The year 2020, will come down in the Medical Books or any other book for that matter, as the year of the clinician. It is a year like no other in our recent history.
Economists, are facing literally a difficult challenge: How to forecast with any degree of confidence, the future path of the economy-- a forecast of GDP growth, the unemployment rate and the likelihood of a return to a stable financial market, under the condition of uncertainty associated with "unforecastable variable--the Covid. The challenge involves the forecast of the productive activity of a labor force that, by law or persuasion is denied the supply of their labor full services.
A viable forecast is made more difficult if not impossible given the lack of any viable mechanism for ascertaining the severe impact of an exogenous variable, the Covid-19, and the implications of imposed "shut down' on labor participation rate once the economy began to open, albeit slowly, and in phases.
In light of the significant loss in the contribution of labor and capital to society output and capital accumulation as well as the instability of the financial market, the economists, those by profession is called upon to chart the outlook path of the economy, are left to ponder the time path of a variable--the Corona virus, whose affliction extended beyond the confines of one country or one state.
Chartering the future path of the economy, requires not only the economist's acumen about the characteristics of an economy, labor, capital and technical know-how, but most assuredly the forecast, or (forecasts) about the path of the virus, and the likelihood of its containment. Most significant perhaps, is a need for a solid assessment of the loss of output and human capital along the path of the virus.
Economic research sheds light on the loss to society's capital, about labor force participation rate associated with the Covid, but falls short of forecasting with any degree of certainty the future path of the economy in light of the uncertainty about the severity or the duration of the Covid. Undoubtedly, an unknown variable, the future path of the virous will exert a significant influence on labor participation rate, even if the states were ready to resume normal activities-- open their economies, for fear of infection and lack of medical intervention.
With daily pronouncements about the epidemic, rarely a day goes by without being reminded of what in store for us, about the magnitude of the vulnerable population, the dire forecast about their life and death circumstances, the economist's forecast must rely on an accurate assessments of another groups-- the clinicians. Not only their assessment is critical for ascertaining the severity of the infliction but also the loss to human capital associated with the closure of medical facilities or the withholding of clinicians services during the course of the pandemic.
A plethora of recommendation from those in the knows and those who were not, did little to give confidence not to mention comfort to those most vulnerable. As to those in the "knows" their inability to make viable forecasts about the likelihood of any one's death from the Corona, save for the elderly, but also most importantly about how might its path impact the livelihood of many , not exclusively those vulnerable.
The question that needs to be asked is the important one: what steps if there are any ( MASK wearing aside),should be taken by the public authorities to ascertain the magnitudes of the loss of income and employment associated with a policy of lockdown. But a first step in ascertaining the magnitudes of such loss is data discovery.
In a recent study reported in the New England Journal of Medicine (September2020), addressed one of the myriad impacts of the virus on a segment of the population: the primary care physicians. The study is coauthored by 12 health care professionals in Massachusetts universities with Zirui Song MD,PhD of the Harvard Medical school, the lead author. Zirui et al, explored the economic and clinical impact of the virous, i.e., Corvid 19 on a segment of the medical providers- the practices of independent primary care clinicians in Massachusetts.
It goes without saying that the expectation would be that the primary care practice sector in the state would suffer a significant loss in revenues which, would translates into losses in employees compensation, tenure of staff, but most significantly ,the welfare of their patients whose wellbeing and mortality most often depend on the visitation to their primary care physicians.
Admittedly, the purpose of said study was to shed light on the consequences of the pandemic for both the clinicians and their staff, nonetheless, it stopped short of alluding and not necessarily estimating the loss to their patients associated with the consolidation or closure of their practices.
Given that the intent of the study was to report on events in one side of the market-- the supply side, the impact on the patients, the demand side, the buyers, is left out-- an economic issue to be sure.
The welfare loss experience by one segment of the population, the clinicians-- suppliers, undoubtedly translates into a welfare cost/if not loss to users, the demand side of the market.
Unfortunately, although the clinician's loss may be measured with some degree of accuracy, the loss incurred by their patients may not be. The clinician admittedly, had exerted an impact on such outcome-- the effect of near zero supply of clinicians 'services on the health of the buyers, which translates into welfare cost/ if not loss to users, the demand side of the market.
Suppose that the clinicians were to defy the order of closure, even going further to advertise the safety of their practices, would such a defiance have been more costly than the returns reaped in term of the increase in the well being ; peace of mind, of their patients? By going along with the "rules" imposed on them by the shut-down, withholding their services, such an act presents us with in the words of Gordon Tullock ( an illustrious economist), with a"social"dilemma. In a celebrated volume, The Social dilemma (2005), the roots of conflict lie in the belief that the profits of one party must necessarily come from losses to others (p.3).
A typical exercise where decisions have to be made under condition of uncertainty is given in a classical study by Halter and Dean(1975). From their analysis, one would present in terms of utility values, the decision -making process facing a clinician under order of closure, by specifying the state of nature i.e. state A comply with the state order of closure, and, state B defy the order. Each state would have a payoff ( utility)with probability of occurrence. The matrix of utility under the different states of nature would have to be specified-- the probability distribution associated with alternative outcomes. Clearly, the payoff associated with any action taken by the clinician will depend on the shape of the utility function, and, the specification of nature-- if all medical practices would be open or none would be open.
One would argue nonetheless that the clinicians' decisions most often are made under conditions of uncertainty i.e. the success or failure of a given procedure. What is different here is that from repeated experimentation, a probability distribution of outcomes has been established. A Probability distribution associated with a newly "minted" virus ; the CORONA, requires repeated experimentation with methods of treatments, isolation and the likes.
Given that the monetary returns associated with the clinician decision depend on the state of nature, an exogenous variable, this makes the assignment of the probability distribution associated with any action the clinician might take difficult if not untenable.
Having said that, it is worth noting that events like the Corona event, is not unique--societies are seldom immune from danger associated with maladies such as the current one-- they have experienced the plague, the flu epidemic and the like. What seems "novel" this time around is its "NOVELITY", as well as the controversy surrounding how it has originated.
Unlike clinicians, economists have to address not only the current cost inflected on a segment of the population, the clinicians, or patients, but rather, perhaps most significantly, the future cost to society measured in terms of the loss in human capital.
Thus far, the focus of statistics and interpretations of said statistics that have been published daily has been on one SINGLE outcome-- the death count, although in some instances and some journals, the distribution of fatalities have been reported with reference to some socioeconomic characteristics of the population.
To be sure, the data is quite useful for states and towns, colleges and universities, schools, businesses as well as social groups, to evaluate the impact of the virus on their revenues, employees and their way of life. Nonetheless, it fell short of treating members of society as individuals with own aspirations, needs and concerns for their way of life. What perhaps , is most disturbing to this economist, is that the focus in reporting the loss to society has been " overwhelmingly " highlighted with reference to the age distribution of the population. In effect, some months ago, at the onset of the virus, a public official was quoted in public speech as saying what amounts to "let the old go"!
True enough , the old fox contribution to current output has diminished. But let us not forget that their contributions towards society's wealth accumulation and investments in human capital were the instrument for the welfare of themselves, but most significantly for society's welfare current and in the future.
In the mean time, as times go by, an accounting of the magnitude of the true cost to society associated with the so called COVED 19, would be forthcoming. and economists as the saying goes shall have "a row to hoe".
Attiat F. Ott, PhD. Emeritus Professor of Economics , Clark University, Worcester, MA, President of the Institute for Economic Policy Studies, Worcester, MA. Zirui Song, MD, PhD, Assistant Professor of Health Policy and Medicine, Department of Health Care Policy , Harvard Medical School, Cambridge, MA.
