And some unpleasant calculus

The Guardian reports that vaccine effectiveness against hospitalisation in 5-11 year olds wanes quickly. Bottom line: the smaller doses wear off more quickly. 

In the study released on Monday, not yet peer-reviewed, six New York state public health scientists analyzed cases and hospitalization rates from 13 December 2021 to 30 January 2022 among 852,384 fully vaccinated children aged 12 to 17 and 365,502 fully vaccinated children aged five to 11.

Results revealed that vaccine effectiveness against hospitalization during the Omicron variant surge declined from 85% to 73% for children aged 12 to 17.

Among children aged five to 11, effectiveness fell even more significantly, from 100% to 48%.

Vaccine effectiveness against testing positive declined from 66% to 51% among children aged 12 to 17. In the younger group, effectiveness dropped from 68% to 12%.

In the last week of January, vaccine effectiveness against hospitalization among 12-year-olds was 67% – but just 11% for 11-year-olds.

If those results hold up, that would mean looking at a third shot for that cohort, or considering an adult-sized booster for 11-year-olds on turning 12 if it's been a couple months since their second kid-jab. 

But the odds that the government here would allow it don't seem high. 

So parents who wanted longer-term protection would want to wait until their 11-year-old turns 12, to get the bigger dose.

But the surge is here, and protection now rather than later is important, even though it is likely to be at the expense of longer-term protection. 

Would be nice if parents of 11-year-olds could opt for the 12-year-old dose instead, as their second dose. 

Worse case worlds

Sometimes, regulation is the best way of dealing with a problem. Other times, leaving people alone to weigh up risks and decide things for themselves is best. 

And we can always argue the toss about cases in the middle. 

But what is really dangerous is cases where people think they're in a "government is protecting me against this risk so I don't have to think about it" world when they're really in the other world. 

It's dead obvious when you think about bank bailouts and deposit guarantees. If everyone knows there's no chance of bailouts, then everyone exercises prudence and banks are disciplined. If there's deposit insurance that charges a fair risk-rated premium, that can work too. I prefer the former, but the latter can also work. What really sucks is when people expect there'd be a bailout, and so exercise that level of prudence, but they're really not in that world.

I worry about the transition to the current Covid phase.

For two years, Kiwis had a very compliance-focused mindset. The government was setting piles of rules and changing them regularly. The rules often didn't make a lot of sense and were hard to apply in particular circumstances. So folks focused on how to comply with the guidelines - with a few notable exceptions. Companies that contracted for regular Covid testing of their staff - they were taking a more risk-focused approach. But that was the exception. Baseline risk was low, so a compliance-focused approach wasn't crazy. 

We're not really in that world anymore. Baseline risk is very high. The government's guidelines are, at best, a minimum - and often downright wrong and misleading. 

Consider the advice about masking in indoor exercise venues.

The advice about masks and exercise is downright wrong and dangerous. Exercise in indoor settings with poor ventilation is one of the very highest risk activities for transmission. Lots of people breathing heavily in an enclosed space. 

Here's what Otago's people said about masks in exercise, back during Delta.

Bars, nightclubs, gyms, restaurants, churches, and indoor social settings – While there may be hesitation to utilize masks in settings which involve maximal respiratory effort (e.g. singing in churches, exhaling heavily during exercise in gyms, energetic children in primary schools, active indoor workplaces, and nightclubs where there is often dancing), it is precisely these venues that pose higher risks for transmission of SARS-CoV-2 from airborne particles expelled by heavy exhalation [3, 20]. New Zealand’s own experience during this current outbreak highlighted how there was a high rate of transmission of COVID-19 amongst individuals in the Mangere church cluster.

Plenty reasonable to argue about cost-benefit of masks in indoor exercise settings when baseline prevalence is low. If there's hardly any Covid around and people are vaccinated, there's not a lot of risk to be guarding against. But when positivity rates in asymptomatic surveillance testing by Rako are currently 4.5%, you only need 25 people in the gym to have an expected case there. And that case is going to spread. 

We've been pulling the kids from indoor activities that are unmasked. Before doing so, we get in touch with the venues they attend. They're in a ton of activities. 

One kung-fu centre where they train refuses to implement a mask requirement, explicitly citing the Ministry's mask guidance saying that no masks are required in exercise. Our kids will not be going back there for a while. The other centre has shifted to outdoor training, in part because their floor is being resurfaced, so they can continue at that one. 

