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Week Ahead – The final stretch

Week Ahead – The final stretch



The countdown is on

The next couple of weeks will be crucial to how we end the year in financial markets and investors are standing by, waiting to respond. It’s deal making time, with months – or in the UK’s case, years – of negotiations coming to a head as the clock ticks down. The US election is in the final stretch and every passing week brings us one step closer to a Covid vaccine. A huge amount of event risk that will ensure it’s a fascinating end to an otherwise horrific year.

Stimulus still missing as election edges closer

Brexit talks intensify after brief pause

All eyes on Ant Financial IPO



In addition to the November 3rd Election Day, the focus in the US will fall on the advance reading of GDP, the COVID-19 spread, and big tech earnings.  The US economy is expected to post a record-breaking rebound in economic growth in the third quarter.  The Q3 growth measure is expected to rise 32.0%, erasing away the -31.4% contraction seen in the prior quarter.  This is the last big data release before the election and could influence some voters on the direction of the economy. 

The virus spread is intensifying in the US and record high cases seem very likely.  The third wave of the virus continues to cripple the Midwest, but hospitalizations are not rising as sharply as many younger individuals are getting exposed.  For now, the US has not seen anything close to the lockdown and restrictive measures happening in Europe, but that could change if another surge happens.

The third week of earnings season heats up with some mega-cap tech results from Facebook, Apple, Alphabet, and Amazon.  Close attention will also fall on industrials and transport earnings reports from GE, 3M, Airbus, Boeing, UPS, Caterpillar and Honeywell.     

US Politics

It is all about the Senate Race.  President Trump had a strong performance in the final and civil debate, but it was not likely enough to move the needle.  Former-VP Biden did not have any major slip-ups, although will some argue his oil statement was an unforced error.  Biden did a good enough job to keep his lead intact.  President Trump will likely see a bump in the polls but with almost a quarter of the vote likely in and the number of undecided voters being in single digits, Wall Street can continue to price in a Biden victory. 

Just as important is the Senate race and that will likely take a big queue after the confirmation of Amy Coney Barrett to the Supreme Court.  Biden has stated he will come out with a clear position before Election Day about where he stands on expanding the Supreme Court.  This could be the biggest risk to the blue wave.  Republicans who disapprove of President Trump may want to vote red for the Senate to keep the conservative majority on the Supreme Court.   Several Senate races are up for grabs and it appears we won’t have a clearer picture until after Election Day.


The ECB meeting next week could lay the groundwork for more easing in December as the euro area economy flirts with a double dip recession. Covid is wreaking havoc once again which means more restrictions across the bloc. This is particularly taking its toll on the services sector with manufacturing performing relatively well, aided by the economic rebound in China. Policy makers have kept a lid on the euro after Christine Lagarde’s blunder in the last press conference and easing hints next week would go some way to easing deflationary pressures for now.


Negotiations are back underway, with Michel Barnier arriving in London on Friday promising to intensify talks and work towards a deal, one based on mutual compromise. This follows months of both sides pushing the other for concessions and, it seems, last week’s post-EU summit comments were a step too far. Neither side can be seen to be getting a raw deal and comments from Barnier in recent days have convinced Number 10 to return to the negotiating table. A breakthrough now looks possible that will enable both sides to claim a success and avert no-deal. Interestingly, sterling never came under much pressure in response to talks breaking down, with traders clearly having had enough of political theatre and empty threats of the last four years. There is clearly more optimism now though that the foundations are in place for compromise and a deal in the coming weeks.


The UK is continuing to see rising Covid cases and hospitalisations forcing tighter restrictions around the country. The situation is going to get much worse before it gets better, which is going to be a drag on the economy. Expect more stimulus from the Bank of England this year. Brexit remains a huge downside risk for the economy but negotiations took a significant step forward this week.


