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The Pandemic Information Gap and the Brutal Economics of COVID-19

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A guide to the pandemic economy: essential reading about the long-term implications of our current crisis.

The COVID-19 pandemic has unleashed a firehose of information (much of it wrong) and an avalanche of opinions (many of them ill-founded). Most of us are so distracted by the everyday awfulness that we don't see the broader issues in play. In this book, economist Joshua Gans steps back from the short-term chaos to take a clear and systematic look at how economic choices are being made in response to COVID-19. He shows that containing the virus and pausing the economy--without letting businesses fail and people lose their jobs--are the necessary first steps.

Kindle Edition

Published November 10, 2020

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About the author

Joshua Gans

27 books16 followers
Joshua Gans is a Professor of Strategic Management and holder of the Jeffrey S. Skoll Chair of Technical Innovation and Entrepreneurship at the Rotman School of Management, the University of Toronto (with a cross-appointment in the Department of Economics). Joshua is also Chief Economist of the University of Toronto's Creative Destruction Lab.

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Displaying 1 - 28 of 28 reviews
Profile Image for Rama Rao.
712 reviews99 followers
May 28, 2020
Economic choices during a health crisis

In this book, the University of Toronto economics professor Joshua Gans analyzes economics of Covid-19 pandemic. The principle question addressed here is how to balance the economy and the public health crisis. What epidemiological model should we use? Covid-19 impacts different demographics in different ways, and compounding the problem is the information flow or the lack of it made it harder. At the beginning of the pandemic, it was stated that the virus affects older population, but later we learnt that it also affects younger population with equal ferocity. The actual number of death reported for wealthy countries does not help. It should be based on percentage of population and the economic diversity of the community.

The author suggests government could lend loans to its citizens during a pandemic to ease the economic burden, and repayment of loans to the government over time through taxation. But this leads to massive bureaucracy, and such a model may work for few wealthy countries. The AIDS epidemic in Africa which devastated an entire generation depleted the workforce and hampered the economic development. Prioritizing the economy over health is not necessarily a wise choice. The author also suggests that an international harmonized response would help. But organizations like United Nations and World Health Organizations have become a strong ally of China which is mainly responsible for this global pandemic. Except for United States, no other country is calling for actions against China which may have committed criminal acts.

This book is written in hurried fashion since much of epidemiology of Covid-19 is not well understood. The author does not have any academic publications in peer reviewed journals in the economics of public health that calls for closer scrutiny of his ideas.
Profile Image for Venky.
928 reviews327 followers
May 28, 2020
As a dumbstruck world is trying to come to grips with what arguably has to be the most severe onslaught of a pandemic since the Spanish Flu in 1917, the social, psychological and economic costs of this unpredictable event have been, putting it mildly, incalculable. Phrases such as Social Distancing, Hand and Respiratory Hygiene and Basic Rate of Transmission have entered the Lexicons of everyday life and routine. How man, the quintessential social animal goes about interacting with his fellow compatriots has undergone a paradigm shift. The MIT Press, during these troubled times has endeavored to offer expert insight on matters that inform urgent local and global consequences. These titles, published in double quick time, almost ‘on the fly’, strive to step back and assume a rational, calm and systematic view of the subjects that are intended to be covered.

The first book in the series is titled “Economics in the time of COVID-19” and is authored by Joshua Gans. Holding the Jeffrey Skoll Chair in Technical Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto, Mr. Gans until 2011, was an economics professor at Melbourne Business School in Australia.

Mr. Gans begins his engaging book, by expounding on the technique of “thinking at the margin”. An integral facet of the dismal science, this notion seeks answers to fundamental questions of trade-off such as what or how much of a particular product or thing or advantage one has to sacrifice in order to obtain or possess a bit more of some other thing or advantage. In unprecedented times such as the one currently staring us in the face, this particular thinking may be conflated, and integrated with epidemiological models to secure plausible options moving forward.