One of the kids also does circus. The circus venue also pointed to the Ministry's guidance as reason they're not requiring masks - but they're at least looking at the Otago work. 

If I thought there were any method to the Ministry's madness, I'd have to conclude that they want to have as hard and fast of spread as possible, to get it through before winter. But the more plausible explanation is inertia and incompetence. 

Bottom line: Do not consider government guidance as anything other than a minimum. A very poor minimum. 

The Monetary Policy Committee

The Reserve Bank seems actively hostile towards actual expertise in monetary policy. 

Dennis Wesselbaum and I polled NZ's macroeconomists about who should be appointed to the Monetary Policy Committee. The respondents said reappoint Bob Buckle. 13th down the queue was reappointing Peter Harris.

The Bank today announced the MPC.

Buckle has been reappointed. 

But so has Peter Harris.

Karen Silk has been appointed to a five-year term as an internal member of the Committee. She has a B.Comm in marketing and accounting. 

In the tagline on my Herald piece, I said I was unqualified to be on the MPC because I'm a microeconomist. But at least I got a full pass on my macro prelims two decades ago - which is an awful lot more than some of the folks on the committee. 

It'll be fun to see where this all leads. 

Afternoon roundup

The closing of the browser tabs:

• Lots of covid cases among police manning the Wellington protest suggests there'll be plenty of cases at the protest. Great to see that ESR is testing wastewater from the protest. Not sure why we haven't results yet though. 
• Dileepa Fonseca makes a case for councils to shift the ratings base to land-value alone, rather than land plus capital. I agree!
• If NIMBYs are going to complain about every single conceivable way of generating electricity anyway, here's a potential option. Nuclear that can load-follow. 
• Michael Reddell gets an OIA response from the RBNZ. Adrian Orr told the Finance and Expenditure Committee that the Bank had done its own modelling of climate risks to financial stability. So Reddell asked for it. And of course the Bank hadn't really done any. I hadn't known that Bank independence extended to (arguably) actively misleading Parliament.
• The protestors have been dumping waste from chemical toilets straight into the stormwater drains, which flush directly to the harbour. 
• NZ's average residential house price is now 8.8 times average household income. 
• Jenée Tibshraeny reports that RBNZ is sticking with its "No experts please. This is the Monetary Policy Committee" position. Barking mad. 

Pooled failure

I called this one in January, and I think I was the first one in NZ to write about it.

The country’s Covid testing system is likely to fall apart, quickly, when case numbers rise.

Testing labs can bundle five to ten samples together for testing. If none are positive, all is fine.

If the pooled sample is positive, individual samples need separate re-testing. When positivity rates are low, the system works well. But when positivity rates are high, pooled sampling stops working. Testing capacity drops to a small fraction of what it had been, just when it is most needed.

Headline figures on testing capacity may be more than a little optimistic. Contracting now for greater capacity, focusing on the saliva-based PCR testing (which identifies genetic material from the virus) that catches Omicron cases earlier, matters.

Today's NZ Herald:

Earlier this week, director general of health Dr Ashley Bloomfield said the seven-day testing average was sitting at around 22,000 or 23,000 per day.

Bloomfield said daily PCR test capacity could be surged up to 60,000 to 70,000 – but also noted that, in the outbreak's centre of Auckland, the present capacity was only 20,000.

Even with local positivity rates of 3 to 5 per cent, Auckland labs weren't able to pool samples, which reduced capacity.

Without being able to pool samples, Bloomfield said national capacity would be around 30,000 samples per day.

It wasn't clear what extra impact a just-announced strike of 10,000 DHB staff - laboratory workers among them - would have.

Prognostication's a curse. You can see the train wreck coming, you can shout about it, but you just can't convince an utterly useless government to do a damned thing about it. 

Bit of a shame that the Herald piece didn't mention that all of this was entirely predictable, was predicted, and could have been avoided by contracting for more capacity with a testing lab that wasn't running pooled samples. 

If it comes to a strike, Bloomfield and Hipkins will do the predictable thing. 

They'll throw their hands up about how none of it is their fault. They'll forget that they could have contracted with more than one supplier for testing. Instead of running everything through a single point of failure, APHG, they could have contracted with Rako, which uses different labs.

