Resetting expectations

We are in a bit of a mess with respect to what we are trying to do

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. (I am also part of the CDL Rapid Screening Consortium. The views expressed here are my own and should not be taken as representing organisations I work for.)


As people move through the five stages of grief with respect to their Fall plans, I have noticed that there seems to be some flailing about with respect to what the overall Covid plan now is. The previous plan — that is, wait for a vaccine, roll it out and declare victory — is no longer feasible. Well, sure you can just declare victory — something Tyler Cowen calls “delta Straussism” — but the main motivation for accepting restrictions to deal with Covid — that is, that it might kill other people — actually hasn’t gone away. So that is easier said than done. All this means that we really don’t know what we are doing.

So let me propose a way of thinking through this. First, I want everyone to forget that life in the past 16 months was anything other than normal. Then, let’s treat the Delta variant that has emerged as a new pandemic out of the blue and consider how we would react to that.

The Delta coronavirus has the following properties:

  1. It has an R0 of between 6 and 9.

  2. It spreads through aerosols and mostly indoors.

  3. There are some effective treatments available out of the gate.

  4. Hospital capacity is, potentially, capacity constrained.

  5. It is not novel to most of the population. That is, by having Classic Covid in the past or being vaccinated, they have some immunity.

  6. The immunity is very protective but less so in terms of being sterilising.

  7. People have a good idea of their immunisation status and, in most cases, that information is verifiable.

  8. A vaccine is available and can be administered to ‘marginal’ people who have a higher risk of not being immune.

  9. Much of the world is not immune and this varies greatly by country with lower-income countries having the least immunity.

  10. New vaccines may come about quickly to deal with those under 12 (who are not immune) and to be more effective against the virus than current immunity.

  11. New variants of the virus may overcome past immunity.

What would we do if faced with a virus with all of these properties?

When I put it this way, the answer is not even hard. It is basically what we would face with a large measles outbreak. And here’s what we would do. We would flatten the curve. The reason is twofold. First, we need to ensure hospitals are not overwhelmed which they quickly could be. Second, we need to buy time to get vaccines to more people and get reproduction numbers (sans other restrictions) less than 1.

What would this look like in terms of policies. First, we would restrict non-essential gatherings to vaccinated people. No large social gatherings (certainly not indoors), no restaurants or pubs, air travel restrictions etc. This would reduce spread. If it didn’t then the restrictions would have to apply to vaccinated people as well. Second, we would keep the schools open using rapid testing to limit outbreaks. Third, we would encourage mask-wearing amongst the vaccinated indoors and require it for others. Fourth, we would use payments and other measures to deal with financial issues striking those who cannot for medical reasons be vaccinated.

This is not the same as the strategy we faced in March 2020 although the broad goal is the same. It is not a suppression strategy that some countries employed. That is no longer in the consideration set. But it is different in that because we know who is more likely to be immune, our restrictions can now be targetted with the goal of flattening the curve but keeping as much economic activity going as possible. In other words, we are in a much better place in terms of understanding the riskiness of individuals in spreading the virus — that is, we face a much, much lower pandemic information gap. And we now have two instruments to reduce it in the short term — testing/tracing and vaccinations.

For a relatively short period of time, this means that some people are more restricted than others. The alternative is to restrict everyone but, as I said because we have a better handle on the information problem that would seem to be a grossly inefficient approach. If we were to restrict everyone, I think it would make sense to make vaccinations mandatory to reduce the time where those restrictions were in place.

The bottom line, when it comes down to it, our first off the shelf solution when it comes to pandemic management applies with the Delta variant. There are still uncertainties but that doesn’t make all of this less clear.