There are a myriad number of choices available to countries to tackle the ongoing pandemic and bring the economy back on its rails. Sweden has gone about as though the days of the pandemic denoted nothing unusual and desisted from any type of lock down measure. This effort to induce ‘herd immunity’ however has ensured a surge of deaths in the Scandinavian country. Singapore, Taiwan and Korea on the other hand have resorted to a maniacal testing, tracing and isolation binge thereby keeping the rates of infection under check. Whatever be the strategy adopted, as Mr. Gans informs his readers, a pandemic is characteristic of two unavoidable factors:

“(1) that a pandemic hollows out our ability to maintain the same balance between health and the economy and

(2) that our choice of priority changes our options going forward; that is, they can drift.”

Hence, if we were to emulate the Swedish strategy and let the pandemic have a free reign before running its course without mitigation, this would lower economic activity, thereby leading to what the author terms “dark recession.” “This is a recession where we see a reduction in the availability, ability, and health of the workforce as the virus spreads unabated. This causes a large reduction in economic activity.”

Mr. Gans agrees with the economist Eric Budish in the latter’s observation that it is vital to possess the correct mindset when thinking about how to reach the frontier. “In particular, if you have a mindset that focuses solely on reducing the infection rate as quickly as possible, this will not necessarily get you to the frontier. Instead, that frontier involves targeting an infection rate that stops the pandemic but, otherwise, picking allowable activities that reflect both their value for the economy and their risk in terms of public health.”

One of the classic conundrums that can be birthed as a result of a pandemic is the procrastination surrounding the value called the real option value. Directing the reader’s attention to a paper penned by economists Patrick Bolton and Joe Farrell, Mr. Gans constructs a fictional scenario where there is an imperative to establish a factory each to manufacture face masks as well as ventilators. But neither of the manufacturers know which factory would be able to do each task at the lowest cost. In a free-market economy, both the manufacturers may hone in on one product as most efficient, retool for that purpose and produce the same product. The result, we will end up with either too many face masks and too few ventilators or vice versa. But there might arise another tricky scenario. Both the manufacturers might adopt a wait and watch approach to gauge their competitor’s move. Hence no one produces anything and hence, untold and perfectly avoidable delays in production.

How does one go about addressing the economic exigencies triggered by the pandemic? An extraordinarily innovative and out of the box thinking, refers to “Stopping time” a creation of Scott Ellison, who was quoted on the Marginal Revolution blog with this proposal:

“I propose temporarily stopping time. This means that today’s date, Tuesday, March 17th, 2020, will remain the current date until further notice. This also means that everything that happens in time (e.g. mortgage due dates, payrolls, travel bookings, stock market trading, contractor gigs, concerts, sporting events) will be paused. It also means that all of these events remain on the books, and will continue as planned once time is resumed.”

Another drastic suggestion was offered by French economists Emmanuel Saez and Gabrielle Zucman. Saez and Zucman opine that governments should become “payers of the last resort.” This, in the event a business is staring at the discomfiting prospect of facing a shutdown, the government would come in and pay for employees and for fixed-cost payments such as rent, utilities, and interest. “Unemployment payments could simply be made as if workers have lost their jobs, to provide an easy route to such payments. They would also allow self-employed or gig economy workers to report themselves as idle to be eligible for such payments. For businesses, if they are part of lockdowns for more extreme social distancing, they would report their costs, be reimbursed, and then any misreporting would be worked out later.”

Mr. Gans also reiterates the need for according short-term help to tide over the crisis and preventing it from ballooning into a major headache. Also price control measures may be instituted on essential products that play a role in reducing the spread of the infection.