The CBRT has a real credibility issue and recent actions haven’t helped. The currency hit new record lows against the dollar this week, bringing losses for the year to 25%, as the central bank refrained from raising interest rates, despite markets expectations of a 175 basis point hike. They appeared to have engaged on a tightening cycle last meeting in order to stabilize the currency and address inflation issues but this week showed it still prefers to tighten conditions using other means. Clearly politics is continuing to play a role in the decision making and that comes at a cost for the currency and, ultimately, the economy.


China Communist Party plenum runs Monday to Thursday to set new 5-year plans. Potentially important policy releases to come on Friday.

China Industrial Profits Tuesday should continue the growth tone of recent data, supporting the CNY and China equities. .

Ant Financial IPO opens Tuesday-Thursday with payment Nov 2nd. Potentially strong tailwind for China tech stocks next week.

China Official Pmis released Saturday 31st October, followed by Caixin PMI Monday 2nd. Main risk is disappointing numbers that could lead to a large fall in equities Monday November 2nd.

Hong Kong

All eyes will be on the Ant Financial IPO this week, which will open and close this week with trading starting after the Nov 3rd US election. Bullishness on IPO should mollify any risk based selling ahead of the US election.

USD/HKD at the bottom of its trading band with heavy buying from the HKMA. The demand for HKD is due to the Ant Financial IPO this week.

HK GDP and BoT expected to show the real economy remains deep in recession with Cathay Pacific announcing massive layoffs this week.


No significant data this week.

Indian Rupee continues to weaken after appalling GDP data. Rampant Covid-19 continues to crush economic activity and India’s potential recovery.  Weak BoP, monetary and fiscal positions with stagflation potentially India’s biggest headache. Continues to be Asia’s weakest link along with Indonesia.

New Zealand 

Landslide victory for Labour at elections boosted NZ Dollar. Equities mostly unmoved. No significant data this week.

RBNZ continues to telegraph negative rates and the NZ Dollar could come under sustained pressure this week ahead of the US election as risk is taken off the books globally..


Australian markets shrug off reports of China coal bans now, focusing on a potential rate cut from the RBA on November 3rd. Covid-19 restrictions eased. Financials and resource sector outperformance to continue.

Copper and iron ore remain near year highs supporting the resource sector and offsetting China’s bans in minor Australian export sectors. Australian markets will remain resilient unless China starts messing with copper, iron ore or LNG. Unlikely at this stage. The rise in risk aversion tensions is threatening to flip the Australian Dollar into a potentially large downward technical correction. This remains the major risk factor next week.

Australian Dollar and equities may suffer downside pressure this week as risk is reduced globally ahead of the US election. That should be a temporary state of affairs though. The lucky country should remain lucky with domestic data showing recovery remains on track.


Japanese Yen rallies strongly on haven demand from onshore investors ahead of the US Election. USD/JPY could potentially fall to 102.50 ahead of the election, especially if the US Senate result is too close to call, or odds of contested election increase.

Heavy data weal with Leading Index, Retail Sales, Tokyo CPI and Industrial Production. All are expected to underperform as Japan’s domestic and export recovery remains sluggish in contrast to Taiwan and South Korea. 

Bank of Japan rate decision on Thursday. Unchanged at -0.10% but a high chance of increased measures to pump money into the economy via lending facilities, and potentially an increase in JGB buying. Yen negative theoretically, but repatriation flows will subsume. The BoJ should be equities positive offsetting risk reduction flows into the US election.



Oil prices were given a big boost on Thursday, as Vladimir Putin refused to rule out postponing production increases planned for January by OPEC+. This was by no means a commitment to do so, nor an acknowledgement that it had been discussed, but his openness to it has been welcomed.

OPEC+ cuts remain at 7.7 million barrels but are scheduled to fall to 5.7 million in January. This is a significant increase that could hit oil prices if the global economy falters in the coming months, as many expect, due to Covid-related restrictions. At this time, the group sees no reason to delay anything but that view may change between now and December, when they’re scheduled to meet and Russia will be critical to any delay.

