Economists and Epidemiologists Need to Get Along

Economists and epidemiologists need to get along. When economists bicker with epidemiologists about the best policy responses to the Covid-19 pandemic, policymakers get confused, and the public suffers. So it’s good that there’s a new effort to reconcile them. It takes the form of a manifesto released by 11 scholars this month: a National Bureau of Economic Research working paper with the subtitle “Bringing Epidemiologists and Economists Together.”

The conventional wisdom is that when it comes to policy prescriptions, economists put more weight on keeping the economy from shutting down, while epidemiologists put more weight on saving lives. That’s an oversimplification, of course, but there’s some truth in it. “It’s an article of faith for economists that there is no such thing as an absolute value — not even the value of human life,” Noah Feldman, a law professor at Harvard, wrote in a Bloomberg opinion column last year.

What is clear is that the two disciplines’ models don’t line up: Each group emphasizes the part that it’s good at. The new working paper, whose authors are a mix of economists, epidemiologists and experts in related fields, notes that “a reasonable critique of most economic models” is that they make “strong and unrealistic assumptions” about disease transmission that neglect the diversity of individual cases. But “a reasonable critique of most epidemiological models,” the paper continues, is that they fail to properly consider the sort of cost-benefit calculations that predictably influence how people behave in the face of health risks.

So why not just mash up the models, combining the rich detail of each to create something that’s greater than the sum of its parts? It’s a good idea but not easy, in part because it can make a model too complex. Consider this intricate cycle: Covid-19 hits, so people stop working, so they spend less. As a result, demand for labor falls, so wages fall, so even more people stay at home … so infection rates decline. Models of individual behavior that incorporate such feedback loops are sometimes “difficult to solve even with vast amounts of computing power,” the authors write.

This week I interviewed three of the authors to learn more about where this new effort came from and where it’s headed. The three are based at Johns Hopkins University in Baltimore, as are five of the other contributors. (Three additional authors are at the Federal Reserve Bank of Atlanta, the University of North Carolina and Washington University in St. Louis.)

Nicholas Papageorge, an economist, explained that he initiated the effort last year because he felt that some people weren’t taking the economic harms caused by the pandemic shutdowns seriously enough. “The conversation seemed to be about sourdough starter and catching up on Netflix,” he said. “I was deeply frustrated.”

He and Robert Barbera, a former Wall Street economist now at Johns Hopkins, wrote a blog post with a Johns Hopkins epidemiologist, David Dowdy, about how the two groups needed to stop talking past each other. It criticized the “facile story line” that the two groups were necessarily at odds. “Any hope of constructing an intelligent plan for the U.S. populace in the months ahead will require thoughtful collaboration, not conflict, between public health and economics professionals,” the post said.

“No one had sat down and said, ‘Why do we not seem to like each other very much?’” Papageorge recalled. “We just hunker down in our silos and say the other group’s dumb.”

He and another economist, Michael Darden at Johns Hopkins’s Carey Business School, got a grant from the Hopkins Business of Health Initiative to conduct six hours of frank discussions between economists and epidemiologists this past summer.

“We wanted to put something out there that would actually hit home,” Dowdy said. “People didn’t want to pull punches just to make a document that would sit well with everyone.”

One strong conclusion of the group was that there really is a balance that must be struck between health and wealth, between lives and livelihoods. Not everyone agrees with that. Eleanor Murray, an epidemiologist at Boston University’s School of Public Health, wrote in the Journal of Economic Perspectives last year, “But we need not choose between a healthy public and a healthy economy!” The authors of the new paper write that Murray “downplays that a pandemic presents policymakers with difficult trade-offs between population health and economic well-being.”

I asked Murray about that disagreement, and she said by email that “the authors continue to place economics and epidemiology in opposition. The view that the economy and the health of the public are in conflict harms our ability to improve both.” She added that government support can minimize “both transmission and economic harm.” (Papageorge’s emailed response: government aid “is not a costless proposition” and “there is thus a trade-off”).

The upshot of the six hours of talking, according to Darden, was that there should eventually be a unified model for combating disease transmission “that retains the core elements that both economists and epidemiologists hold dear without becoming so big that it can’t be analyzed.” Achieving that, he continued, “requires a willingness to compromise.”

Such a unified model is still a long way off. An interim step is to get economists and epidemiologists at least talking to each other and being clearer about where and why they disagree, said Papageorge. That step alone would make the two professions more useful to policymakers and the public.

The readers write

Thanks for your piece on Mark Spitznagel’s “safe haven” investing. You do realize that is one of the fundamental tenets of value investing, right? You can Google Warren Buffett’s 1984 talk at Columbia University called “The Superinvestors of Graham-and-Doddsville” if you’re interested in his description of exactly what you’re talking about. (As risk goes down, reward goes up, in direct contradiction to modern portfolio theory.) Benjamin Graham also emphasized the same principle as far back as 1949 in “The Intelligent Investor,” with his concept of margin of safety coupled with adequate diversification. It may even go back to his 1934 classic, “Security Analysis.”

Anant Kishore

Columbia, Md.

Quote of the day

“The cellular economy idea was that, within the existing economic and social systems, groups (or cells) of people linked by geography or shared beliefs and aspirations would coalesce and launch initiatives aimed at improving life locally or globally, making it more sustainable, peaceful and just.”

— Steve Hamm, “The Pivot: Addressing Global Problems Through Local Action” (2021)

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