Recently on Twitter there’s been a trend of “it’s not that bad” tweets gong around. One said that half of Italy’s CoVid19 fatalities were people with three or more existing illness while people with no other illnesses existed in less than one-percent of deaths. Among the ‘maybe it’s not that bad’ list are Elon Musk, Phil Hellmuth, and Bill Gurley.
No one is saying doing nothing, but many are saying to look at the costs. Many are saying to think like economists.
With hindsight we’ll see that someone had the right model from day one. It likely won’t be you or me. However we get to sharpen our thinking (skill) rather than be right (luck).
So, what might account for these experts in one domain to be right in this one too?
- Data. It could be that there’s so little good data that we face an elephant problem. The Italy statistics look like this. The China statistics look like this. One country sees a pandemic, one an outbreak.
- Uncertainty. Maybe I’m too confident in my projections of outcome distributions. It could be way better or way worse than I expect right now.
- Salience. It could be we’re all caught up against a ‘common enemy’ with nonstop news fanning the flames.
- Opportunity costs neglect. People tend to overemphasize the importance of what comes to mind and dismiss what else they could spend money or time on.
- Stock data. The stock market thinks that immediate future earnings will be significantly less. Could this be a bad proxy?
- Outcome severity. Maybe there will be many more with ‘zero effects’ than ‘death/ruin’. If that’s the case then CoVid19 edges more towards “driving across the country” and away from “contracting Ebola.”
- Existing immunity. The virus has already spread through many people and those that have survived are resistant to antibodies. The influence like illness data that’s coming out might suggest this.
It could be that Musk, Gurley, and Hellmuth were wrong in their consideration of all the details. However the process of considering why is right. Our Phantom Tyler Cowen suggests we write out why the opposing side is correct.
There’s a lot here about arguing well and the critics of that idea say that doing is so much more difficult than discussing it. In this crisis is an opportunity.
(I use luck in the Mauboussin sense of anything out of one’s control. For example, if this were a physics problem like ‘where will planet X by at time t we would have the answer for the CoVid19 pandemic).