WTI is back above $40 on the comments which, as we’ve seen so often before, could simply be a simple means of manipulating prices in their favour in the near-term. But if not combined with action, should demand slip as expected, it will only be a short-term boost. Brent continues to see considerable support around $41.80, with WTI seeing it around the $39.50 region.


There isn’t an enormous amount to add on gold in recent days and weeks. The yellow metal continues to hover around $1,900, as we await movement on some of the major risk events that are coming to a head in the coming weeks. 

Momentum is just about with the bulls, despite gold spending a little time below $1,900 yesterday, but ultimately, the next move will be event driven and that will probably come from the stimulus talks on Capitol Hill. We may not have to wait too long for movement on that front. A close below $1,900 may signal that talks are collapsing, with a break above $1,930 perhaps meaning good news from Washington.

Key Economic Events

Monday, Oct. 26

– New Japanese Prime Minister Yoshihide Suga addresses parliament for the first time as premier

– The Chinese Communist Party’s Central Committee begins its 4-day all-important plenum, where it’s expected to outline the plan for the economy’s development for the next 15 years.

– WTO holds a dispute settlement meeting where it’s expected to grant the EU legal authority to impose retaliatory tariffs on $4 billion of US exports.

– India Energy Forum (4-day event) by CERAWEEK

– US Senate Republicans are expected to confirm Judge Amy Coney Barrett to the Supreme Court.

Economic Events

US new home sales

Mexico economic activity

Japan PPI, leading index

Singapore industrial production

Germany Ifo business climate

Tuesday, Oct. 27

Economic Events

U.S. durable goods, FHFA house price index, Conference Board consumer confidence

Mexico trade balance

New Zealand trade

South Korea GDP

China industrial profits

Spain unemployment

Hong Kong trade

Wednesday, Oct. 28

– The CEOs of Facebook, Google and Twitter to testify before a Senate hearing on hate speech, misinformation, and privacy on their platforms.

Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Wilkins hold a press conference to discuss the Bank’s expected decision to keep rates on hold

– Dallas Fed President Robert Kaplan takes part in a virtual discussion with former BOE and Bank of Canada Governor Mark Carney.

– Weekly EIA crude oil inventory report

– South Africa releases medium-term budget

Economic Events

US wholesale inventories

Canada rate decision

Brazil rate decision

South Korea consumer confidence

Turkey economic confidence

CPI: South Africa, Australia

Spain retail sales

Thursday, Oct. 29

European Central Bank rate decision: Expected to keep Main Refinancing Rate unchanged at 0.00%

The advance reading of US Q3 GDP is anticipated to be the strongest on record, a 32.0% rebound from the record dive of -31.4%.  Weekly Initial Jobless Claims will also be released.

Big Tech Earnings from Facebook, Amazon and Apple will closely be watched. 

Economic Events

US Q3 Advance Q/Q: 32.0%e v -31.4% prior, Weekly Initial Jobless Claims, pending home sales

Bank of Japan rate decision: Expected to keep policy unchanged

Japan retail sales, consumer confidence, department store sales

New Zealand ANZ business confidence

Australia NAB business confidence

Euro-area economic/consumer confidence

Germany unemployment, CPI

Italy manufacturing/consumer confidence

UK mortgage approvals

Singapore unemployment

Hungary Central Bank: Decision on 1-week Deposit Rate(primary transmission for short rates)

Friday, Oct. 30

Economic Events

US personal income/spending, MNI Chicago PMI, University of Michigan Sentiment

GDP: Canada, Mexico, Germany, France, Italy, Spain, Austria, Portugal, Czech, Hong Kong

Euro-area Q3 Advance GDP Q/Q: 9.4%e v -11.8% prior; Y/Y: -7.4%e v -14.7% prior, CPI, unemployment

South Korea industrial production

Japan CPI, jobless rate, vehicle production, housing starts, industrial production

Australia private sector credit, PPI

Trade balance: South Africa, Turkey

Polish CPI

Sovereign Rating Upgrades

– Finland (Fitch)

– Romania (Fitch) Czech Republic (S&P)

– Denmark (Moody’s)

– Netherlands (Moody’s)

– Saudi Arabia (Moody’s) 

– Italy (DBRS)


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Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

In response to the virus pandemic and nationwide…



Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

In response to the virus pandemic and nationwide Black Lives Matter riots in the summer of 2020, some elite colleges and universities shredded testing requirements for admission. Several years later, the test-optional admission has yet to produce the promising results for racial and class-based equity that many woke academic institutions wished.

