Here we go with round 3 of the Corona series!
Chronicle/Recap:
- When a Virus Goes Viral (2020) - "It’s not an abnormal thing to wonder when things will get back to normal. I don’t believe they will, I don’t think they ever do."
- When a Virus Stays Viral (2021) - "I don't know what the right answer is, but if you are arguing for restaurants and bars to open up, tell me how many grandmas you are willing to kill. Conversely, if you want to save your grandma's life, tell me how many of your neighbors should lose their homes or jobs."
We will quickly revisit the core three buckets that are continually evolving:
- Decision making/uncertainty
- Risk models
- Major structural changes in the world
And for our "Booster," I will look at the questions raised in round two.
ECONOMIC RECOVERY post pandemic
- How do we recover all the bailout, relief money?
- How do rental markets/evictions unfold?
- Relocation effects?
- Company Mergers/Acquisitions - particularly in travel and entertainment
At year 3, we are getting to the point where the "I told you so's" start coming in stronger. And both sides of "lockdown", "vaccine mandates", and "masking" are torturing data to prove they were right all along. Across the board it continues to be difficult to separate randomness and luck (good or bad) from causal effects. And the new variant Omicron only confounded the problem.
A good example of this is Simpson's Paradox.
Another concern is that the media/public haven't fully realized "excess deaths" as a key metric yet. "COVID deaths" still dominates headlines, although there is more attention to excess from other outlets. This will continue to be important if case fatality drops to near zero but LONG COVID lingers and creates trouble.
- Our World in Data covers the topic here.
Cognitive Biases still plagues the population. And a good way to see this is how viscerally someone reacts to the positions of a public figure. An interesting case study is the COVID controversy that went down with Aaron Rodgers, quarterback for the Green Bay Packers.
Be particularly watchful for OUTCOME BIAS. Hopefully we don't have to deal with other types of pandemics anytime soon, but we need to be honest about how much randomness and chance are involved in the outcomes.
With election cycles on the horizon, I expect the polarization of data narratives will likely continue. I expect cries of "look at the data" or "do the math" and for them to be totally flawed. Expect broad statements without nuance, a few skewed charts, and comparisons between apples and oranges. Sharpen your pencils folks!
Risk Models
2022 is the year of the cat, well a tiger actually. So I want to spend a moment on cat (catastrophe) models, as opposed to feline cat models.
Instead of looking at a forecast of future deaths or hospitalizations over time, the value of cat model is to get a better sense of the variance and tail risk of a hazard.
The NAIC has a good overview. While historically these have been climate focused, looking at things like hurricanes or other sever weather outcomes, there may be a role for cat models in understanding mortality/pandemic risk.
Historically this type of modeling is not something life insurers do very often, but maybe they should. I recently had a chance to dive into this with RMS LifeRisks and am a firm believer in its value to an actuary’s toolkit.
The New World
As of this writing, covid restrictions are beginning to thaw in the US. Freedom feels great, and it’s fun to be going back to concerts and traveling again (oddly the last band I saw before COVID is the first band I saw post lockdowns - check out Tall Heights when you get a chance).
However, perhaps the world has generally benefited from masking and increased sanitation - as seen in reduced levels of other contagious diseases. Nature has a good piece on the viral dance ( does getting a cold might help you against covid?)
The question will be how long risk mitigation practices will stick.
- Will companies in travel and hospitality continue to have high sanitization standards?
- Masking is now a political issue, but will it continue in some form or fashion in certain contexts? While traveling? For certain states/counties? Same for vaccination cards.
People are going back to work in their offices. For some this is welcome news, and others are apprehensive about commuting again. For most office jobs, 100% in office is probably dead. I am predicting you will see “in office” settle in at under 50% of workforce and 3 out 5 days a week.
One of the areas that I am still trying to sort out is education. What sorts of changes have come to universities and public primary and secondary schools? Will there be more at home learners? Can you get a quality post secondary education from Youtube U? Have teaching methods adapted?
Booster 1 - Economic Recovery
Unfortunately, it looks like we have a tough road ahead.
