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Sunday, March 15, 2020

The Problem of Rare Catastophes

The current pandemic exemplifies a problem that is widely discussed in literature on regulation. The hardest events for policymakers to address are ones that are very rare but do enormous harm when they occur. The 2004 Indian Ocean Tsunami was an example. Why is this such a problem?

One reason is that people are unfamiliar with the problem because it has not occurred during their lifetimes. It's easy for someone like me to say, "Oh, this shares some traits with the Spanish influenza of 1918." (My grandmother, who lived to be 101, had that when she was a toddler.) The trouble is that few people today know what the 1918 Spanish flu was.

Another reason is that people overrate the ability of technology to handle these exceptional problems. In watching the coverage so far, I'm struck by the fact that the modern mind (at least here) seems unable to grasp the idea that you can be ill, have health insurance, and still be unable to get care because the hospitals are overrun. People a hundred years ago would have understood this perfectly well due to wartime situations or other epidemics.

Finally, the adage that an ounce of prevention is worth a pound of cure misfires when the disease seems so improbable in any given year. Why spend money on tests that you may not need when there are other, more immediate, problems? The trouble is that you can keep saying this until it's too late.

From now on, people will be on top of possible pandemics. And tsunamis. The next Black Swan of this sort, though, is something that happened long ago for which no action is being taken. Until it happens again.

 

Posted by Gerard Magliocca on March 15, 2020 at 03:55 PM | Permalink

Comments

Those whose job is to worry about this sort of thing have warned people to be worried and prepared. There even were people specifically there to help that the current Administration got rid of. And, then, the virus outbreak occurred overseas, another warning sign to be on guard.

The general theme is okay, but at some point, it isn't quite a black swan. See also, the second time the popular and electoral vote didn't match in a sixteen year span.

Posted by: Joe | Mar 16, 2020 8:57:22 PM

Re: ounce of prevention/pound of cure, this crisis is also revealing the shallowness of the evidence-based-policy trend of the past decade. Back when some commentators in SV and elsewhere started sounding the alarm a month and a half ago, they were dismissed as irrationally acting based on fear, because "Where is the evidence of a potential pandemic? The only evidence you have is a 0.5-2% death rate in Wuhan? Come back to me when you have actual evidence that this is an issue HERE, not in China."

The trouble is that when it comes to pandemics and other fat tail risks, you will only have evidence once the problem is well beyond management.

Posted by: RComing | Mar 16, 2020 5:19:14 PM

Sorry, but this all comes down to funding. Anyone who works in disaster response and management (fire departments, Red Cross, spill response) will tell you that preparedness takes money and training. Federal fiscal policies and tax cuts have decimated what little federal funding was available for planning and stockpiling. The states are broke, as are local agencies.

Posted by: Paul Sonnenfeld | Mar 16, 2020 1:00:47 AM

Interesting, but it is bit exaggerated to claim that: " people overrate the ability of technology to handle these exceptional problems ", this is because, typically, people are aware to the fact, that, currently, there is no cure, no vaccination for that disease.

But some firms and organisations work on it, as we write, and according to all estimations almost, it would take between : one year up to two, to come with vaccination. But, like in the case of the Sars at the time, the hope is, that before it , it would be contained through public means.

Here to:

"Johnson & Johnson working on vaccine for deadly coronavirus"

https://www.reuters.com/article/us-china-health-johnson-johnson/johnson-johnson-working-on-vaccine-for-deadly-coronavirus-idUSKBN1ZS1VW

And by the way, or back to legal field, and catastrophes, you may find great interest here I guess:

" There are big barriers to "canceling" or even postponing the 2020 presidential election "

Here:

https://excessofdemocracy.com/blog/2020/3/there-are-big-barriers-to-canceling-or-even-postponing-the-2020-presidential-election

Thanks

Posted by: El roam | Mar 15, 2020 5:53:09 PM

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