The failure of test-optional admission policies has forced Dartmouth College to reinstate standardized test scores for admission starting next year. This should never have been eliminated, as merit will always prevail. 

"Nearly four years later, having studied the role of testing in our admissions process as well as its value as a predictor of student success at Dartmouth, we are removing the extended pause and reactivating the standardized testing requirement for undergraduate admission, effective with the Class of 2029," Dartmouth wrote in a press release Monday morning. 

"For Dartmouth, the evidence supporting our reactivation of a required testing policy is clear. Our bottom line is simple: we believe a standardized testing requirement will improve—not detract from—our ability to bring the most promising and diverse students to our campus," the elite college said. 

Who would've thought eliminating standardized tests for admission because a fringe minority said they were instruments of racism and a biased system was ever a good idea? 

Also, it doesn't take a rocket scientist to figure this out. More from Dartmouth, who commissioned the research: 

They also found that test scores represent an especially valuable tool to identify high-achieving applicants from low and middle-income backgrounds; who are first-generation college-bound; as well as students from urban and rural backgrounds.

All the colleges and universities that quickly adopted test-optional admissions in 2020 experienced a surge in applications. Perhaps the push for test-optional was under the guise of woke equality but was nothing more than protecting the bottom line for these institutions. 

A glimpse of sanity returns to woke schools: Admit qualified kids. Next up is corporate America and all tiers of the US government. 

Tyler Durden Mon, 02/05/2024 - 17:20

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From Colombia to Laos: protecting crops through nanotechnology

In a recent breakthrough, DNA sequencing technology has uncovered the culprit behind cassava witches’ broom disease: the fungus genus Ceratobasidium….



In a recent breakthrough, DNA sequencing technology has uncovered the culprit behind cassava witches’ broom disease: the fungus genus Ceratobasidium.

Credit: Alliance of Bioversity and CIAT / A. Galeon

In a recent breakthrough, DNA sequencing technology has uncovered the culprit behind cassava witches’ broom disease: the fungus genus Ceratobasidium.

The cutting-edge nanopore technology used for this discovery was first developed to track the COVID-19 virus in Colombia, but is equally suited to identifying and reducing the spread of plant viruses. The findings, published in Scientific Reports, will help plant pathologists in Laos, Cambodia, Vietnam and Thailand protect farmers’ valued cassava harvest.

“In Southeast Asia, most smallholder farmers rely on cassava: its starch-rich roots form the basis of an industry that supports millions of producers. In the past decade, however, Cassava Witches’ Broom disease has stunted plants, reducing harvests to levels that barely permit affected farmers to make a living,” said Wilmer Cuellar, Senior Scientist at the Alliance of Bioversity and CIAT.

Since 2017, researchers at the Alliance of Bioversity International and CIAT have incorporated nanotechnology into their research, specifically through the Oxford Nanopore DNA/RNA sequencing technology. This advanced tool provides insight into the deeper mysteries of plant life, accurately identifying pathogens such as viruses, bacteria and fungi that affect crops.

“When you find out which pathogen is present in a crop, you can implement an appropriate diagnostic method, search for resistant varieties and integrate that diagnosis into variety selection processes,” said Ana Maria Leiva, Senior Researcher at the Alliance.

Nanotechnology, in essence, is the bridge between what we see and what we can barely imagine. This innovation opens a window into the microscopic world of plant life and pathogens, redefining the way we understand and combat diseases that affect crops.

