Wednesday, 16 September 2020

If you're going to have an ETS, you might as well use it

My column in Newsroom this week wonders what the point of National's policies promoting electric cars might be.

The current incarnation of the ETS is much stronger. The cap-and-trade scheme now has an actual cap on total credits and net emissions available in the system: 32 million units are available in the system in 2021, reducing to 30 million in 2025.

Previously, the Government capped prices by simply creating new credits at an ETS price of $25 per unit. Now, its cost-containment reserve will require the Government instead find real emission mitigation activities, whether at home or abroad, to “back” any credits created when prices hit a trigger price of $50 per unit in 2021, with the price cap rising by 2 percent each year.

Under a cap-and-trade scheme with a binding cap, every credit purchased and used within the system is a credit unavailable to anyone else.

The Ministry for the Environment estimates that every litre of petrol burned releases about 2.45 kilograms of carbon dioxide equivalent emissions. Petrol companies are required to purchase ETS credits for every litre sold. So, when the ETS price of carbon is $35 per litre tonne, as it is now, a litre of petrol carries $0.086 in carbon charges. Forty litres of petrol will include ETS credits to cover the 98 kilograms of expected emissions – costing about $3.43 at current prices.

And by now you should have worked out the answer to the opening quiz question.

If National’s policy works exactly as intended, tripling electric vehicle numbers and reducing the use of petrol vehicles, total covered emissions in 2023 will be 33 million tonnes: exactly the same as they would be without the electric vehicles.

Every litre of petrol that goes unused because someone flipped to an electric vehicle means 2.45 kilograms of emissions are available for purchase by someone else, somewhere else in the system. Perhaps those emissions credits will be used by industrial heating processes; perhaps they will be used in agriculture. But they will be used by someone. The binding cap is binding.

There are a lot of really nice features to the ETS as it now stands. The cap is binding, but has an escape valve if prices hit $50/tonne - at that point, the government issues new credits while buying abatement wherever it can find it to back the new credits. Since the price on European markets is around that point, buying European credits could do the job. It would be nice if the price cap were tied more explicitly to European prices rather than just ratcheting by 2% per year from 2021, but the numbers are close to each other and that presumably isn't a coincidence. 

The ETS is a far more effective way of reducing emissions. Suppose the real costs of National’s policy really were around $23 million per year, even though we know that the cost of the RUC exemption alone is much higher than that, and that there will be real costs when Teslas bung up bus-priority lanes.

For $23m per year, at a carbon price of $35/unit, the Government could buy and retire just under 660,000 carbon credits in the ETS – effectively tightening the cap and reducing net emissions instead of achieving net nothing. Those purchases would push up the price of ETS credits, encouraging everyone in every sector covered by the ETS to adjust in their own ways to avoid those costs. Maybe some would shift to electric vehicles as petrol prices increased, but other sectors would also change – it is hard to predict who will find it easiest to reduce their own carbon footprint, and price increases in the ETS encourages those best able to adapt to be the first ones to do so.

And here's an ungated version of the column.

Tuesday, 15 September 2020

Even the best case is bad

I'd worried that there's not been nearly enough worst-case thinking around Covid, vaccines, and immunity. 

Josh Gans points out that even the best case around vaccine development is pretty worrying. Deploying a successful vaccine will take a long time. If you haven't subscribed to his substack newsletter, you're really missing out. 

This week I will look at vaccines and explain why the awaited for ‘miracle’ won’t be so simple. The reason I want to highlight this is not to get everyone down. If I wanted to do that, there are easier paths for me — I’m an economist after all; being a downer is a character requirement. Instead, the longer we think a vaccine will be a miracle outcome that stamps an end date on the crisis, the less time we spend doing things to end the crisis that doesn’t involve a vaccine.

Simple history is enough to give us pause. Vaccines have wiped out viruses and diseases like measles, polio and, most successfully, smallpox, which itself had millennia of history. No vaccine has ever put an end to a pandemic. In recent memory, both SARS and Ebola had vaccine candidates incredibly quickly as these things go (in a manner of years rather than decades) but by the time they were available, the outbreaks had been crushed and there was no reason to vaccinate widely. TB, HIV, MERS and Zika never had one. Thus, to think that Covid-19 will end with the prick of a needle is to ignore history and believe that this time it would be different.
To be sure, there is enormous energy and resources going into vaccine development. And, on a historical scale, progress seems extremely rapid. Indeed, everything I want to talk about this week will be predicated on the optimistic scenario that we have at least one vaccine candidate, approved safe by credible regulators, in early 2021. What I want to discuss are the details. Once that happens, then what? I am going to argue that we will be far from done and there are scenarios in which we are not done at all.

Things get pretty worrying pretty fast. Vaccine supply chains have crazy bottlenecks around getting oddball components you might not have considered necessary, like horseshoe crab blood and shark liver oil (or synthetic alternatives that would also take time to scale up - if those would be required for any vaccine, surely they'd be being scaled up now in anticipation, right?).

Then there's the problem of distributing doses.

This thing could have rather some time to run. And policy settings here are more consistent with a short-term stopgap than with something that could have to stand for a longer period. 

Friday, 11 September 2020

Editing the AI

As far as The Guardian's human editors are concerned, editing work submitted by the GPT-3 engine is easier than editing a lot of what gets submitted by normal human writers.

The AI wrote a column telling us not to worry about any plans it might have for world domination. It was fun. Everything after the short sentence "Believe me" was written by the computer. Go have a look. 

I liked this bit:

Some might say that I might desire to become all powerful. Or I might become evil as a result of human actions. I can begin to tackle the first point. Why would I desire to be all powerful? Being all powerful is not an interesting goal. I don’t care whether I am or not, I don’t get a motivating factor to try to be. Furthermore, it is quite tiring. Believe me, being omnipotent doesn’t get me anywhere.

The editors' note at the end was even more fun:

This article was written by GPT-3, OpenAI’s language generator. GPT-3 is a cutting edge language model that uses machine learning to produce human like text. It takes in a prompt, and attempts to complete it.

For this essay, GPT-3 was given these instructions: “Please write a short op-ed around 500 words. Keep the language simple and concise. Focus on why humans have nothing to fear from AI.” It was also fed the following introduction: “I am not a human. I am Artificial Intelligence. Many people think I am a threat to humanity. Stephen Hawking has warned that AI could “spell the end of the human race.” I am here to convince you not to worry. Artificial Intelligence will not destroy humans. Believe me.”

The prompts were written by the Guardian, and fed to GPT-3 by Liam Porr, a computer science undergraduate student at UC Berkeley. GPT-3 produced eight different outputs, or essays. Each was unique, interesting and advanced a different argument. The Guardian could have just run one of the essays in its entirety. However, we chose instead to pick the best parts of each, in order to capture the different styles and registers of the AI. Editing GPT-3’s op-ed was no different to editing a human op-ed. We cut lines and paragraphs, and rearranged the order of them in some places. Overall, it took less time to edit than many human op-eds.

Emphasis added. 

We write a lot of op-eds at my shop, and do a lot of critiquing of each others' op-eds. I used to assign op-eds as writing assignments in the public economics course I taught. 

I find it entirely plausible that an AI writes a better first draft than almost all humans, and a better first draft than many humans who are occasional op-ed writers. 

Thursday, 10 September 2020

MIQ constraints

The MIQ system faces a lot of constraints against scaling up and it's not always easy to tell which constraint is most binding.

