Welcome to Plugging the Gap (my email newsletter about Covid-19 and its economics). In case you don’t know me, I’m an economist and professor at the University of Toronto. I have written lots of books including, most recently, on Covid-19. You can follow me on Twitter (@joshgans) or subscribe to this email newsletter here.
Sometimes you hear Covid-19 described as a black swan. Here is the definition of that:
Covid-19 is neither a Western Australian aquatic water-fowl nor something that was unpredictable or unforeseen although it did have extreme consequences. A global pandemic was one of the most predictable events ever based both on historical precedent and a strong scientific consensus.
Indeed, as we reflect on the last year, the closest things to black swan events in this pandemic have all been good news. Here is a list of things that we didn’t expect that turned out well:
We thought Covid-19 would spread on surfaces and so spend, and still spend (!), hundreds of millions of dollars on keeping surfaces clean. But it does not appear to spread on surfaces.
We thought Covid-19 would spread any place where people gathered. But it does not spread outdoors — at least, there are no events that can be tied to purely outdoor interactions between people.
We thought that hospitals would be overwhelmed. But while there were certainly some cases where this occurred, it was not a widespread condition due mainly to people taking actions that reduced viral spread.
We thought that it would not be possible to work from home both as a matter of course and because things like broadband internet (and Zoom itself) would collapse under Zoom pressure. That proved not to be and even “never online” attitudes like University education quickly pivoted.
We thought that there would be a rent apocalypse. Well, actually, other people thought that but economists believed otherwise. There have been issues but given the disruption, there was no mass expulsion of people onto the streets.
We thought that there would be much harsher impacts of the virus in lower-income countries. That hasn’t been the case.
And, finally, we thought that viable vaccine candidates would take at least 18 months to come about (and even that was seen as wishful thinking). It turned out that it took 10 months and near miracle levels of efficacy across the board.
I know it may not feel this way but there is an incredible string of good luck. All of the things above, sensible people would have put very low probabilities of happening one year ago. The fact that we got so many is amazing. So amazing that we should not forget that they appear close to black swan events.
Why do we need to remember this? Well, the next time around we may not be so lucky. In many respects, as global infectious diseases go, this is well and truly on the less costly side of the equation. In that respect, it is a tail event conditional on there being a pandemic. Luck is a recipe for complacency. That is a lesson we need to be mindful of.