In order to boost the efforts to introduce a vaccine, Mr. Gans advocates an approach suggested by Michael Kremer. An approach that involves the use of Advanced Market Commitments (“AMCs”). “Suppose you are trying to encourage the development and then manufacture of a vaccine. An AMC is a contract without a specific counterparty that a donor/sponsor offers to deliver the intended vaccine. The contract specifies that the provider (as yet unknown) will be guaranteed a certain payment per dose of the vaccine up to a specified number of doses. This serves to set a floor on what the provider might earn because the contract specifies a subsidy for every dose actually purchased. So, a country, for instance, may pay a low price (such as $1) per dose but the provider would receive an additional subsidy (say, $15) per dose. Thus, there is a guaranteed payoff for providers, but, in return, providers agree to cap the price they charge for the vaccine.”

Mr. Gans also lays great emphasis, and rightly so, on the need for making widespread testing both available and affordable.

“Economics in the time of COVID-19” is a handy primer for all those who are interested in a rejuvenation of the global economy, while at the same time, preserving the health and welfare of the citizens.
Profile Image for Jake.
198 reviews37 followers
May 4, 2020
I read the free version available on this website in about two sittings after work. I thought it was inforamtive, especially chapter 5, about the testing economy. I had no idea creekstone did such a thing. Chapter 7 about how to rally innovation seems to be saying a lot of obvious things, but maybe obvious should be welcomed. I would like to thank MIT for putting this book out for free so quickly. There's a typo in chapter 2 dealing with the equation at the top (i believe?) that's Sum(2^i,{i,0,32}) but I may just be confused by its placement in the book. I'm not an economist, I'm an engineer by training although I did study political science for a while so take this review with that caveat. For me a book like this is welcomed by someone like me because it puts something very real to my day to day in sharper focus and I can get a look into the minds of those who rule me by listening to the people who have real effects on policy and decision making. Again, Thanks Joshua.

I'd like to have heard more about the economics of a more isolationist world that may be coming post covid. Reading this book that seemed like the big elephant in the room. I'm not sure if China or the United States is Weimar Germany in that exchange but either way it scares me.
Profile Image for Todd.
104 reviews61 followers
May 12, 2020
The US was caught with its pants down by the pandemic, that much is clear. Part of the problem was that the experts were not listened to. For the most part, for late 2019 and early 2020, we are talking about high ranking public officials, epidemiologists, and public health experts. The mid and long term response will require thinking by economists, political scientists, epidemiologists, and public officials, in concert with the politicians in power at the local, state, and federal level.  

There is some helpful thinking here, if we keep the scope and limits of economics and economic modeling in mind. It is helpful to think this pandemic through using a framework. Otherwise we are responding to every issue sui generis in situ; that is subject to a lack of proportion and a lack of discounting.  At this point an emerging--fast and dirty--framework is better than no framework 

The extent to which public intellectuals are able to help mobilize a mid-term and long-term response is now also becoming evident. The problem is this. While the turnaround seems faster than before, it is still not fast enough. As Gans made clear, he was writing this book in March 2020. It was released by MIT Press on April 21, 2020. However, the timeframe of this pandemic to date has been so quick. By the second week of May, considerable sections had been outstripped by conditions on the ground. 
Profile Image for Peter Tillman.
3,408 reviews302 followers
Want to read
May 23, 2020
Nature's review of the first edition:
https://www.nature.com/articles/d4158...
Excerpt:
"It’s a shame that policymakers did not have books such as Joshua Gans’s Economics in the Age of COVID-19 to lay out the issues for them in January. It is remarkable that they do already. Gans completed this book at breakneck speed, by late March. His attempt to explain the economic thinking that should guide policy is useful, but inevitably limited. With the situation and knowledge changing daily, unfurling events will always render some aspects of such an analysis obsolete. In this sense, Gans, an economist at the University of Toronto in Canada, has taken a brave shot at an impossible task. Ultimately, economic thinking will need wider horizons. ...

Is the past any guide? Gans touches on the only comparable event in recent times, the 1918 influenza pandemic. The economic consequences of that were complicated because it occurred directly after a global war (mobilization of troops exacerbated that outbreak). Gans might also have mentioned the AIDS epidemic in Africa, which has in some regions been devastating enough to orphan generations, deplete the workforce and hamper economic development. Prioritizing the economy over health is not necessarily taking the long view.

