Both in class, and in the media, we keep seeing analogies drawn between SARS and the new coronavirus, and also sometimes with MERS. Both SARS and MERS were once the “new coronaviruses”. Both are associated with human proximity to animal reservoirs, followed by human-to-human transmission.
SARS hit Hong Kong and surrounding areas in 2002-3. It then disappeared (probably evolving into something we don’t notice much). At that time, SARS was the biggest epidemic scare in decades. Ultimately there were about 8K cases, and 800 deaths, in about 30 countries. A 10% death rate is high for a coronavirus.
MERS is more chronic, and has been popping up since 2012, mostly in the Middle East, with a big cluster in South Korea related to travel from Saudi Arabia. MERS now seems more serious: while rare, it hasn’t gone away, and the fatality rate is about 35%. There have been about 2,500 cases over the last 8 years, hitting almost 30 countries.
For both of these, there is a strong possibility that the fatality rate is much lower. Since they have similar symptoms to a severe case of the common cold, it’s probable that there are a lot of people infected who don’t ever get tested.
Keep in mind that these things are not as common as seasonal influenza outbreaks, but are more deadly. In the U.S. alone, there have been 22 million cases of the flu so far this winter, but the fatality rate is about 0.05%.
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The new coronavirus is now much more widespread than either SARS or MERS, with about 40K confirmed cases. And it passed SARS death toll this past Saturday.
There are two new issues with the data.
- China has decided to change their counting rules. Now, if you test positive, but show no symptoms, you will not counted as a confirmed case. This is problematic, particularly in Hubei, where all hospital beds are full, and those without symptoms are being sent home.
- For several days now, new cases in China have been level at just over 3,000 per day, with about 10K new ones every 3 days. This is not mathematically consistent with growth through compounding (which is what infections do). There is a possibility that this means preventive measures are reducing infections. But, a much more likely explanation is that China has hit the limit of how many tests they can process per day.
Also note that when China started recommending the widespread closing of factories and stores outside the quarantine area, they indicated February 9th as the likely day to re-open. Not many (including Apple’s Foxconn affiliate) are.
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This is a good time to start reviewing the economic impact of SARS. SARS was geographically focused like the new virus. MERS is less geographically focused, so we’re not sure how much damage it’s done.
There have been lots of casual estimates for the cost of SARS, but the scholarly gold standard is probably Lee and McKibbin [2004]. You don’t have to read this, but you should skim it and take a look at some of the tables (like Table 2.2) and charts (like Figure 2.4). In particular, pay attention to the language: things like negative shocks, and temporary vs. permanent shocks, are mainstays in macroeconomics that you’ll start learning about shortly.
Their conclusion is that the cost of SARS, mostly born by Hong Kong, is about $40B in current dollars at the time the paper was written. Data from FRED shows that Hong Kong’s GDP in current U.S. dollars was about $160B/yr at the time. Now, total costs of an epidemic are a stock variable, and GDP is a flow variable, so be careful about comparing those (for perspective, at roughly the same time, the damage from Hurricane Katrina was estimated at $400B).
Their Table 2.2 estimates the permanent effects on Hong Kong’s GDP at –3.2%, and on China’s at –2.3%. That’s a lot. The long-run effects on the U.S. economy from the 2007-9 recession are in that range.
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While browsing over the weekend, I came upon a version of the initial (in depth) article in The Wall Street Journal, entitled “New Virus Discovered by Chinese Scientists Investigating Pneumonia Outbreak” that trouble was brewing in China. Reading it is sobering: this was published less than 5 weeks ago:
Chinese scientists investigating a mystery illness that has sickened dozens in central China …Yep … dozens.
The disease afflicting patients in Wuhan hasn’t been transmitted from human to human, and health-care workers have remained uninfected …It is believed that something like 5 million people traveled through Wuhan in the days after this on their way to visit relatives for New Years celebrations. No quarantines were in place until 12 days after this article came out.
Health experts say one risk is that the disease could become a bigger threat as tens of millions of Chinese travel around the country during the Lunar New Year holidays …
Health authorities in Singapore and Hong Kong, cities that have direct flights from Wuhan, have issued alerts …Similarities to other diseases were still speculative:
Researchers have determined that a large proportion of new infectious diseases in humans are transmitted via animals. Such illnesses are referred to as zoonoses. Two newer human coronaviruses, MERS-CoV and SARS-CoV, have been known to cause severe illness and death, according to the U.S. CDC.K.Y. Yuen, chair professor of infectious diseases at the University of Hong Kong’s Faculty of Medicine said this:
The Wuhan strain is similar to bat coronaviruses that were a precursor to SARS …
Given the marked advances in hospital isolation facilities, infection-control training and laboratory diagnostic capabilities in the past two decades, it is unlikely that this outbreak will lead to a major 2003-like epidemic …Of course, China has been pretty clear about this for a couple of weeks now: they have a large region in which healthcare facilities are overwhelmed.
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Estimates I mentioned in class last week of a total cost of $150B are based on extrapolating the 2-3% permanent effect of SARS to China’s contemporary $15,000B/yr economy. It now appears it’s going to be quite a bit larger than that.
One more tidbit. China's political structure is pyramidal, with larger committees supporting smaller committees with more power, until you get to the very top. Prior to 2012, the organization was similar to a U.S. firm with a CEO making big decisions, and a COO running things. Xi is the CEO, Li is the COO. But Xi has accumulated more power than most, so Li is doing a lot less than his predecessors. With the new coronavirus, Li has been put in charge of the response. China watchers think this is so he can be pushed out if things go poorly, and so that Xi can isolate himself from political repercussions.
ReplyDeleteForgot to mention that while China does not have political parties, it does have factions (crown prince or communist youth league) and focuses (elitist or populist). Xi is from the first in each pair, and the intention was to balance that with Li who is from the last two. Of course, Xi has accumulated more power than expected over the last 8 years. So, it's plausible that not only is pushing this job onto Li a way to protect himself, but also a way to push out Li and accumulate more power if things go badly.
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