO) ZonMw (Vici grant no. 91818627 to R.W.S., S3 study, grant agreement no. 10430022010023 to M.K.B.; RECoVERED, grant agreement no. 10150062010002 to M.D.d.J.), by the Bill & Melinda Gates Foundation (grant no. INV002022 and INV008818 to R.W.S. and INV-024617 to M.J.v.G.), by Amsterdam UMC through the AMC Fellowship (to M.J.v.G.) and the Corona Research Fund (to M.K.B.), and by the European Union’s Horizon 2020 program (RECoVER, grant no. 101003589 to M.D.d.J). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.


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