Gans does a good job fleshing out the requirements for an exit strategy. ..."

Note that a second edition is planned for this fall: https://www.goodreads.com/book/show/5...
Profile Image for Harmony Williams.
Author 20 books149 followers
September 25, 2020
I read this hoping for some insight into the state of the global economy as we continue to weather and (fingers crossed) come out of the pandemic. There was a lot of discussion about policy that should be used in the case of an epidemic to best save lives and keep from going into a dark recession, but very little about what to expect in the future.
Profile Image for Rodrigo.
380 reviews18 followers
October 22, 2022
Having lived the whole thing, a lot of info does not sound new. But the register is very important for the future.
Profile Image for Ying Xuan .
38 reviews12 followers
May 25, 2020
An academic read that help me make sense of the Covid-19 pandemic in an economic lens. Perhaps why it was insightful for me was b/c I do not have Economics background.

I thought that the book was pretty well-structured, from the immediate choices that decision makers have to take at the start of the pandemic, to post-pandemic recovery measures. Also really appreciated the succinct summary points at the end of each chapter. The author also uses quite a number of analogies throughout the book - some more helpful than others.

Watching how the pandemic unfolds as I read this book also makes it an interesting read. Since it was published in Apr 2020, this book does not taken into account developments since then. Some concepts were also a touch-and-go, and I would have appreciated further insights. Despite so, this is a really much-needed TLDR in the chaotic pandemic situation today. Looking forward to the polished version of the book that will be published later this year!

Notes:
- Main problems with a pandemic like Covid-19 is the lack of knowledge (uncertainty) and the time factor.
-Decision makers need to act decisively while weighing the costs and benefits of the different options. Options available at the onset of the pandemic include 1) Hygiene practices 2) closure of national boundaries 3) social distancing
- Many other decisions to grapple with include: declaring essential services vs non-essential services (evaluated on the basis of economic value + density & risk) // Movement restrictions: 'blanket' martial law approach VS targeted approach (isolating more vulnerable groups / people with higher chance of spreading) // Treatments & Release // Rationing of vaccines, who to prioritise // Financial assistance for economy recovery
- Centralisation > decentralisation - abandonment of market processes for public good as the govt would do a better job at allocating resources to wherever that has a largest impact.
- Setting price controls, preventing price gouging b/c if we let market forces dominate, only the rich will be able to lay hands on the necessary resources (eg. masks, hand sanitizers) and deprive of the people who live in densely populated areas who would require it more. // Having a war-like resource allocation mindset, tapping on idle resources to support the manufacturing effort for essential supplies.
- Covid-19 as a DARK recession (we can't produce --> SS remains low even tho DD is high). We want to be able to 'pause time'. To do so, govt can provide payments, subsidies, loan guarantees to alleviate fixed costs of business owners eg. loans, mortgages, rents, utilities. // Post crisis measures - Macroeconomic policies to simulate and accelerate the recovery.
- Testing economy - 1) rapid testing (to make sure that people are 'certified safe') 2) Contact tracing 1) and 2) both to improve knowledge, lower risks and to be able to take targeted actions.
- Innovation and R&D for vaccines - BAU market rewards and processes are not suitable, but instead there's a need for govt interventions (innovation for public good). Advanced market commitments as a possibility to spur pharma coys to come up w/ affordable vaccines (coys to be compensated subsidies) --> prioritising the solutions that are closer to market (build capacity, undergo trials)
- Mgt of pandemic needs to be GLOBAL even though immediate impacts are local. Call for a global pandemic response units with public health & economic expertise (ref. IMF that was set up after WWII). Not to rest on our laurels even if 'victory' over Covid-19 is obtained - we need RESOLVE to mitigate costs of future pandemics.
- A catastrophic world with climate change, nuclear threat, pandemics, what to priortisie? Pandemics seem to be a lower hanging fruit compared to the other treats (lower cost, higher benefits) --> only a small portion covered. I don't fully agree with that, but would love to see the author elaborate further.
Profile Image for Chris Esposo.
670 reviews29 followers
July 11, 2020
This is an good basic "proto"-boom on the economic policy of Covid-19 (and also partially Pandemics in general) from a cost-benefit analysis purview, roughly inline with a principles microeconomics level (though maybe the maturity of a "intermediate student").