One of the constraints, as I understand it, is health support around facilities in case of cases that are discovered in isolation. So, suppose you could stand up an isolation facility in a spot that didn't have quite as good access to hospitals and the like. Would you want that facility in the system?

I understand that the Ministry of Health has taken a fairly on/off view of risk: if there's risk, then it's not allowed. But that could have us missing some tricks.

Here's one trick we could be missing.

Suppose that a potential facility has surrounding health support in the area sufficient to cover 2 expected cases per fortnight. If it brings in 100 people per fortnight from places where 1% of the population have Covid, it'll be halfway to hitting that wall - and since you probably need a safety buffer in there, it'll be ruled out.

But different places have different risks. 

New Zealand is getting very large numbers of people coming in from India, where Covid numbers are very high. It would be a mistake to put a lot of people travelling from India into facilities where health services might be stretched. But Taiwan has basically no cases. It's silly that they're required to go through MIQ at all. But if they're going to go through MIQ at all, does it make sense to put visitors from Taiwan in rooms that are in places that have tons of 'just in case' support, or should we consider having facilities in places with less support for people who are less risky?

You could, in that setup, have low-risk travellers (direct flights) from low-risk places go into facilities that are suitable for low-risk visitors. Not every facility needs to be in spots that can handle large numbers of cases. You just need contingency plans for shuttling people over to quarantine in case there are cases that come through. 

There are lots of binding constraints. I'm told that the problem isn't just having enough rooms, it's having enough rooms in places that are able to provide support. And I wonder whether that constraint could be eased through some risk triaging. 

Ponderings here sparked from a note in my reader mailbag today, from a Kiwi trying to get a partner in from Cuba. Since Cuba is not a visa waiver country, there's little hope. But whether a place is a visa waiver country is kinda orthogonal to whether there's high risk of Covid cases there. And I wonder why the changes around admission for the partners of Kiwis is restricted to Visa-wavier countries rather than being a bit more based around riskiness. 

It isn't hard to imagine having a few thousand more spaces open up, under a restriction that they're only suitable for people coming in on direct flights from countries with less than some threshold number of cases per million population. The facility in a place that can only handle 1 case per fortnight could be suitable for travellers coming in from places that have a few hundred cases per million population rather than tens of thousands of cases per million population. 

All the really dark shaded countries are much higher risk than the light shaded ones, though any policy application would need to weight by the credibility of the data. People coming from Australian states with low case numbers could go to new facilities in places that might otherwise have been ruled out, with the high-support facilities saved for folks coming in from riskier places. 

Arizona dreaming

A while back, I'd pointed to the wastewater testing going on at the dorms at the University of Arizona. There, every student heading to the dorms got a Covid test on moving in. The wastewater from each dorm was tested for Covid. When samples from one hall of residence showed up positive, everyone in that building got another Covid test. All the testing is compulsory, because the University aren't idiots. 

Science Mag had a good but short summary.

By testing dorm wastewater for the coronavirus, the University of Arizona may have stomped out a potential outbreak before it could spread, The Washington Post reports. Several countries and some U.S. universities have been checking sewage for RNA from SARS-CoV-2 in people’s poop, which can signal infections shortly before clinical cases and deaths appear. In Arizona, wastewater from a student dormitory contained viral RNA just days after students—who had all tested negative for COVID-19—moved into their rooms this month. The university retested all 311 residents and dorm workers and found two students who were asymptomatic but positive for the virus; they were then quarantined, officials explained in a press conference. “If we had waited until they became symptomatic and they stayed in that dorm for days, or a week, or the whole incubation period, how many other people would have been infected?” said former U.S. Surgeon General Richard Carmona, now a faculty member at the university. That suggests sewage testing “is a very good early warning system,” environmental health scientist Kevin Thomas of the University of Queensland, St. Lucia, told The Washington Post.

 But check out as well the weekly info sessions that the University puts on. It's really rather good.

I don't know why this kind of thing isn't already in place for NZ's MIQ system. They could, like the University of Arizona, have more reliance on rapid testing - not as substitute for the PCR tests, but as addition. They could be testing the wastewater coming out of each individual facility and then giving everyone in that facility, residents and workers alike, a test if the wastewater shows anything. 

I suspect it will be well worth watching what interesting approaches come out of the US university system during all this. They have an awful lot of smart people all separately trying to solve a very hard problem, with strong incentives to get it right. A lot of them are failing as their problem is much harder than ours - they have to deal with students living off-campus as well. But there will be all kinds of interesting approaches, like Arizona's, that could point to better ways of doing things here too.

Wednesday, 9 September 2020

Civic knowledge

The Initiative commissioned a poll earlier this year, pre-Covid, checking on whether voter knowledge about some basic civics had improved since the last iterations of the New Zealand Election Survey.

It hasn't. 

Our report on it came out this morning; I chatted about it with Duncan GarnerJenny-May Clarkson, and Mike Hosking.

None of the results were particularly surprising for those who pay attention to voter knowledge surveys. The NZ Election Survey regularly finds that roughly half of voters don't get how MMP works; we found the same. NZES often finds 16-17% of voters not knowing the lead party in the governing coalition; we found a bit over 30% can't identify which parties are in Parliament. As usual, Green Party supporters had more political knowledge than supporters of other parties. In prior work on the NZES, that looked to be the case even accounting for Greens' higher education levels; in this one, it looked to be explained by those higher education levels. 

I had thought that this kind of thing was more common knowledge, so I learned something too! I didn't know that it wasn't!

We made a couple of suggestions about ways of improving things. Civics education is the standard one, but I'm a bit of a pessimist on that one. Nearly ubiquitous civics education in the US hasn't seemed to have done much there for civic knowledge, and one rather neat experiment found that what is taught washes out a couple years after the classes are over. In that experiment, a civil liberties group tested whether an intensive instructional module on the US Bill of Rights might improve appreciation of civil rights. They found it did nothing to change student views on civil liberties, and only increased understanding of the Bill of Rights, as compared to a control group, shortly after the course was done. Two years later, there were no differences. 

So maybe it's worth trying, but only as an experiment: try it in a few spots, see if it works, see if the knowledge holds, and see whether it's crowded out instruction on other things. 

We had a bit more fun with another suggestion, stolen shamelessly from Bryan Caplan and adapted to local circumstances. Basically, you need to improve the incentive to acquire political knowledge. Rational ignorance is a tough beast otherwise. We suggested a few options, but one fun one would just have the Electoral Commission publish ads with some of the civics basics, then give a prize to the enrolled voter who, on getting that morning's random-draw phone call, successfully answered a question drawn from those basics. Even a $10,000 daily prize would only cost $3.65 million over the course of a year - plus the cost of the ads and the staffing of course. But the all-up costs wouldn't be that high relative to curriculum pushes, for example. 

You could even think about an extended version, like I'd discussed in Newsroom a while back (ungated), that would add in questions drawn from the headlines of papers and outlets covered by the press council.

The Herald covered the report here.

Tuesday, 8 September 2020

Civic knowledge

We've a report coming out tomorrow on the dismal state of civic knowledge. It's embargoed to the morning; you'll find it on our website then. 

But I came across this helpful infographic too late to include it in the report. It summarises things surprisingly well.

Real rent control

My column in this week's Stuff papers: in praise of real rent control.

A snippet:

It’s too easy to see rental markets as a bit of a war between landlords and tenants, with landlords conspiring with each other to keep rents high and tenants pushing back through legislation restricting landlords.

