Vaccines are better than you think — plus Robinhood, schools, and hurricanes. By Matthew Yglesias.

Vaccines are better than you think — plus Robinhood, schools, and hurricanes. By Matthew Yglesias.

January 29, 2021.

Happy Saturday — here’s some quick takes.

Vaccines are really good

When you read in the press that a vaccine is 90 percent effective vs another one that’s only 70 percent effective, do you know what that means? It turns out that what everyone is measuring in their Covid trials is the share of people in the control group who develop symptoms vs the share of people in the treatment group. That focus on symptoms has a bad news aspect that’s been widely publicized — they measured symptoms rather than doing constant PCR tests so some of the vaccinated people may have had asymptotic infections, and it’s possible that vaccinated people can still spread the virus.

Less widely publicized is the good news: None of the people in the Pfizer/Moderna treatment groups died or even fell seriously ill and had to be hospitalized.

This is typical of vaccines. For virology reasons that I don’t really understand, flu vaccines have very low efficacy as measured in this way. One of the main reasons doctors recommended them anyway is that the immune system head start they provide greatly reduces the severity of flu infections even when it doesn’t stop them. These days they vaccinate kids against chickenpox, so kids mostly don’t get chicken pox. But even more remarkable, when they do get chickenpox these days it’s a “sick for a few days” kind of thing not “miss weeks of school while suffering in agony.”

This is a really big deal with regard to the lower efficacy we are expecting from the AstraZeneca and Johnson & Johnson vaccines. A vaccine that’s only 70 percent effective at blocking infection would be expected to generate a larger than that reduction in hospitalizations and an even larger reduction in death. Which is to say that especially as a solution for the non-elderly, a vaccine like that is actually really good. Giving everyone under 65 a 70% effective vaccine sounds a little lame, but would eliminate almost all the loss of life among the non-elderly and also take a huge burden off America’s hospital system. These vaccines are really good.

Knowledge is dangerous

(Photo by Andrew Caballero-Reynolds)

Something I’ve been thinking about these days is that there was a view in the winter of 2008-2009 that some legislation might pass with moderate Democrats voting yes on cloture but no on final passage. That’s how the Assault Weapons Ban got done in 1993, and on the flipside it’s also how Clarence Thomas and Samuel Alito got confirmed to the Supreme Court.

Then one day, this once-common legislative gambit went away.

This sometimes gets chalked up to “polarization,” but I think the key point is that the bait and switch went in both directions. Several Democrats voted no on Alito to register that they disagree with his jurisprudence without wanting to be obstructionist. Later that would be untenable and you have to actually try to obstruct. That’s consistent with polarization. But several Democrats voted no on the assault weapons ban without obstructing its adoption, I assume because they privately favored it even if their official political position was more pro-gun.

What’s common to the two cases is that the electorate became more sophisticated about this kind of game and less tolerant of funny business. By the same token, today a very sophisticated political observer will recognize that however deranged Marjorie Taylor Greene is, 95 percent of her job is just to vote to concentrate power in Kevin McCarthy’s hands rather than Nancy Pelosi. So if you like tax cuts and hate abortion, you vote for her. An earlier, less-knowledgeable public would be more likely to reject someone like that.

Robinhood is marketing

The Reddit bandits trying to make money by exploiting the power of collective action to ruin a handful of short-selling hedge funds is a fun story, but a lot of folks are imbuing it with a level of drama and class politics that it doesn’t deserve.

Let’s be real. Just because some hedge funds are on one side of a trade doesn’t mean that causing those funds to lose money is striking a blow against “hedge funds” or “Wall Street.” There are a lot of funds! They make a lot of different investment bets. The way you strike a blow against hedge funds is to subject their income to a higher level of taxation.

The name Robinhood is a clever marketing gimmick for an app. But day trading is not stealing from the rich to give to the poor. It’s in fact a great way to lose money. This can be obscured by the fact that during a bull market, probably any stock you pick will go up. That can make it look like picking stocks is an amazing way to make money and get over on the big boys. But index funds go up in bull markets too. And they have less risk and low fees.

Hurricanes and municipal finance

Since 1980, over 2,000 local governments in US Atlantic and Gulf states have been hit by a hurricane. Such natural disasters can exert severe budgetary pressure on local governments’ ability to provide critical infrastructure, goods, and services. We study local government revenue, expenditure, and borrowing dynamics in the aftermath of hurricanes. These shocks impact, both, current local public resources through reducing tax revenues and expenditures, as well as future local public resources through increasing the cost of debt. Major hurricanes have much larger effects than minor hurricanes: major storms cause local revenues to fall by 6 to 7%. These losses persist at least ten years after a hurricane strike, leading to a 6% decline in expenditures on important public goods and services and a significant increase in the risk of default on municipal debt. Our results reveal how hurricanes can create a “vicious cycle” for local governments by increasing the cost of debt at critical moments after a hurricane strike, when localities are in greatest need of funding sources. Cities deemed riskier by ratings agencies face higher borrowing costs and thereby face constraints to invest in climate change adaptation. Municipalities with a racial minority composition 1 standard deviation above the sample mean suffer expenditure losses more than 2 times larger and debt default risk 8 times larger than municipalities with average racial composition in the decade following a hurricane strike. These results suggest that climate change can exacerbate environmental justice challenges.

I would say the lesson here is less specifically about climate change than about the broad desirability of creating some kind of system to ensure local governments against fiscal shocks.

School reopening

After nearly a year of absence, my kid is supposed to resume in-person school on Monday (though it may be delayed another day because of the snow).

Part of that process has opened my eyes to a dynamic that I think is a little obscured in some of the media discourse on this. The low-income families who I think of as being disproportionately in need of in-person school services are much more reluctant to actually send their kids back to school than the upscale professionals who are better equipped to supervised remote school. And one of the big reasons, it seems to me, is that all families correctly perceive that the actual public health situation is not greatly different in February 2021 relative to where it was in August 2020. But they have different interpretations of what that means.

In yuppie circles, it’s largely taken for granted that this is a political decision, with the school system only belatedly doing what it should have done at the start of the school year. But of course, the city doesn’t come out and say that.

So a lot of the lower-income families see a situation that was unsafe in August and hasn’t changed that much in the subsequent months and wonder why they’re being asked to trust it now. If you’ve been consuming a lot of highbrow media over the past six months, you know how much the school reopening decisions have been driven by union politics — whether you think the unions are right or wrong on this, the difference between which school systems reopen and which don’t is clearly the political clout of the union rather than facts about the virus. But lots of people don’t consume lots of highbrow media, take city officials’ statements and face value, and rightly note that what they’re saying doesn’t quite make sense.