Because of the nature of the phenomena, and the fact that the book is more or less being published in "real time", it's akin to a "hot take" (for textbooks/monographs anyways) , and the authors claim it will be followed up by a more substantive offering in the fall.

Still, for what this is, it's a sound analysis of the how one ought to organize a pandemic response from an economy standpoint, and introduces some new terms as well as some visual tools appropriated from standard microeconomics, especially comparative statics, to assess policy decisions and choices. In particular, the notion of the "dark recession", a economic recession induced from a non-economic reason (e.g. natural disasters like virus-pandemics, earthquakes, storms), and explains policy analyzing some short step-wise results of policy on an economy's production possibilities frontier between policy to "help the economy" and policy to maintain population health. These are interesting, but unfortunately, the United States seemed to have done mostly the opposite of all recommended policies within this context.

There's also a small section on the nature of viral spread, with the author producing a functional intro to SIR models and infection-rate curves. A better layman introduction to this topic can be found in Bob Shiller's book "Narrative Economics" in the appendix.

Other sections include a cursory study of the testing economy (a status where the economy is running, but with a robust testing regime because the virus was found to be resistant to vaccine, or the nature of the virus was that immunity was temporary, as well as some comparative analysis of different regions/nations experience with the pandemic based on their fidelity (or lack thereof) to such a testing regime. Other topics also include a brief analysis and observations of the immediate effect of the virus (or the viral news) on the real / retail economy, and what it says about the nature of purchasing runs. I would like more of this macroeconomic purview for the later book.

Overall, I am satisfied by this short, yet timely book on the topic. I look forward the more substantive (and hopefully technically detailed) treatment in the fall. It is not a book for academic economist. However, policy people might find some use in it. But the most useful potential reader is the general citizen, which needs to be well-informed on the correct nature of government response to this natural disaster, so that they can make sound judgement on the efficaciousness of their local governance' performance.
Profile Image for Janardhan.
25 reviews3 followers
May 31, 2020
This is a splendid work by Mr Joshua Gans, during this tough times he had come out with analyzing not just economic factors but also political and social costs associated with...I thank MIT press for offering a free version available on their website.
Joshua gans used his splendid economic knowledge in giving a perfect picture for the underlying adversity and how various governments are acting on to prevent the forthcoming Dark recession ,
where economic activity is low, production is low and also the people are also falling sick.

Mr Gans very efficiently and aptly compares the present awful crisis with the historical evidences and creates a sound analogy ,he emphasises on the requirement of a staunch federal policy with adhering to recovery of economy by controlling macro economic policy and also increasing public health infrastructure.

Author vividly focuses on Testing ,Innovation ,Reemergence of virus,Recession of unique nature anticipated to come, and the mathematical surprises associated with the COVID 19 crisis in perfect detail.

The various stages in opening up of economy in this globally interconnected situation is explained ,The takeaway from this book is to make a serious note that governments (especially the once who spend billions of dollars on their national security needs to relook as they have adversely failed the anticipate such a huge pandemic and unpreparedness.