At what point is MoH criminally negligent?

For a better Monetary Policy Committee

The terms of two of the three external members of the Monetary Policy Committee are due for renewal this year. 

My column in yesterday's New Zealand Herald (ungated here) suggests that the Board of the Reserve Bank of New Zealand might want to make sure that subject experts are welcomed, this time through.

A snippet:

In 2019, the Bank appointed its first Monetary Policy Committee. Previously, decisions were made by the Governor. The move to a committee structure made sense. Appointments to the Committee are made by the Minister of Finance on the recommendation of the Board of the Reserve Bank.

But Treasury warned at the time that the Bank’s view on conflicts of interest could have some strange effects. The Bank viewed an active research interest in monetary policy or macroeconomics as being a conflict of interest. That view meant that every serious macroeconomist and monetary policy specialist working at the country’s universities was excluded from consideration.

It was a bizarre view.

The United States Federal Reserve has some of the country’s most eminent macroeconomic researchers helping in setting monetary policy. The RBNZ considered them to be too conflicted to be appointed.

Monetary policy, to the standard necessary for high stakes monetary policy decisions, is a highly specialised discipline. Even a doctorate in economics is not sufficient on its own. Macroeconomics is its own specialised field. Few microeconomists are able to stay current in the latest research in macroeconomics. And macroeconomics has its own specialised domains.

Being able to keep up to date with the latest research papers in macroeconomics and monetary policy requires staying on top of the latest methods. It requires people who are active in the field.

The Committee currently includes three Reserve Bank officials: Governor Adrian Orr, Deputy Governor Christian Hawkesby, and outgoing Chief Economist Yuong Ha.

It also includes three external members, the terms of two of which come due this year.

Treasury recommended that, “in future appointments to the MPC, looser criteria could be adopted that would allow for a broader field of potential nominees from the Board, if desired.”

It seems a good idea.

Dennis Wesselbaum and I surveyed the country's academic macroeconomists and asked them to rank-order each other for the impending vacancies; the two MPC members whose terms are coming due were also surveyed. Our response rate was a bit less than half; not too bad. I set each candidate in a pairwise race against each other candidate in a Condorcet process. 

Bob Buckle lost to no one. Good pick for a reappointment, if he'd be willing to serve. 

Arthur Grimes, John McDermott, Prasanna Gai, Viv Hall, Dennis Wesselbaum and Mark Holmes came in next. 

Peter Harris came in 13th, losing a pairwise contest to each of Bob Buckle, Arthur Grimes, John McDermott, Prasanna Gai, Viv Hall, Dennis Wesselbaum, Mark Holmes, and five others.

Good appointments will matter where there are worries about in-house capabilities. 

Broken Data Pipes

This week's column in Newsroom went through the burst data pipe at Statistics New Zealand. NZ.Stat was shut down, abruptly, on 4 February. It's the only way of accessing some core statistics, other than the interim measure now in place of filling in a form and waiting for someone to send you the spreadsheet you were after.

It's the culmination of years of neglect of core systems. 

A few of us are looking at setting up an external mirror of Infoshare, in case SNZ decides they have to kill that even-more-archaic system too. 

After the front fell off of NZ.Stat, one informed data analyst, David Friggens, reported that the system was running on software that was five versions out of date. NZ.Stat is built on OECD.Stat. The Australian Bureau of Statistics, by his report, has version 9 of OECD.Stat in beta. And while Statistics NZ had recently started a project to upgrade to Version 10, the version of NZ.Stat that failed was Version 5.

I asked Statistics NZ whether Friggens was correct. Statistics NZ confirmed, via email, that they have been running “a legacy version of OECD.Stat software, with a project underway to upgrade this”, but did not specify which version had been in use.

To its credit, Statistics NZ had recognised some of the risk it faced. The Agency’s Statement of Strategic Intentions 2021-25 set workstreams aimed at ensuring “core information technology systems are at less risk of failing”. It sought to “identify risks to core systems and track the effectiveness of mitigating actions to ensure the stability of these systems.”

Unfortunately, it came a bit too late.

For years Statistics NZ has, like the proverbial local government, chased after shiny new objectives while largely ignoring the critical infrastructure that is necessary to keep the whole ship running.

The problem is not just budgets.

The problem is also priorities.