For an in-depth look at the technology being used in Laos and Colombia, please explore this link.

About the Alliance of Bioversity International and CIAT

The Alliance of Bioversity International and the International Center for Tropical Agriculture (CIAT) delivers research-based solutions that harness agricultural biodiversity and sustainably transform food systems to improve people’s lives. Alliance solutions address the global crises of malnutrition, climate change, biodiversity loss, and environmental degradation.

With novel partnerships, the Alliance generates evidence and mainstreams innovations to transform food systems and landscapes so that they sustain the planet, drive prosperity, and nourish people in a climate crisis.

The Alliance is part of CGIAR, a global research partnership for a food-secure future.

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Public Health from the People

There are many ways to privately improve public health. Such responses make use of local knowledge, entrepreneurship, and civil society and pursue standard…



There are many ways to privately improve public health. Such responses make use of local knowledge, entrepreneurship, and civil society and pursue standard goals of public health like controlling the spread of infectious diseases. Moreover, private responses improve overall welfare by lowering the total costs of a disease and limiting externalities. If private responses can produce similar outcomes as standard, governmental public health programs—and more—perhaps we should reconsider when and where we call upon governments to improve public health.

Two Kinds of Private Responses

Following Vernon Smith and his distinction between constructivist and ecological rationality, private actors can engage in two general kinds of public health improvements. They can engage in concerted efforts to improve public health, and they can engage in emergent responses through myriad interactions.1 Three stories below—about William Walsh, Martha Claghorn, and Edwin Gould—indicate concerted efforts to improve public health.

Walsh, a Catholic priest and President of the Father Matthew Society in Memphis, Tennessee, used the society to organize a refugee camp outside of the city and helped hundreds of people avoid yellow fever during the 1878 epidemic—one of the worst yellow fever epidemics in the country.2 Shortly after learning mosquitos carried diseases prior to 1901, Claghorn chaired the Civics committee of the Twentieth Century Club in the Richmond Hill area of Long Island and led a community-wide anti-mosquito campaign, which rid the area of potentially infectious mosquitos.3 After realizing that many of his employees were sick with malaria, Gould—president of the St. Louis Southwestern Railway—used his wealth and business firm to finance and develop an anti-mosquito campaign throughout Texas.4

These stories show how individuals recognize a public health problem given their circumstances and use their knowledge and available resources to resolve the problem. More recently, we might all be familiar with private, constructivist responses to Covid-19. We all made plans to avoid others and produce our desired amount of exposure. Many people made facemasks from old clothes or purchased them from facemask producers. Businesses, retailers, restaurants, and many others adapted in various ways to limit exposure for their workers and customers. My favorite example, albeit not relevant for most, is the so-called bubble that was implemented by the NBA, which housed teams, encouraged play, and limited infection. The NBA finished their season and crowned a 2020 champion only because of the privately designed and implemented bubble solution. The key is that the bubble pursued all of those objectives, not just one of them. All of these responses indicate how private interactions among people can minimize their exposure, through negotiation, discussion, and mutually beneficial means.

In addition to privately designed solutions, emergent public health responses are also important, perhaps even more so. Long-term migration and settlement patterns away from infectious diseases, consumption to improve nutrition, hygiene, sanitation, and the development of social norms to encourage preventative behavior are all different kinds of emergent public health responses. Each of these responses—developed through the actions of no one person—are substantial ways to improve public health.

