Charting a pandemic course in uncertain waters
A global crisis requires global answers. In China, stellar minds and data analytics from around the world are coming together to track Covid-19’s economic impact with robust solutions.
As the pandemic approaches 50 million cases and over 1.2 million deaths – with no end in sight – there’s no doubt the virus is everyone’s problem. Yet so far, governments around the world have not been able to forge a united response.
In Hangzhou, China, an open research centre is attempting to provide a powerful antidote to the disjointedness and “fortress mentality” of today’s global pandemic discourse.
The Luohan Academy was founded with a mission to help humanity explore the impact of digital technology. It brings together leading scientists, including seven Nobel Economics laureates, to engage in an open collaboration on the pressing issues of our times.
As the virus spread around the world, the research centre shifted gears to investigate responses to the crisis. Specifically it sought to design a unique, data-driven solution to chart the pandemic and its economic impact – in real time. GDP figures and other conventional metrics, project leaders felt, were simply too slow to offer answers when urgent action was needed to prevent deaths and economic dislocation.
Led by Chen Long, Luohan Academy’s director, and Michael Spence, the 2001 Nobel Economics laureate, the team sought a new paradigm to graph daily virus containment and economic impact. The mission is to provide everyone from policymakers to businesses and families with insights into navigating the trade-off between cracking down on Covid and staying open for business. The result? The Pandemic Economic Tracker, or PET.
Mobility: a window on the economic world
Many organisations, from UN agencies to media outlets, are attempting to track the pandemic and its economic impact. What makes the PET unique? The team had a game-changing insight: mobility data can be deployed as a strikingly accurate and immediately observable proxy for measuring changes in economic activity.
In essence, the less people move around the less they generate economic activity – and the correlation is strong. Mobility is impacted by both distancing policies and people’s conscious risk avoidance, capturing the pandemic’s compound economic impact.
“The real innovation of the project is to get real-time, daily updates on the economy with respect to the virus through mobility. This is a giant leap forward,” says Spence. “We need a different way to estimate what’s going on in the economy, and mobility is the key concept that combines the impact of the pandemic and economy together.”
One remarkable aspect of the PET is that the data itself is a mirror of Luohan Academy’s ethos of global cooperation to solve humanity’s problems. Luohan Academy is taking the world’s economic pulse with data published by US tech giants Google and Apple, Chinese Internet group Baidu, and AMAP, a Chinese mapping tool. “It’s a global big data collaboration,” says Chen.
The results bear out the creative insight and inclusive approach. For 54 economies with available data, changes in mobility account for roughly half of the variations in cross-country GDP growth (rates). “With e-commerce and mobile payments and mobility data, we’re in a position to take real-time snapshots of what’s going on in economies,” says Spence. “It’s a revolution.”
Doubling days and “pandemanomics”
The PET relies on another key concept: doubling of days (DD). It’s a measure of a society’s success at containing the virus. In PET interactive charts, a vertical axis depicts a country’s economic contraction based on mobility data. Meanwhile, a horizontal axis shows the number of days it takes for Covid cases to double in the country.
Since DD is a proxy for the speed the virus is spreading, in general the larger the DD the better a country is doing at virus control. Likewise, the higher a country is on the vertical axis, the better it’s performing economically. (Hint: to be a star PET performer, you want to aim for the top-right corner of the chart.)
Doubling days, however, is about more than keeping people healthy. The time dimension is a critical part of the economic equation. The reason is that economic damage – in terms of lost income, reduced production and higher unemployment – is strongly influenced by duration of contraction as well as depth. If two countries have similar-looking PET charts, the one with the better DD rate is in better economic shape. Generally it will cost them less time and money propping up the economy (and thus may have smaller deficits and lower sovereign debt increments).
Lessons for beating the pandemic
The PET is more than an academic exercise. It is a powerful toolkit for decision makers to understand the nature of the Covid pandemic economy and to strike the right balance in the triangle of epidemic, economic and policy responses. One clear lesson emerges time and again from the PET data: Act fast. Act decisively.
In every global region, those countries that have moved aggressively to contain the virus are the best performers. They not only suffer the fewest cases, but also recover fastest from the downturn.
As we shall explore more closely in the next articles in this series, the PET provides insights into how societies can best negotiate the trade-off between protecting lives and fostering the rebound. It furnishes clear evidence for the need of coordinated action to avert an emerging world tragedy. And it offers ballast to the argument that global players must join forces to design an endgame that is stable and equitable for all.
The world needs to come together to beat this challenge. The PET is a hopeful sign of the promise of collaborative Covid responses that transcend borders and national interests.