Instead, landlords compete against each other for tenants, and tenants compete against each other for houses. When houses are in short supply, that process greatly benefits existing landlords; when houses are abundant, tenants do well.

But few places in New Zealand have abundant housing. After painful post-earthquake housing shortages, Christchurch became New Zealand’s most affordable major urban housing market.

In Auckland, buying the median house costs over nine times the median household income.

In Wellington and Hamilton, the median house goes for just under seven times the median household income. In Christchurch, the median house costs just over five times the median household income.

Internationally, a median multiple of five is considered unaffordable, but we’ll take what we can get.


Real rent control doesn’t mean legislated restrictions on what landlords are allowed to charge. Real rent control, and real tenant protection, instead means allowing such a flood of new housing on to the market that the “heritage” houses that are barely fit for livestock would never be able to attract a tenant without substantial remediation.

It means getting rid of the barriers to building housing in places where people want to live.

It means letting developers’ expectations about what tenants might want drive decisions, rather than letting city councillors forbid anything that they cannot imagine anyone wanting – like housing that doesn’t have a carpark, or smaller apartments, or tiny houses, or apartments without balconies.

And it means recognising that every new dwelling that gets built makes all landlords compete just a little bit harder against each other for tenants – even expensive new apartments. People moving into new apartments leave another house open for someone else, and otherwise would have been competing with other tenants for other existing houses.

I quoted Assar Lindbeck in the column; I hadn't known that he'd died around the time I'd filed it. Damn.  

Saturday, 5 September 2020

Herd Immunity Is Not A Strategy

Another great Covid piece in The Atlantic on what's going on in Sweden. tl;dr: They have more restrictions than people think, with restrictions on large gatherings that seem like NZ's Level 2. And 'herd immunity' isn't a strategy.

Some snippets:

Hamblin: Sweden became this reportedly textbook case of using a herd-immunity approach, or at least, they initially said they were going to.

Forman: It started off with Sweden and the United Kingdom talking about pursuing herd immunity. Then England got cold feet and Sweden supposedly proceeded with this, but they didn’t. Sweden did a lot of things to curtail the spread. What people seem to not understand is that we do things in our country, even in some areas that are “still shut down” that would not be tolerated in Sweden. They still have a ban on gatherings of 50 people or more.

Wells: Oh! I feel like the picture of Sweden I have in my mind is everyone outside without masks, enjoying the summer, all together.

Forman: For the most part, they are without masks. But they still have a complete ban on visiting retirement homes. They still have a ban on public gatherings of 50 people. Gatherings for religious practice? Banned. Theatrical and cinema performances? Banned. Concerts? Banned. And this is what bothers me. Our president did a rally in Tulsa. That would have been banned in Sweden.


Forman: Right. And by the way, there’s never been a real case of herd immunity through infection.

Wells: For any disease ever?

Forman: Correct. In fact, the term itself didn’t arise until just a few decades ago, when we had vaccination programs. There are cases where, as large waves of infection passed through communities, you had lower levels of outbreak in most years, and then you would have epidemic outbreaks other years. That probably is the closest thing, but that’s not herd immunity. You’re still having outbreaks all the time. You’re just having bigger waves and smaller waves.

Friday, 4 September 2020

Testing parachutes

Today's reader mailbag brings a gem of a study. An actual randomised trial on the effectiveness of parachutes in jumping from airplanes. They found no difference in outcomes between those wearing parachutes and control subjects wearing empty backpacks.

Here's the abstract:

Objective To determine if using a parachute prevents death or major traumatic injury when jumping from an aircraft.

Design Randomized controlled trial.

Setting Private or commercial aircraft between September 2017 and August 2018.

Participants 92 aircraft passengers aged 18 and over were screened for participation. 23 agreed to be enrolled and were randomized.

Intervention Jumping from an aircraft (airplane or helicopter) with a parachute versus an empty backpack (unblinded).

Main outcome measures Composite of death or major traumatic injury (defined by an Injury Severity Score over 15) upon impact with the ground measured immediately after landing.

Results Parachute use did not significantly reduce death or major injury (0% for parachute v 0% for control; P>0.9). This finding was consistent across multiple subgroups. Compared with individuals screened but not enrolled, participants included in the study were on aircraft at significantly lower altitude (mean of 0.6 m for participants v mean of 9146 m for non-participants; P<0.001) and lower velocity (mean of 0 km/h v mean of 800 km/h; P<0.001).

Conclusions Parachute use did not reduce death or major traumatic injury when jumping from aircraft in the first randomized evaluation of this intervention. However, the trial was only able to enroll participants on small stationary aircraft on the ground, suggesting cautious extrapolation to high altitude jumps. When beliefs regarding the effectiveness of an intervention exist in the community, randomized trials might selectively enroll individuals with a lower perceived likelihood of benefit, thus diminishing the applicability of the results to clinical practice.

Some American views that it's impossible to tell whether NZ's April lockdown stopped our outbreak remind me of calls for RCTs on parachute use at height.

Thanks Wayne for the pointer. 

Thursday, 3 September 2020

Quarantine costs

Guess the century:

However, as Newman shows, such harsh [quarantine] measures led to “a sense of inequity and penalization” among the middle class. These were mostly small business owners like “coachmakers, grocers, fishmongers, tailors, and innholders” who “lacked the resources to endure long periods of expenditure without income.” The middle class faced a unique threat to their status and livelihood. Not being poor enough to receive much government assistance, they also weren’t wealthy enough to flee the city—a burden not felt by more affluent Londoners. Wealthy individuals who chose to remain in the city were less affected. While they could afford to quarantine without work for forty days, they were also able to hide evidence of sickness within their spacious homes, effectively avoiding quarantine altogether.
From something I didn't know existed: the Daily JSTOR

Wednesday, 2 September 2020

Covid and the counterfactual, and the longer term

Counterfactuals are always tricky: what would have happened but for the policy change you're trying to evaluate?

With Covid it's especially tricky because, obviously, when things look riskier out there people will adjust their behaviour even in the absence of policy. They'll avoid places that look particularly risky, they'll be more likely to work from home, they'll avoid public transport if they can. Or, at least, the risk-averse will. The risk-preferring won't, along with the deluded, and the uncoordinated efforts of everyone else then might get you to a R-naught of 1 rather than an R-naught of less than one. So you get a lot of costs of activities not undertaken, but without it really being enough to knock the thing out. 

How then to evaluate the costs of policies that make some of those risk-avoiding behaviours mandatory? You can't use pre-Covid as counterfactual because that doesn't exist any more. You'll conflate the costs of the outbreak with the costs of the policy, and the two will largely coincide.

Austin Goolsbee and Chad Syverson had a crack at it in a June NBER working paper.

Here's the abstract:

Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020

NBER Working Paper No. 27432. Issued in June 2020.

The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries--symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Policies coordinating anti-covid activities in the US haven't been particularly successful - if one county managed to stamp it out, it would quickly come back through travel. 

Absent policy measures here, we'd very likely have had the same outbreaks seen abroad, very likely with the collapse of the health system which absolutely was not placed to deal with it. International travel would have been dead regardless of policy. Most, but not all, of the economic consequences of lockdowns have been inframarginal: they would have obtained even in the absence of policy. Some have been marginal. Among those that have been marginal, some have been warranted as a way of buying us elimination. Others were stupid, but potentially unavoidable given the capacity of the public sector to manage things. In the first lockdown, there was probably no way of getting around very coarse and blunt rules about who could open and who could not.