First, consider how common migration operates as a means of lowering prevalence rates. As soon as people realized that living near stagnant bodies of water increased the probability of acquiring diseases like malaria, they were more likely to leave those areas and subsequently avoid them. Places with such features became known as places to avoid; people also developed myths to dissuade visitors and inhabitants.5 Such myths and associations left places like the Roman Campagna desolate for centuries. These kinds of cultural associations are also widespread; for example, many people in North and South Carolina moved to areas with higher elevation and took summer vacations to avoid diseases like malaria. East End and West End, in London, also developed because of the opportunities people had to migrate away from (and towards) several diseases.6

While these migration patterns might develop over decades, movement and migration also help in more acute public health crises. During the 1878 yellow fever epidemic throughout the southern United States, for example, thousands of people fled their cities to avoid infection. They took any means of transportation they could find. While some fled to other, more northern cities, many acquired temporary housing in suburbs, and many formed campsites and refugee camps outside of their city. The refugee camps outside of Memphis—like the one formed by William Walsh—helped hundreds and thousands of people avoid infection throughout the Fall of 1878.

Second, more mundane public health improvements—like improvements in nutrition, hygiene, and sanitation—are also emergent. These improvements arise from the actions of individuals and entrepreneurs, often closely associated with voluntary consumption and markets. According to renowned medical scientist Thomas McKeown, that is, rising incomes encouraged voluntary changes in consumption, which helped improve nutrition, sanitation, and lowered mortality rates.7 These effects were especially pertinent for women and mothers as they often selected more nutritious food and altered household sanitation practices. With advancing ideas about germs, moreover, historian Nancy Tomes argues that private interests advanced the campaign to improve house-hold sanitation and nutrition—full of advice and advertisements in newspapers, magazines, manuals, and books.8 Following Tomes, economic historians Rebecca Stein and Joel Mokyr substantiate these ideas and show that people changed their hygiene, sanitation, house-hold cleaning habits, and diets as they learned more about germs.9 Such developments helped people to provide their desired exposure to germs according to their values.

Obviously, there were concerted public health improvements during this time that also explain falling mortality rates. For example, waterworks were conscious efforts to improve public health and were provided publicly and privately, with similar, positive effects on health.10 The point is that while we might be quick to connect the health improvements associated with a public water system, we should also recognize emergent responses like gradual changes in voluntary consumption.

Finally, social norms or rules that encourage preventative behavior might also be relevant kinds of emergent public health responses. Such rules identify behavior that should or should not be allowed, they are enforced in a decentralized way, and if they follow from the values of individuals in a community.11 If such rules pertain to public health, they can raise the cost of infectious behavior or the benefits of preventative behavior. Covering one’s mouth when sneezing is not only beneficial from a public health perspective, it also helps avoid earning disapproval.

The condom code during the height of the HIV/AIDS epidemic is another example of an emergent public health rule that reduced infectiousness by encouraging safer behavior.12 People who adopted safer sexual practices were seen to be doing the right thing—akin to taking care of a brother. People who refrained from adopting safer sexual practices were admonished. No single person or entity announced the rule; rather, it emerged from the actions and interactions of individuals within various communities to pursue their goals regarding maintaining sexual activity and limiting the spread of disease. Indeed, such norms were more effective in communities where people used their social capital resources to determine which behaviors should be changed and where they can more easily monitor and enforce infractions. This seems like a relevant factor where many gay men and men who have sex with men live in dense urban areas like New York and Los Angeles that foster LGBTQ communities.

Covid-19 provides additional examples where social norms encouraged the use of seemingly appropriate behavior, e.g., social distancing, the use of facemasks, and vaccination. Regardless of any formal rule in place, many people adapted their behavior because of social norms that encouraged social distancing, the use of facemasks, and vaccination. In communities that valued such behaviors, people that wore face masks and vaccinated were praised and were seen as doing the right thing; people that did not were viewed with scorn. Indeed, states and cities that have higher levels of social capital and higher values for public health tend to have higher Covid-19 vaccine uptakes.13

Improving Public Health and More

“Private approaches tend to lower the total costs of diseases and they limit externalities.”

While these private approaches can improve public health, can they do more than typical public health approaches cannot? Private approaches tend to lower the total costs of diseases and they limit externalities. Each aspect of private responses requires additional explanation.