I liked the AMC model of encouraging Innovations for coming out with a vaccine or drug and also the stock market factors associated with it.I admire authors appreciation in bringing in Bill Gates resolve in his constant work on viral infections and their impact ,his warning of unpreparedness and huge economic face offs correlated with these kind of pandemic since years.

he gives a positive outlook to the entire crisis as coronavirus is also not that grave in causing deaths and it can be handled and we will win the war but the future victory has to be taken in a very careful way and changed approaches have to come in place as IMF and UN came after not just one but 2 world wars and same suit has to follow to bring a Global Pandemic Response Institution with enough teeth to handle future catastophes.
I appeal everyone to read this book during this resilient time.
1 review3 followers
August 12, 2020
Written with a sense of urgency, the strength is I needed te first few chapters which offer an emotion-free implicit critique of governments that delayed responding forcefully when they should have known better. The author admits to have written in haste and it shows especially in the later chapters which clearly wandered far from his areas of expertise. Nonetheless one wishes that governments had taken on his central argument that health trumps the economy.
Profile Image for harry panini.
80 reviews8 followers
May 12, 2020
This books came in the midst of our global crisis with a clear message from its title. It carefully explains the crisis via the economy perspective and how it effects us all not only now but also in the upcoming near future.
I personally enjoy the book and looking forward to the final version of it once we declaimed the victory against COVID-19
Profile Image for Riccardo Lo Monaco.
326 reviews1 follower
August 30, 2021
Pumped out too quickly and became outdated almost immediately. Reads more like an old newspaper editorial than a definitive book on the subject.

Nonetheless I appreciated the section about vaccines since it was written before the vaccine and therefore seems a bit more candid than whatever information would be currently attainable.
Profile Image for Greg.
330 reviews
July 31, 2020
The book did its best in providing the economics of Covid-19. The knowledge of this pandemic is evolving as of this writing. Nevertheless, I found the ideas valuable to see the economic impact of this to all aspects of life of humanity today.
35 reviews3 followers
May 1, 2020
Thank you Joshua Gans and MIT Press for producing this timely book. I look forward to the updated version in late 2020.
14 reviews
May 17, 2020
Good overview and helpful to see it all layed out. May date, but it is timely and to the point.
Profile Image for Mariana.
173 reviews8 followers
May 22, 2020
Well written and lucid, and yet - I did not learn a thing (I blame my lack of focus on the pandemics)
25 reviews
May 26, 2020
Very useful book to understand the true complexity of dealing with a pandemic. Highly recommended
Profile Image for Emma.
433 reviews30 followers
February 24, 2021
Written in april 2020. May have been useful then.
Now, outdated by the events.
Profile Image for Visveswaran Vishnu.
9 reviews1 follower
May 3, 2021
Informative. And repetitive . As the book wrote in hurry, the ideas yet to be scrutinised.
Profile Image for Hoa Le.
7 reviews
May 5, 2021
Cuốn sách viết kém, nội dung không đúng với tên sách.
Profile Image for Dr Aneez A.
41 reviews3 followers
June 19, 2021
The concepts described are valuable. But sometimes ,as they say,there is no single correct answer.
Trade-off between health and economy
Vaccine AMC
Lockdown
Next pandemic preparedness
More
Profile Image for David Clulee.
35 reviews3 followers
June 4, 2020
What's that expression - don't judge a book by its cover!

If not for smart marketing and the catchy graphics I'd not have paid $10 bucks for this.

Like most people who have been furloughed, I've had plenty of time to review and digest numerous media and commentary from a wide range of sources. Some left, some right, some in the middle. Gans trots out a playbook that we all know about - how governments and the body-politic balance health and economy?

That's a moot point. We all know this is the central issue.

I was expecting some commentary on the inevitable paradigm shifts in Tourism, Retail, and Politics that are likely to come from this. Nothing about how "creative destruction" catalyzed by exogenous shock is painful but ultimately this is what drives further economic growth and innovation ushering in new wealth?

Didn't really hit the mark in my opinion for an experienced Economics Professor. Banal analysis.
Profile Image for Charlie.
66 reviews1 follower
August 26, 2020
Great little book although already a bit dated as the information has been changing rapidly. The book covers all important subjects around COVID, including virus reproduction rate, supply shortages, testing, social distancing, economic recession, returning to work, network effects, innovation and vaccine pricing from the lens of a fairly simple macroeconomic framework that a general audience could understand. The writing is common sense and clear.
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