Eakinomics: Avoidance, Treatment, Protection, and Tradeoffs in the Pandemic

Imagine for a moment that there were a cheap morning-after pill for COVID-19. You get up feeling a little coronavirusish, pop a tablet (or liqui-gel), and off you go. It would change completely the current discussion about controlling the spread of the virus and restoring the opportunities for commerce.

The current obsession – and I mean obsession bordering on the worst combination of nanny and police state – with social distancing and lockdown would vanish. Avoiding the virus would mean little. If you happen to run across the coronavirus, you can fix it in the morning.

The incentives for the rapid development of a vaccine would vanish as well. The argument that national economic pain must continue until a vaccine is in hand would be dismissed. Protection from the virus means little if you can always easily fix things after the fact.

Obviously, this is not the state of affairs. But it is a good reminder that treatments like antivirals and antibodies are an important part of the health care mix. As AAF’s Andrew Strohman discusses, “Several types of antiviral therapies, such as remdesivir, look promising for treating the virus, and it seems likely that antibody therapies will be available soon.” There are important policy-design issues in keeping unnecessary regulatory barriers low and promoting efficient information sharing, but ultimately the progress will depend on medical science.

It is a good reminder of how wrong-headed is the current “everybody must stay in complete lockdown and social distance until the order is given to restart the economy” mantra.  Locking down everyone and everything would guarantee zero viral load and zero viral transmission – at an enormous cost. The cost is too high, so — mantra notwithstanding — we don’t have a complete lockdown. There are ranges of activities where the benefits of economic activity exceed the expected costs of potential infections, and vice versa. The nature of those tradeoffs differs across geography, across economic activities, across individuals, and over time as progress on tests, treatments, and vaccines occurs. These exist, and should be recognized, but are not immutable.

Advances in the medical science of COVID-19 are important in their own right, but they also change how one thinks about the economic policy priorities.