Responding to infectious diseases and disease prevention is doubly challenging because not only do we have to worry about being sick, we also have to consider the costs imposed by our preventative behaviors and the rules we might impose. Thus, the total costs of an infectious disease include 1) the costs related to the disease—the pain and suffering of a disease and the opportunity costs of being sick—and 2) the costs associated with preventative and avoidance behavior. While disease costs are mostly self-explanatory, the costs of avoiding infection warrant more explanation. Self-isolation when you have a cold, for example, entails the loss of potentially valuable social activities; and wearing condoms to prevent sexually transmitted diseases forfeits the pleasures of unprotected sexual activity. Diseases for which vaccines and other medicines are available are less worrisome, perhaps, because these are diseases with lower prevention costs than diseases where those pharmaceutical interventions are not available. Governmental means of prevention also add relevant costs. Many readers might be familiar with the costs imposed by our private and public responses to Covid—from isolation to learning loss, and from sharp decreases in economic activity to increased rates of depression and spousal abuse.14 Long before Covid, moreover, people bemoaned wearing masks during the Great Flu,15 balked at quarantine against yellow fever,16 and protested bathhouse closings with the onset of HIV.17

Figure 1 shows the overall problem: diseases are harmful but our responses to those diseases might also be harmful.

Figure 1. The Excess Burden of Infectious Diseases

This figure follows Bhattacharya, Hyde, and Tu (2013) and Philipson (2000), who refer to the difference between total costs and disease costs as the excess burden of a disease. That is, excess burden depends on how severely we respond to a disease in private and in public. The excess burden associated with the common cold tends to be negligible as we bear the minor inconvenience of a fever, a sore throat perhaps, or a couple days off work; moreover, most people don’t go out of their way to avoid catching a cold. The excess burden of plague, however, is more complicated; not only are the symptoms much worse—and include death—people have more severe reactions. Note too that disease costs rise with prevalence and with worsening symptoms but eventually decline as more severe diseases tend to be less prevalent. Still, no one wants to be infected with a major disease, and severe precautions are likely. We might shun all social interactions, and we might use government to impose strict quarantine measures. As disease severity rises along the horizontal axis, it might be the case that the cure is worse than the disease.

The private responses indicated above all help to lower the total costs of a disease because people choose their responses and they use their local knowledge and available resources to select cheaper methods of prevention. Claghorn used her neighborhood connections and the social capital of her civics association to encourage homeowners to rid their yards of pools of water; as such she lowered the costs of producing mosquito control. Similarly, Gould used the organizational structure of his firm to hire experts in mosquito control and build a sanitation department. These are cheap methods to limit exposure to mosquitos.

Emergent responses also help to lower the total costs of a disease because such responses indicate the variety of choices people face and their ability to select cheaper options. People facing diseases like malaria might be able to move away and, for some, it is cheaper than alternative means of prevention. Many people now are able to limit their exposure to mosquitos with screens, improved dwellings, and air conditioning.18 Consider the variety of ways people can limit their exposure to sexually transmitted diseases like HIV. If some people would rather use condoms to limit HIV transmission, they are better off doing so than if they were to refrain from sexual activity altogether. Similarly, some people would be better off having relatively risky sexual activity if they were in monogamous relationships or if they knew about their partner’s sexual history. That people can choose their own preventative measures indicates lower total costs compared with blunt, one-rule-for-all, governmental public health responses.

Negative and positive externalities of spreadable diseases indicate too much infectious behavior and too little preventative behavior, respectively. Hosting a party is fun, but it also incurs the internal costs of the drinks and appetizers and, more importantly, perhaps the external costs of raising the probability that people get sick. Attending a local cafe can be relaxing, but you have to pay for a cup of coffee and you might also transmit a disease to other coffee drinkers. The same could be said for many other public and social activities that might spread diseases like attending a class or a basketball game, transporting goods and people, and sexual behaviors. Our preventative behaviors from taking a vaccine to covering your mouth and from isolation to engaging in safer sexual practices emits positive externalities. If left unchecked, negative and positive externalities lead to higher rates of infection.