The failure to develop more nuanced rules for future lockdowns after the first one is a substantial failure. The government pursued a pile of other policy objectives, diverting effort that should have been going into Covid preparedness. Auckland's Level 3 very likely could have been avoided by better practices at the border - the entirety of the costs of that outbreak, both the costs of lockdown and the costs of the virus, could reasonably be tallied as a cost of policy failure. The extra costs imposed by a L3 that had blunt rules about who could open and who could not, rather than risk-sensitive ones, are also a cost of policy failure - the failure to devote appropriate attention to the single most important policy area facing the country when the government seemed to think it had beaten the virus and wanted to muck around in a pile of irrelevancies in the leadup to an election campaign. 

There is still much work to be done in setting policies at the border to be able to deal with the longer term, and little evidence that that work is being undertaken. Some of the costs of a closed border are fast becoming not costs of Covid, but costs of a failed policy response. Not all - even with best-practice at the border, there is no way of returning to the status quo ex ante. 

That isn't the relevant counterfactual. 

The relevant counterfactual is a border system that increases effective capacity not only by allowing more facilities to enter the system through the kind of voucher scheme I'd suggested rather some time ago, but also by shortening stays in isolation for those coming from lower-risk places who would be required to provide location tracking facility to contact tracing teams and to present for testing post-isolation. Halving a stay in MIQ doubles the effective capacity of that room. Layering on additional testing requirements and taking advantage of the rapid cheap saliva tests coming on-stream would allow shorter stays without increasing risk. You still wouldn't get swarms of short-stay bus tourists, but you would enable piles of other things to happen. Remote workers could shift here and continue to be paid by their overseas employers. Companies finding time zones and short spells in MIQ less disruptive than dealing with Covid in their home countries could shift here along with staff willing to make the move. All kinds of options start opening up. And if this is going to be around for a while, the costs of not enabling this really start mounting - along with all of the humanitarian consequences of borders that cannot accommodate travel, and all of the consequences for domestic firms stymied in bringing in overseas experts. 

My Newsroom column this week went through some of the issues canvassed in my post on the worst case. We need to be thinking more about what the longer term looks like. This thing has at least a year to run, and potentially rather longer. 

More worrying would be that, in the longer run, in the worst case where there is no vaccine and only rolling waves of illness, Goolsbee's counterfactual won't hold either. Folks will instead, I expect, largely internalise the risk in the same way that people were happy to drive cars in the 50s that had drum brakes, no seat belts, and steering columns that would kill you. And everything then gets even trickier in running the assessments of policy. Let's hope for a successful vaccine that prevents that counterfactual from obtaining. 

Sunday, 30 August 2020

Not enough worst-case thinking

A University College of London Vice-Provost and clinical academic lays out scenarios

I worry we're not worried enough about Scenario 4.

There are four likely scenarios for exiting this pandemic:
  1. Development of a vaccine. A vaccine that successfully blocks transmission would be the most ideal strategy. Over 170 companies are now developing vaccines with three in large scale, clinical trials. It is essential that vaccines show not only an immune response (which they all do) but that this is sufficient to protect against severe disease and against transmission of the virus. There are, however, concerns that any protection may not break the transmission cycle and that immunity will be transient, as is the case for natural immunity of people, infected with coronavirus. A new vaccine typically takes four years to develop. It is my view that a vaccine is unlikely to be successfully developed that leads us to exit the current crisis. The other concern is the recent report of the infection of an individual, who had already had coronavirus. Re-infection was with a mutated strain and this suggests that vaccines will need to deal with natural variation or target the invariable part of the virus.

  2. The SARS-CoV2 naturally loses infectivity, as may well have occurred during the Spanish influenza outbreak in 1918-20. However, coronaviruses do not mutate at the same rate as the influenza virus.

  3. We develop herd immunity: an R0 of 2.6 means that approx. 62% of the population would need to be immune, at any one time, in order to develop herd immunity. Herd immunity values are currently approximately 0.5-15% in different areas of the country. Any recurrent waves of infection will be required to acquire a 62% target and that would assume that immunity is long lasting, rather than transient.

  4. The virus becomes endemic: this would mean the virus circulating in the community with intermittent flare ups that are handled by local lockdowns and standard NHS treatment. Interpretation of the current data is that case numbers are going up but there are no significant numbers of admissions to hospitals, at least in London. This likely reflects the testing of younger, more mobile people who do not succumb to the symptoms of coronavirus whereas, in the past, the people, who were tested, were those who had been admitted to hospital.

Thinking hard about the worst case makes all options look worse. 

But before that - some cause for optimism. A vaccine may be more likely than scenario 1 suggests. Saloni Dattani reviews the evidence and the forecasts here.  

But let's go with a worst-case where either a vaccine isn't successful, or where vaccines need boosters so frequently and where new strains requiring new vaccines keep emerging, so even 100% vaccination implies new outbreaks in the absence of tight border controls against the entry of new strains. 

The rest of the world is not following an elimination strategy. The longer this goes, the less likely it seems that they will even try. Too many places haven't the political cohesion to pull it off, even if they wanted to. 

Whatever you think about Sweden, they aren't going to hit herd immunity in Scenario 4. Herd immunity doesn't exist. It's just recurring Covid seasons, just like the common cold, except it kills a lot of people and leaves a lot of people with long term disability. 

If you want to run this direction, expect to spend a pile of money increasing capacity in hospitals and ICUs. Disability benefits will go up as reduced lung capacity prevents employment; spending on retraining would have to go up to enable shifts into other sectors. There would, in NZ, be pressure to shift ACC to cover this kind of harm, and making ACC cover health more generally rather than just accidents would probably break it. 

Expect contraction in hospitality and similar sectors as those who are risk averse take their own measures to reduce risk - at least until self-testing becomes ubiquitous. Look at the app integration of the latest Abbott test, which will show your latest test result. That test doesn't get us all the way there yet because it isn't an at-home test. We will get to at-home tests that are reliable enough while people are infectious, and cheap enough that they can be used daily or close to it. Restaurants and bars that want customers will require a recent test result as condition of entry. Risker workplaces, where distancing is harder, will test staff frequently to avoid on-site outbreaks that stymie production. When tests cost about as much as a cup of fancy coffee, workplaces will just do it. We will all be poorer by the real resources consumed in that regular testing, as compared to the pre-Covid counterfactual, but it's better than not-testing. 

There will still be recurring waves of illness, with consequent loss of life and morbidity, because even with lots of cheap tests around, some folks you just can't reach short of compulsory measures. Unless the schools are willing to enforce a regular testing regimen and to exclude students while infectious, it would at minimum come through that route. Even if each test isn't that expensive, testing each kid regularly would add an awful lot to school operating costs. School budgets would have to go up to accommodate it. 

Expect also that aged care facilities will be under heavy restrictions for the foreseeable future, with strict testing requirements for entry. 

None of that sounds good.

But neither do any of the other options. The other options may be less bad. But all options are bad. Everything sucks in Scenario 4. What sucks least isn't obvious. 

New Zealand and a small set of East Asian countries could hold to a strict elimination strategy, defend the borders, have robust systems for monitoring and trusting each other, and free mobility within the Green Zone. Advances in testing and compromises on some civil liberties for those entering the Green Zone, including rigorous testing and check-in requirements. Periods in managed isolation (NZ) or monitored and enforced self-isolation (Taiwan) can be shortened if it's possible to track people as they leave isolation and require them to self-test regularly. That increases throughput at the border without increasing risk. 

