Tyler Cowen: belief

Transcript context

…Well, about a week ago, my wife was a little concerned with how focused I was on it, I was on the whole issue. And I realized this. That’s just the way I deal with it. That’s part of my anxiety control mechanism. It’s just, I think my human reaction to it and it sounds like it’s yours too. One striking fact about all of these events is I think it really drives home the difficulty for people of thinking in exponential terms. So you and I have both been talking today about the importance of economic growth, compounding returns over time. Having an economy growing at 3% is much, much better over time than having an economy growing at 1%. How hard it is for people to grasp that. That’s old news to the two of us. And here we have a totally new event where, by some estimates, the number of actual cases is doubling say every five to seven days in many parts of the country or world. It right now doesn’t actually quote unquote “look that terrible.” And there are many people who have coronavirus but no symptoms and they’ll probably just be fine. But nonetheless, if something is doubling every five to seven days, some very bad events are not so far away. But because they’re not vivid people, including a lot of economists I know, they’re not able to make that mental leap. I think my background with thinking about economic growth is a significant reason why I think I’ve seen some of the dangers here coming. Well, I’m going to think about that a different way. I, like you, I spend a lot of time thinking about uncertainty and risk and growth, linear versus exponential. And I’ve been struck by how hard it is for me to get my head around this. I was alluding to that earlier that I have relatives who watch Fox News and they were telling me a week ago, this is just like the flu. Maybe eight days ago, 10 days ago. I lost it. I said, “1.5 million people dying in America is not like the flu.” And I was looking at these numbers, 40% to 70% of Americans will likely get coronavirus. Let’s say that’s half. So that gets you to about 150 160 million. And that “1% will die,” that gets you to 1.6 million, presumably extra deaths. So that concentrated the mind wonderfully or whatever the opposite is, right? I started to think, oh, we’ve got to act right now. We got to spread the word. People are under appreciating it and I think they did for a while. I feel like they’ve kind of gone back the other way now. I think we have to be very careful right now. I think it’s really appropriate most of the things that everyone’s doing. Staying at home as much as possible, wash your hands, not touching your face, staying six feet away from people. Those are all crucial over the next two weeks and maybe the next month, maybe longer. We don’t know. But I do think there is an apocalyptic reaction to this that that is also very natural. That is the opposite of what you’re talking about. That people just, they see the curve going like this. They say, “ We’re 10 days behind Italy.” I don’t think we are. I mean I don’t want to be eight days behind Italy or 12 or whatever the right way to think about that is. But I think it’s really hard to think about this. I’m not so good at it and I think about it a lot.…

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