Overall, we should continue to think more critically about delineating how private and public actors can improve public health and overall welfare. More importantly, we should recognize that private actors are more capable than we often realize, especially in light of conscious efforts to improve public health and those efforts that emerge from people’s actions and interactions. These private efforts might be better at advancing some public health goals than public actors do. Individuals, for example, have more access to local knowledge and can discover novel solutions that serve multiple ends—often ends they value—rather than the ends of distant officials. Such cases and possibilities indicate cheaper ways to improve public health.


[1] Smith (2009), Rationality in Economics: Constructivist and Ecological Forms, Cambridge University Press.

[2] For more on Walsh, see Carson (forthcoming), “Prevention Externalities: Private and Public Responses to the 1878 Yellow Fever Epidemic,” Public Choice.

[3] For more on Claghorn, see Carson (2020), “Privately Preventing Malaria in the United States, 1900-1925,” Essays in Economics and Business History.

[4] For more on Gould, see Carson (2016), “Firm-led Malaria Prevention in the United States, 1910-1920,” American Journal of Law and Medicine.

[5] On the connection between malarial diseases, dragons, and dragon-slaying saints, see Horden (1992), “Disease, Dragons, and Saints: the management of epidemics in the dark ages,” in Epidemics and Ideas by Ranger and Slack.

[6] For more on migration and prevalence rates, see Mesnard and Seabright (2016), “Migration and the equilibrium prevalence of infectious disease,” Journal of Demographic Economics.

[7] The American Journal of Public Health published several commentaries on McKeown in 2002:

[8] Tomes (1990), “The Private Side of Public Health: Sanitary Science, Domestic Hygiene, and the Germ Theory, 1870-1990,” Bulletin of the History of Medicine.

[9] Mokyr and Stein (1996), “Science, Health, and Household Technology: The Effect of the Pasteur Revolution on Consumer Demand,” in The Economics of New Goods, NBER.

[10] See Werner Troesken’s work on public and private waterworks in the U.S. around the turn of the 20th century. See Galiani, Gertler, and Shargrodsky (2005), “Water for Life,” Journal of Political Economy.

[11] Brennan et al., (2013), Explaining Norms, Oxford University Press.

[12] For more on the condom code, see Carson (2017), “The Informal Norms of HIV Prevention: The emergence and erosion of the condom code,” Journal of Law, Medicine and Ethics.

[13] Carilli, Carson, and Isaacs (2022), “Jabbing Together? The complementarity between social capital, formal public health rules, and covid-19 vaccine rates in the U.S.,” Vaccine.

[14] Leslie and Wilson, “Sheltering in Place and Domestic Violence: Evidence from Calls for Service During Covid-19.” Journal of Public Economics 189, 104241. Mulligan, “Deaths of Despair and the Incidence of Excess Mortality in 2020,” NBER, Betthauser, Bach-Mortensen, and Engzell, “A systematic review and meta-analysis of the evidence on learning during the Covid-19 Pandemic,” Nature Human Behavior,

[15] On the great influenza epidemic, see CBS News, “During the 1918 Flu pandemic, masks were controversial for ‘many of the same reasons they are today’.” Oct. 30, 2020.

[16] On yellow fever quarantine in Mississippi, see Deanne Nuwer (2009), Plague Among the Magnolias: The 1878 Yellow Fever Epidemic in Mississippi.

[17] On these closures, see Trout (2021), “The Bathhouse Battle of 1984.”

[18] Tusting et al. (2017), “Housing Improvement and Malaria Risk in Sub-Saharan Africa: a multi-country analysis of survey data.” PLOS Medicine.

*Byron Carson is an Associate Professor of Economics and Business at Hampden-Sydney College in Virginia, where he teaches courses on introductory economics, money and banking, health economics, and urban economics. Byron earned his Ph.D. in Economics from George Mason University in 2017, and his research interests include economic epidemiology, public choice, and Austrian economics.

This article was edited by Features Editor Ed Lopez.


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