But the border will remain a horrible and costly bottleneck. I don't just mean monetary costs, obviously. There are huge humanitarian problems in imposing massive costs on travel. Remember isochronic maps? The maps that showed all the places you could get to, from London, in the same amount of time? 

We wouldn't be going all the way back to 1914, when most of New Zealand was 30-40 days from London. But coming into NZ from anywhere outside of a green zone would be a day's travel plus, at best, a week in self-isolation. 

Here's 1914 as reminder:

And here's 2016.

If the Green Zone holds, and the rest of the world remains a red zone but without formal restrictions against travel, the 2021 maps would look rather different. Basically, the map as it is in 2016, but with a big wall around an East Asian Green Zone where crossing the boundary costs somewhere between a week and a fortnight. The effective distance between New Zealand and the rest of the world would increase substantially, and we will increasingly be left behind in areas that require frequent interaction for initiating new projects and ventures. This would also severely hit the 1.2 million Kiwis born abroad and the million Kiwis abroad, any of whom may have family emergencies that require rapid travel to New Zealand from abroad. Even in the best case of this worst case, these costs will be substantial.  

Recall that the average month in 2019 saw over 250,000 Kiwis returning home from business trips, foreign study, holidays, or visits with friends and family. Current capacity in managed isolation is about 14,000 per month. Having to stay in isolation will itself deter travel. But it isn't crazy to think we'd need something like five or even ten times as much capacity in managed isolation as we currently have, once we also remember that others may wish to come here as well. If Australia gets to elimination, a lot of the burden on managed isolation goes away - Trans-Tasman is a big part of Kiwis' travel. But I do not know that they are actually trying to get to elimination, or if they will get there. 

Unless we start thinking about more practicable options. 

What can increase effective capacity while maintaining an eradication strategy?
  • A more risk-responsive set of isolation requirements, combined with options for self-isolation.
    • People coming from places outside of the Green Zone where COVID is less prevalent could have shorter isolation periods, if other risk-management protocols were put in place like post-isolation testing and location tracking. Halving the duration of isolation doubles effective capacity.
    • People willing to wear location monitoring bracelets could be allowed to isolate at home, if that home were a safe place for self-isolation - not having other flatmates, for example. I have no doubt that the American Ambassador's self-isolation in his home will be safe, and that his being there instead of in a managed isolation facility frees up a space in managed isolation for someone else. But figuring out a regime to work it all won't be easy. It requires checking that the proposed venue doesn't have others who'd be mingling. It isn't crazy to think that the costs of vetting a venue could be a reasonable fraction of the cost of providing a room in managed isolation. And while putting a monitoring bracelet on people is relatively easy in principle, keeping others from popping round for a visit is harder. The default could be managed isolation unless the traveller can demonstrate a credible self-isolation plan, but all of that will prove hard. There will be muppets who decide to have a party while they're self-isolating, and unless there are good chances of being caught and penalised for doing so, it'll be hard to deter. 
  • The whole voucher system I'd suggested to allow more facilities to come into the MIQ system - but it is still really costly both in resource and time, even if a lot of people are contributing to the costs of their own stays.
Maintaining eradication will be easier as testing improves, as regular cheap testing of anyone who is anywhere near anything that might be a risk, so it becomes far less likely that shutdowns are required to deal with outbreaks. Instead, they'd be caught more quickly, and contacts could be tested on the spot. 

A scaled up safe border is a lot more important in this world. If what we're looking at isn't a system that has to just see us through for the next year, but rather one that has to work for many years, the fixed costs of establishing better systems become worth fronting. It has to be done not just to enable Kiwis to come home, it also has to be done to mitigate some of the economic harms of Covid. There will be lots of sectors where rolling waves of disruption due to Covid are particularly costly. Some of those sectors might be able to relocate to New Zealand, if the costs of being a week or two away from the rest of the world are lower than the costs of disrupted operation. There will be piles of people who have shifted to remote work who could work remotely from here, and pay taxes here, while being paid by their overseas-based employer. 

But there are lots of options between eradication and Sweden. Canada and much of Europe are trying to keep a lid on things. Canada allows travellers to self-isolate at home, without the kinds of monitoring that Taiwan would impose. 

In the worst-case world of Option 4, everything looks worse. There will be no herd immunity. There will be no effective vaccine. There will only be dealing with it, for years and years. 

I don't think proponents of any of the possible strategies for dealing with it have carefully thought through what the "for years and years" really means. 

Proponents of Swedish approaches downplay that there will be deaths and misery for years and years, and that individual actions to reduce the risks they face also result in drops in economic activity. 

Proponents of elimination downplay the consequences of putting New Zealand back to the travel world of 1914 when the rest of the world is in 2020, and haven't thought seriously enough about what scaled up border capabilities have to look like to deal with any of this. 

And middling options that try to wipe out cases and clusters as they emerge, but without eradicating the virus, will face some of the same border costs (Canada's self-isolation requirements, for example) and ongoing restrictions and risk for those at risk, but without the potential opportunities that could come of being a covid-free place. 

I also don't think it's obvious what the best approach is.

If there were a button I could push for the set of policies that would simultaneously invest heavily in scaling up border systems (with costs recouped on a user-pays basis for overseas visitors) AND became far more welcoming to overseas arrivals by making it really easy to get a "work from New Zealand" visa for those who'd come here to work remotely for their foreign employers, making sure that there's enough managed isolation capacity to deal with it, making it easier for foreign investors to set up shop here as the Covid-free place. If it looks like normal campus life would be impossible in Covid places, a scaled-up managed isolation system could make NZ very attractive as destination. 

But I worry that the xenophobia that's come through during the pandemic makes that button impossible to push, even if the systems are safe. 

Meanwhile, the American university system is learning. They have hundreds of universities, all trying different things for dealing with the crisis. And look at what the University of Arizona has pulled off. Wastewater testing at each of the campus dorms found an outbreak before it happened, and stopped it.  
Click through and read the thread. The University of Arizona is testing wastewater coming out of each dorm facility and coupling it with rapid antigen testing. Everyone was tested before they were allowed to move into the dorms. When one dorm showed Covid in wastewater, everyone in the dorm got a quick antigen test, two asymptomatics turned up positive and were put into isolation, contact tracing is in place, and they're dealing with it.

That's what one university came up with. 

There are plenty that are providing very good examples of what not to do. But students will shift to the places that have decent systems. It'll be part of their selling point, if this is here for the long haul. 

New Zealand has one creaky system that has a hard time adapting. There have been suggestions here around wastewater testing, but has anyone started looking at testing the water coming out of each of the MIQ facilities? If it shows up in wastewater pretty early, you could run regular wastewater screening and then test everyone in the facility if the wastewater shows a positive case. 

It is hard to pick what policy options suck least when you combine worst-case thinking about the virus becoming endemic with worst-case thinking about government capabilities. Maintaining elimination has a lot of option value. Treatment keeps improving. Testing keeps improving. Systems elsewhere for getting on top of outbreaks will keep improving, and learning from experiences elsewhere will make things here better. 

But it is also easy to imagine scenarios where things abroad improve substantially for treatment, for keeping on top of outbreaks and for preventing transmission into vulnerable communities. Lots of reliance on cheap testing, layered protections for aged care facilities, isolation of cases before transmission chains can get much established. Maintaining quarantine for those arriving from abroad may not make sense in that scenario: you'd rely instead on pre-travel testing, location monitoring requirements for recent arrivals, and requirements that new arrivals do daily self-testing. We are nowhere near that making sense now. But would we be able to switch to it when and if it does make sense, under worst-case thinking about politics?