Out of Stock. We are finding out that it takes a little bit to restart after everything gets shut down. Supply chain headaches are cropping up everywhere.
The Great Resignation. Staffing shortages are adding to the supply chain woes. People aren’t showing up for work or are retiring early.
Inflation pressure is building.
The housing market is still insane. Though it doesn’t seem like there was any major fallout from eviction restrictions ending -yet - courts are likely backlogged.
On the plus side -
We generally tend to bounce back after a while. From Forbes "Although the current situation is unprecedented, bear markets and recessions are not. Yes, this one is different, but to be fair the ones before it were too. And they all have one thing in common: they eventually end."
Certainly there is pent up demand, and there may be a sense of urgency about getting out there and doing stuff, because time is precious!
Business relief programs are still moving through congress. And the Biden administration is pushing for more projects to spend money on.
Work from home prevalence may drive productivity in new ways.
Finally mergers and acquisitions activity was up in 2021 and seems like it still may be hot in 2022.
Booster 2 - Vaccines and Related Policies
Arguably, Omnicron threw vaccination advocates for a loop, as the vaccinated didn't seem to get much protection for catching or spreading the variant. (But perhaps they were spared severe health outcomes). I often asked the question, isn't this mutation a sign that our early vaccination approach was effective? Isn't a virus evolving into a more benign format a good scenario? It's like an obnoxious neighbor that moves in next door who you convince to not blast their music past midnight on a weekday. Still may be annoying, but at least tolerable.
Nevertheless, aside from political drama about vaccination cards, the latest numbers indicate "overall, about 253.8 million people, or 76.4% of the total U.S. population, have received at least one dose of vaccine. About 215.8 million people, or 65.0% of the total U.S. population, have been fully vaccinated." More critically, by age group "As of March 2, 2022, 95.0% of people ages 65 years or older have received at least one dose of vaccine and 88.8% are fully vaccinated."
To get that much of the US population to do anything is quite an impressive result.
This pandemic has taught us a lot about vaccine approaches. I think there is room to grow to establish trust in vaccines, and to develop the right tone for vaccine advocacy that can respect freedom and individual circumstance.
But for me one the more amazing things that is a byproduct of such intense focus on vaccine tech is the emerging developments including:
- An vaccine developed by the Army that might 'anticipate' variation
- More exploration of mRNA approaches
- Against seasonal influenza
- Using mRNA to treat HIV
- Using mRNA against Eppstein Barr
- Taking down malaria
- Maybe even cancer
- Improvements in supply chain logistics, vaccine manufacturing, and storage solutions
While pursuing progress, it remains important to continue to monitor, disclose and try to protect for unexpected consequences, including viral mutations, autoimmune response, unanticipated side effects and more.
Vaccines are a proactive/preventative tool. On the other had the treatment of COVID has also gone through the ringer from drama about Ivermectin and other drugs to advances in Monoclonial Antibodies.
Additional side innovations from the COVID catalyst include more telehealth deployment, lab testing protocols, population health tracking, and fortification of eldercare facilities.
Conclusion and Looking Ahead
This large scale social experiment has been quite the ride! I am hopeful that we are getting to a point where the 'sky is falling' mentalities are dropping. At least when it comes to the pandemic. As of this writing, Russia and Ukraine are in engaged armed combat, so we seem to be hopping from one crisis into another, and we may already have crisis fatigue.
It may sound cliche to say it's darkest before the dawn, but I do believe that. The Stoics often embraced the reminders of their mortality to inspire them to live life to its fullest. As we sludge through these tough times, my hope is that we continue to look to what is really important.
I am grateful I can type my musings to a small audience on the internet. I am thankful for every moment I have to spend with my family. I've enjoyed exploring more parks around me and getting out into nature. Slowing down, learning new things, and deepening my spiritual journey have all generated a new perspective through the mire. And I wish you the same.
Finally, let me plug one of my favorite bands, from Minnesota, called Cloud Cult, whose album Metamorphosis captures so much of this emotional rollercoaster we've through in the past 2 years.
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