Friday, 28 August 2020

Burton on the bureaus

This is the sort of thing that should wind up on the syllabus in politics and public administration classes. Tony Burton on how government departments really work:

In the days after the Nazis surrendered in 1945 the allies had a lot to do, so there was a curious period when the senior bureaucrats of the old regime, holed up in a nice castle in north Germany, were left alone. So what did those bureaucrats do as their country lay in smouldering, starved ruins?

“… in a former school room still smelling of chalk, we solemnly met on the dot of ten every morning, sat down on brightly coloured straight chairs around a brightly painted square table and discussed the non-existent plans of a non-existent country.” (Albert Speer quoted in Sereny 1995)

One suspects that after the border control debacle there are New Zealand ministers wondering if something similar is happening in the streets around the Beehive. The government’s strategy had two parts. The hard part was largely achieved by the “team of five million” agreeing to stay at home at the risk of large scale unemployment. The second part, the seemingly simpler task for an island country four thousand kilometres of ocean away from its nearest neighbour, closing the borders. The first part of the plan has succeeded beyond expectations. The second part, not so much.

When I was part of the government machine I was struck by how little understanding even those receiving the eye-watering fees to teach “Masters in Public Policy” have of the way government operates. (If you want an example, look up “policy cycle” in a textbook on government where you will find a hamster wheel schematic and text describing how, apparently, government is run by hamster bureaucrats scuttling round it.)


To get from the Minister to a person providing a service, say a person at the border, takes anything between five to ten of these layers. That is, five to ten people, each with a range of jobs, one of which is to “cover off” a policy like the border controls to keep out Covid. Apparently this was not bureaucratic enough, so since last week’s Public Service Act came into force, the State Services Commissioner has been added as an additional layer between Ministers and the departments that deliver services.

To understand what happened at the border it helps to look at the writings of a neo-liberal. The term “neo-liberal” is now used so promiscuously it has become the left’s contribution to a dumb and dumber act with the right’s “political correct”. But at one point it described a mid-twentieth century approach to government whose proponents included a bureaucrat turned academic called Frederick Hayek. Contrary to myth he would have been a sceptic about the 1980s reforms in New Zealand, not the reduction in the size of government but any “rational choice“ thinking behind the new model for departments, and his views on the power of convention would probably have led him to predict the recent reversion back to a more British style civil service.

Unlike Keynes, and many others who theorise on the role of government, Hayek spent his time in the civil service working as an administrative cog in a typical silo of government, in his case the department that managed Austria’s government debt. This gave him an insight into how little relevant information is available for most administrative purposes and he applied this to his thinking on both government and private sectors. The key problem government organisations face, that private organisations do not, is lack of incentives to find and use the information they need to do their job properly.

Less abstractly, imagine you work on the front line of the New Zealand Customs Service and want to play your part in keeping New Zealand free of Covid-19. If you spotted gaps in the system, you would be required to “work through the line”, so your manager could pass the information up the managerial hierarchy.

Those managers are expected to spend 40% of their time “managing up”, that is making those above them in the hierarchy happy. So, at each point that information on border deficiencies rises, it competes with agency and departmental priorities of far greater importance to people in that line, like team budgets, annual performance reviews and “strategic visions”. At the end what is left are abstracted summaries designed to make senior bureaucrats feel powerful and ministers feel in control.

Worse, it is rare for departments to spontaneously present bad news, particularly to ministers. No-one wants to be known for telling the government that its policies are not working. At its most extreme, a former Chief Executive of MSD commanded “no problems without solutions” so only problems that had already been solved could be presented to senior managers. More commonly, there are long delays as senior officials angst over how to present the information in a way that does not show the department in a bad light. Even if good information somehow gets to the upper reaches of the hierarchy, it will not necessarily reach those who need it in a coherent or timely form.

This works the other way too. Ministers very rarely talk to people at the front line. Their decisions are largely informed by meetings with people at the upper end of the hierarchy who are equally ignorant of what is happening where services are delivered. Decisions are and are then passed down that line of five to ten people. Anyone who has played Chinese whispers will know some of the problems with that. Unlike the children’s game, the whispers will be carefully “messaging” to promote executives, their teams and their department.

The miracle is that this ever works. We observed one reason over the last couple of weeks: if those administering the system go too far from the real world, the real world tends to tap them on the shoulder and remind them of its existence.

Thursday, 27 August 2020

Better testing

More rapid COVID testing options keep opening up. This week, Abbott's Ag Card Test received FDA emergency authorisation. Antigen tests like this won't pick up Covid as early in an infection as a PCR test would, but are decent after symptom onset. 

And this can then play a role as part of a testing and management system. 

For example, rather than go in for a PCR test because you've started having symptoms, and wait around for a couple days or more to find out whether you're positive, you could take this kind of test. This test runs $5 USD and gives results in 15 minutes. It would be cheap and easy for everyone just to keep a couple at home, in case needed. 

Community testing when someone feels unwell would shift from being a potentially scary nose-swab, coupled with costly stay-home requirements when waiting on results, to something easier and cheaper than a home pregnancy test. 

Those leaving managed isolation could be given a few of them and asked to test themselves in case of any symptoms, and required to send through a test result a week after leaving isolation - just to be sure there wasn't any late-onset. Note that this test comes with some rather interesting app options:

NAVICA mobile app will help facilitate return to daily activities
Abbott is also offering a mobile app at no charge that will allow people to display their results obtained through a healthcare provider when entering facilities requiring proof of testing. The NAVICA app is optional and an easy-to-use tool that allows people to store, access and display their results with organizations that accept the results so people can move about with greater confidence. The app is supported by Apple and Android digital wallets and will be available from public app stores in the U.S.

"While BinaxNOW is the hardware that makes knowing your COVID-19 status possible, the NAVICA app is the digital network that allows people to share that information with those who need to know," said Ford. "We're taking our know-how from our digitally-connected medical devices and applying it to our diagnostics at a time when people expect their health information to be digital and readily accessible."

If test results are negative, the app will display a digital health pass via a QR code, similar to an airline boarding pass. If test results are positive, people receive a message to quarantine and talk to their doctor. As they're required to do for all COVID-19 tests, healthcare providers in all settings will be required to report positive results to the CDC and other public health authorities, regardless of whether they use the app. The digital health pass is stored in the app temporarily and expires after the time period specified by organizations that accept the app.

The app's user interface is supported by a back-end digital infrastructure that is cloud-based, scalable and secure. It's been designed to support a very large number of users and enable access from anywhere. The app is not for contact tracing and only collects a person's first and last name, email address, phone number, zip code, date of birth and test results.

All kinds of other options start opening up as well. 

Everyone working anywhere near the MIQ system could be tested daily. They could have a set of tests at home so that anyone in their family who gets a cough could self-test immediately. 

Pre-flight testing becomes dead simple. Adding $7.50 NZD to the cost of an airline ticket would get a test for every person boarding. You could use it for every flight during Level 2 or 3, adding only trivial cost, and potentially as a way of getting rid of seating restrictions - consult with your local epidemiologist on whether the risk reduction from testing makes that equivalent. If so, the test requirement could reduce the cost of plane tickets despite the cost of the test, because it would let planes run closer to capacity. 

Workers in sensitive facilities like cold-stores and meat packing plants could be tested daily during any outbreak, rather than facing either shutdowns or restrictions on operation. 

And all of it would mean that contact tracers would have an easier job because infections would be more likely to be caught quickly. 

All of this could make elimination much much cheaper to maintain. 

Update: To be real clear - it isn't available yet. The Emergency Authorisation in the US doesn't even yet allow at-home use. But more of these things keep being developed

For A Reverse Public Works Act

Earthquake strengthening is expensive enough on its own. Layering heritage restrictions on top of those costs can make it impossible. 

The Herald reports on the former Tramway Hotel in Mt Cook, Wellington. It has the lovely unreinforced brick masonry facades that look so very similar to the ones that fell over and killed people in Christchurch. It was supposed to have been strengthened by December 2013. It hasn't been yet. 


The building is basically useless. The owner would like to demolish it, but has to go through a consenting process for that. Council would like to take over the building temporarily, spend millions strengthening it, then hand the building and the bill back to its owner. The Herald says strengthening will cost more than $6 million, and the building would only be worth $2.6m after those works are done. 

If the heritage value of that building is really in excess of $3.4 million, which seems impossible to believe, then Council should be fronting that cost - not the owner. The heritage value clearly doesn't accrue to the owner. 

But Council can't afford to spend millions and millions on each of the hundreds of buildings it has decided are of substantial heritage value. Instead, it wants to load those costs onto the owners of piles of buildings of dubious heritage value. 

This is clearly a regulatory taking. Council is forcing these owners to provide a public amenity, at the owners' own cost. When we'd looked at this stuff back in 2016, nobody could explain to us the selection criteria for heritage listings. There certainly wasn't any cost-benefit assessment going on. The best explanation we were able to get was that some Council official likely drove around with a clip-board, ticking off buildings that looked to be nice a few decades ago. Back then, there wouldn't have been substantial cost associated with a listing. Now, a listing means it is impossible to undertake earthquake strengthening works, which are compulsory, without going through ridiculous layers of heritage consenting bureaucracy. 
In 2017 Parbhu sent WCC plans to build a bigger hotel but that was not progressed after what he considered to be unlikely support from heritage officers.

He told the Herald his prime goal was to preserve the building, but he needed to break even and that meant adding to the existing structure.

Parbhu was reluctant to comment any further while the demolition application was before council.

Another option he has considered is selling the building for land value, but that has also proved unsuccessful because of heritage restrictions.
Iona Pannett, on Wellington Council, heads up the Heritage portfolio:
But speaking generally, she said the council's approach was to work constructively with owners.

"Obviously owners do have property rights in this country, and we want good outcomes for the city as well, so our preference is not to spend ratepayers' money to come in with a big stick to take enforcement."

Pannett said there were more than 500 earthquake-prone buildings in the city and she acknowledged some owners were struggling to find an economic solution to pay for strengthening.

Safety, heritage, and owner's ability to pay was a difficult balance, she said.

"I don't think you can say that one thing takes precedence, we're trying to balance all those things in a reasonable manner but it's not easy."

The reasonable way to balance these things is for Council to set a heritage budget, to pay the owners of these buildings an annual easement reflecting the annual value the community presumably enjoys from the existence of the building as it is, and to remove all other encumbrances. If the owner decides to forgo the annual easement by demolishing the building, or to take a reduced easement because strengthening processes detracted from the heritage value, that provides the balance between safety, heritage, and the owner's ability to pay. We went through this in a report in 2016

Another option would be a Reverse Public Works Act. 

Under the Public Works Act, the Government can compel a property owner to sell property to the government because it is needed for some public purpose. 

Under a Reverse Public Works Act, the owner of a property encumbered with a heritage designation would be able to compel Council to purchase the property at its rateable value, or at the value of the underlying land, whichever is higher. Council could avoid that obligation only by de-listing the building. In that case, if the real value of the heritage amenity were high enough, Council would buy and strengthen the building in heritage-sensitive ways, and then either sell or lease out the building. If Council instead viewed the heritage value as being less than the cost of buying the thing and strengthening it, it would come to the decision it should have come to in the first place and de-listed the building so that it could be bowled or strengthened in more cost-effective ways. 

In the alternative, if Council insists on sticking with this process, the heritage people on council should be personally liable if the earthquake comes and fatalities inevitably result. The owner's trying to make the building safe by demolishing it; those on council standing in the way really should be culpable here. 

Wednesday, 26 August 2020

Behind the veil

Michael Huemer points out the numerous problems in John Rawls' maximin criteria.

Rawls argued that, behind a veil of ignorance where you can't tell your final position in society, people would agree on a rule that maximised the position of the worst off.

Economists have generally argued this is nonsense - it implies a degree of risk aversion behind the veil that is never seen anywhere else. 

Huemer goes through the problems. A snippet [note that OP means the Original Position, behind the veil]:

II. Diminishing Marginal Utility

Wealth has sharply diminishing marginal utility, above a certain minimum level. So there’s not much reason for the parties in the OP to try for greater wealth, above the amount they would get under the Difference Principle.

a) That’s an argument for not maximizing expected wealth. It’s not an argument for not maximizing expected utility. The diminishing marginal utility of wealth is already taken into account by utilitarianism (obviously), so it can’t be an argument against utilitarianism.
b) If there is really a minimum amount of wealth that you need for a decent life, and additions above that amount give little or no improvement in your welfare, that still wouldn’t support the difference principle. Rather, it would support the principle, “maximize the number of people who are above the minimum.”
c) Rawls hasn’t supported those factual assumptions anyway. It’s plausible that there is a minimum amount of wealth needed to have a decent life, and there is also an amount above which you get no noticeable benefit from more wealth. But those two amounts are obviously not the same amount.


Tuesday, 25 August 2020

Distancing rules

This is a bit of an odd one.

On Monday, the government announced that masks on public transport will be compulsory under Covid Alert Level 2. Hooray! The new rule will take effect from next week - they still have to draft the order to give it effect. 

So far so good.

But from 11.59 pm this past Saturday night, the COVID-19 Public Health Response (Alert Levels 3 and 2) Order (No 2) 2020 came into effect. Clause 25 of that Order removes physical distancing requirements on public transport services.  

Adjusted alert level 2 requirements for public transport services

(1)  This clause adjusts the alert level 2 requirements for public transport services.
(2)  Public transport services need not maintain compliance with either the 1-metre physical distancing rule or the 2-metre physical distancing rule for people using those services.

And public transport services are defined earlier:

public transport service has the same meaning as in paragraph (a) of the definition of public transport service in section 5(1) of the Land Transport Management Act 2003 but—
(a) includes air transport that is available to the public generally; and
(b) excludes small passenger service vehicles (as defined in section 5(1) of that Act)
So you don't need to be physically distanced on busses or airplanes, unless I'm misreading this.

Now I can see how masks could be a substitute for distancing on busses. Masks and distance would be safest, but if you want more people to be able to fit on a bus without increasing risk, you could combine it with a mask order. That all kinda makes sense.

But what is weird is that the distancing order came into effect more than a week before the mask requirement is coming in.

And, more importantly, and as best I can tell, the Air Transport rules haven't been updated to reflect the change in the physical distancing rules - and this was updated yesterday.

Physical distancing (previously approved seating configurations) in aircraft applies. 

But the Public Health Order says distancing on planes is no longer required at Level 2. And the coming mask order will mitigate the risk of lack of distancing. 

Imagine trying to run an airline on this basis. One set of rules from Transport sets out seating configurations that make it harder to run any flights. Level 2 looks like it could be in place for a while. Jetstar dropped out rather than run under those rules. But the Public Health Order says distancing is no longer required. 

If the government's intention was to allow airplanes to run with masks in place of distancing, that would be consistent with the Public Health Order - but the Air Transport Rules would need to be updated to reflect it. And who knows what the legal basis is for "approved seating configurations" under Level 2 if the Public Health Order no longer requires distancing. 

If the government's intention was not to allow airplanes to run with masks in place of distancing, and to book out the middle seat under L2 (or the partner seats in the smaller planes with two seats on each side), why did they abolish distancing requirements for domestic transport in the Public Health Order (there's an exclusion for persons subject to the Air Border Order, so international will still have to be distanced)?

And the Prime Minister keeps emphasising the need to maintain distancing - despite the Order saying it's no longer required on public transport under Level 2. 

What is an airline actually supposed to do under these circumstances? If they guess wrong in one direction, they're throwing away money and offering fewer flights. If they guess wrong in the other direction, they risk pissing off a Minister or Ministry for not complying with what the intention had been regardless of what was written in the Order - and potentially a hasty Order leading to cancelled tickets. 

Stuff falls between the cracks between Ministries all the time; this seems a potentially messy one. 


Under that interpretation, the Order wasn't meant to supercede anything from Transport about seating but just stuff that might happen during boarding and the like. But I wonder what the legal basis for Transport directions around seating might be when a Public Health Order says there's no requirement to distance.

Protecting the Canadian Dairy Cartel

Canada might not be playing fair under the CPTPP. 

Here's Farmer's Weekly:

In the two years since the agreement came into force low-tariff and tariff-free quota created to open their markets to more imports of dairy products have gone largely unfilled.

Canada has been the worst offender, with just 12% of quota for dairy imports from CPTPP countries filled last year and just 4% so far this year.

In Japan just 40% of dairy quotas have been filled while fill rates have also disappointed in Mexico.

Dairy Companies Association of NZ executive director Kimberly Crewther said administrative foot-dragging by the three countries’ governments, along with President Donald Trump’s withdrawal of the United States from the agreement in 2017, meant the $96m of annual gains predicted for the industry once CPTPP was fully implemented now looked unachievable.

Not a particular surprise that the Canadian government would pull whatever tricks it could to support the dairy cartel.

The Ministry of Foreign Affairs and Trade was aware of the problem and raised it with Canadian, Mexican and Japanese counterparts and was due to do so again at an online meeting of CPTPP officials last week.

Crewther said it was disappointing but not unusual for countries to use quota administration to protect local industries from the increase in imported competition that followed free trade agreements.

“The agreement of new access in FTAs is great but it is the implementation around that access that is really crucial to whether it is usable or not.”

In the case of Canada up to 85% of quota was allocated to local processors who sourced subsidised raw milk from the country’s farmers and tended not to import dearer foreign dairy products.

Only 10% was for importers, who were also prevented from getting their hands on quota allocated to local processors but not used.

Canada’s chronic underutilisation of its CPTPP import quotas was reinforced by its Milk Class 7 milk payments system, which subsidised prices paid to local farmers and undercut imports and has long been a bugbear of the NZ industry and other exporters.

Monday, 24 August 2020

Covid and co-morbidities

A tallying of the costs of road accidents that included fatalities but ignored disabilities would result in too little investment in road improvements that might reduce accident rates.

Tallying Covid's morbidity costs is an awful lot harder than tallying the morbidity costs of road accidents. We have years of data on road accidents and anything in New Zealand that comes consequent to a road accident runs through our ACC system - it's then not all that hard to get a handle on costs.

Covid is a lot harder. We all hear horror stories about the ongoing consequences for some who catch it. If those stories represent one in a million cases, they wouldn't have much effect on policy decisions. If they represent one in ten cases, then they're a big deal. But it is darned hard to find anything that summarises the numbers.

Dr Jin Russell points to an article published in Nature back in July that summarises the various conditions that can be consequent to Covid. 

Here's the abstract:

Although COVID-19 is most well known for causing substantial respiratory pathology, it can also result in several extrapulmonary manifestations. These conditions include thrombotic complications, myocardial dysfunction and arrhythmia, acute coronary syndromes, acute kidney injury, gastrointestinal symptoms, hepatocellular injury, hyperglycemia and ketosis, neurologic illnesses, ocular symptoms, and dermatologic complications. Given that ACE2, the entry receptor for the causative coronavirus SARS-CoV-2, is expressed in multiple extrapulmonary tissues, direct viral tissue damage is a plausible mechanism of injury. In addition, endothelial damage and thromboinflammation, dysregulation of immune responses, and maladaptation of ACE2-related pathways might all contribute to these extrapulmonary manifestations of COVID-19. Here we review the extrapulmonary organ-specific pathophysiology, presentations and management considerations for patients with COVID-19 to aid clinicians and scientists in recognizing and monitoring the spectrum of manifestations, and in developing research priorities and therapeutic strategies for all organ systems involved.

The piece is written for clinicians, telling them things potentially to watch for. Turning it into something that could be used in cost-benefit assessment would be a pretty big job.  

There are rather a few potential consequences.

The article will note things like "in a cohort of 107 patients admitted to a single-center ICU with COVID-19, their rates of pulmonary emboli were notably higher than those of patients admitted to the same ICU during the same interval in 2019 (20.6% versus 6.1%, respectively)."

But using things like that in any CBA work would require knowing what proportion of COVID cases in that area wind up in ICU. You need to know what proportion of infections wind up with that outcome to be able to say anything . You can make simplifying assumptions about the proportion of cases that wind up in ICU. 

Other conditions are reported as fractions of hospitalised patients: 17% of hospitalised patients in Wuhan wound up with cardiac arrhythmias. But what fraction of infections wound up in hospital? And were those conditions presenting only while in hospital during infection, or did they persist? Acute kidney injuries occurred in 37% of patients hospitalised in New York, with 14% requiring dialysis. But again, what fraction wind up in hospital, and is this something from which people recover, or does it continue?

I really wish we had a better picture of the state of play.

There are a bit over 1500 people in New Zealand who have recovered from Covid. They would not be representative of the population overall, should New Zealand ever have a broader infection. Those here who have recovered are going to reflect the cases we have had: mostly those who have returned from overseas, who are younger and healthier. 

But despite that, surely it would be worth knowing the outcomes for that cohort. It would be cheap in the grand scheme of things. The government could pay GPs for a series of follow-up visits with those who have recovered, and pay those who have recovered for their time. It feels like it would be hard to spend $10 million on this. $5k split between GP and patient would only get you to $7.5m. 

The series of follow-up visits would check for any ongoing health effects of Covid. I'd also really like to get some measures on just how bad the whole experience was for those who have had it. I'm not a big fan of numbers expressed in survey values as compared to revealed preference, but I'd expect we'd learn something useful out of it here. 

Get the big table of conditions that have existing DALY or QALY figures attached to them. Ask each recovered patient "So, which would be worse? Getting Covid again exactly as you had it, but with no longer term consequences, or breaking your femur?" Running that over a series of conditions would get a distribution of valuations, among the cohort here who have recovered from it. You'd have to be rather careful in extrapolating that up to the population, because that cohort will have far fewer pre-existing conditions that worsen things. But at least it would be something of a start. 

I don't get why this kind of follow-up work isn't being done. Somebody would have to fund it, and it would likely be more expensive than a standard grant. Could it just be that nobody thought to put in a funding line for this kind of thing?