Sunday, April 26, 2020

Bill Gates writes for The Economist and I take issue with his post 1945 outlook

Bill Gates writes for The Economist and I take issue with his post 1945 outlook


In an article on the Economist https://www.google.com.tr/amp/s/amp.economist.com/by-invitation/2020/04/23/bill-gates-on-how-to-fight-future-pandemics Bill Gates has written about the fight against this and the next pandemic.
Bill starts by a deeply insightful comment that the most notable part of this crisis will be what happens from here onwards.
Then he goes on to talk about vaccination technology. While being cautious to underline a late 2021 expectation on that front, he applauds it as the fastest in human history. More importantly, here and in his other recent publications Gates mentions new RNA vaccines that give the body essentially instructions on how to behave rather than adapting through the classic weakened form of virus injection. Then he goes on talking about diagnostic technology and antiviral drugs.
On the multifaceted crisis, his most important non-health technology comment is that this could be a post 1945 world order in which countries would cooperate for rational self interest directly and through global organizations.
A remarkable short piece backed extensively with material that can be found at https://www.gatesnotes.com/Health/Innovation-for-COVID but I fail to agree with its conclusion even with the somber Churchill quote to give a flexibility of outcome and bestow a sense of responsibility on decision makers.
I agree with Bill that the most remarkable chapters of this crisis has not yet been written. One should mention the remarkably bad policy choices gyrating from nonsensical ignorance to politics drenched panic of many a government marks a momentous and ugly introduction to this yet unwritten inconclusive-at-the-moment history.
One of the most remarkable facets of the next phase will be the health related factors as he points out. I am not in a position to contest his expectations on that front and I deeply agree with the urgency for richer countries to help out the others in a genuine way. However, I think that he on purpose focuses on the can do positive factors of technological innovation while ignoring altogether the issues of cost, distribution, timing and effectiveness risks associated with the developments he singles out.
Where I differ from Bill Gates in a substantial way is his post 1945 reference of global cooperation and coordination. I do not wish to doubt his good intentions but they sound paternalistic – from the perspective of the less privileged, be it a country or a group of people or anyone of the great majority of ordinary individuals, this has to be backed up with clear commitments and delivery mechanisms to have an effect.
Post 1945 was shaped by the impact of the atom bomb, American power, Russian boots on the ground, Truman in place of Wilson, Clement Attlee replacing Winston Churchill, lessons of World War I and the Treaty of Versailles, erosion of classical imperialism in the face of a new efficiency led mass customization mode and the Great Depression among a lot of other factors idiosyncratic to that epoch.
Yet even then it was discussed whether to carve up Germany or to destroy its industry for good. Little did Americans pay attention to the plight of the effectively bankrupt Britain as they secured eminence for New York and the Dollar in this new era. Similarly global organizations were set up with decisive American influence such as the IMF voting quotas and the UN Security Council make up.
It was to be expected then as it should be expected now that the relative victors that emerge from a crisis will first make sure their positions are consolidated before indulging in benevolence and cooperation.
As for today’s timeline the next year and a half until potential mass vaccination will be period of intense pain on multiple fronts that can easily erode confidence in a greater sense. Even with a hope for vaccination, explicitly ruling out major detrimental virus mutations and assuming second or third waves of infections can be handled at fractional overall human and financial cost; this not so clearly defined interlude will test the political, economic and social order vehemently alongside the healthcare system in general.
I find it hard to surmise this challenge being met with global cooperation. As a naive liberal democrat I espouse the case for globalism, cooperation and coordination as it appears rational and in global self interest. However the realist skeptic in me reminds me that this rational cooperation has not been shown in most of the events in recent history from the Chinese handling of initial virus developments to Italy’s need for medical support, from millions slaughtered in African conflicts to creeping climate change risks and from reckless government deficits to even more reckless financing.
This sadly is not a post 1945 moment. Neither the damage is that great nor the global leadership and its legitimacy is in place. It might be that the end of beginning is still a good time than what is upcoming. Perhaps there is still time to improve the conclusion whenever that is but the interim looks a lot more challenging than Bill Gates lays out.
April 2020, İstanbul

John Anderson interviews Niall Ferguson: On the Response to Covid-19


John Anderson interviews Niall Ferguson: On the Response to Covid-19

John Anderson https://en.wikipedia.org/wiki/John_Anderson_(Australian_politician)  has interviewed Niall Ferguson https://en.wikipedia.org/wiki/Niall_Ferguson on April 24, 2020 on the response to Covid-19. John Anderson is a former Australian politician and Niall Ferguson is an historian. Both have a lot of other titles and accomplishments under their belt as well as at times having strong contrarian positions on policy matters.

I would, for the sake of framing, call them liberal conservatives and valuable contributors to the public debate. I have followed Niall’s speaking engagements on YouTube and they’re usually quite interesting and I’ve just finished his Civilization book https://www.amazon.com/dp/B0054TVW04 that by the way pointed out to the pandemic and debt issues throughout and most specifically in its conclusion.

In this short piece, I will outline some of the discussion and key points in the interview very briefly and offer my own opinion alongside where relevant. I strongly believe they’re covering very important issues and are bold enough to be contentious. Many of these points, we will revisit in the near and far future and with no joy I think that there will a lot of validity in the conclusions derived in this interview.

Here’s the YouTube link for John Anderson’s channel and the interview: https://www.youtube.com/watch?v=J3s6pzmmvEg

Below are my key takeaways and personal commentary:

1.       World Economic Forum:
a.       Niall: WEF was held in January this year and did not focus on this pandemic as a risk. I tried to call attention to it and was not successful.
b.      My comment: Virus had already broken out in Wuhan and it is surprising that the global elite was utterly complacent in risk assessment (at the very least in general). This calls out to the general viability of the current global order and / or its main components and / or its priorities and / or its leadership. With 2008 Great Recession as well as with the Coronavirus episode, the global order is rapidly losing trust. Furthermore while the US is acting incompetently, neither EU nor China is a satisfactory global alternative. As it stands, Pax Americana is suffering and heirless.

2.       Inability to Act as per Plans & Preperations:
a.       Niall: The US did have comprehensive pandemic response plans. On paper, it was well prepared and it had resources. Then something went terribly wrong in implementation. Whereas Taiwan and South Korea was able to do the implementation properly. Similarly UK failed as well.
b.      My comment: From far away, the institutional capacity of the US and the UK looks to have eroded in the last couple of years. I disagree with Niall to attribute a higher quality to smaller government (as per his comments in this interview) and think that he is self-contradicting by praising smaller government and the government led responses in Taiwan and South Korea.

3.       On the Government Response:
a.       Niall: This virus is similar to 1958 virus but the responses are very different. In the former economic life was not brought to a halt.
b.      Niall: This shutdown is similar to World War I response where the stock markets were closed on government order and economic dislocation happened due to war related panic.
c.       My comment: From the early days, it has been politically wrong to point out this cost and benefit dilemma. As Niall point out, the worst of both worlds have been achieved in some countries. Virus has spread and the economy was stopped. The complacency early on led to panic afterwards and resulting mix was toxic in multiple fronts.
d.      Graham Fuller was one of the early commentators on this issue in his blog http://grahamefuller.com/corona-thoughts-on-end-times/ : “It may be some time before it becomes clear just how much the sweeping measures to stop the disease may in the end be worse than the disease. But how much worse? In an age when pandemics are likely to emerge again, how much and how often can leaders really shatter public life to meet the disease? And how will shattered economic and social orders ever restore themselves?”
e.      I tried to write about this by creating a fictional world scenario laden with game theory to show that a controlled smart response was better on https://medium.com/photos-2019/a-game-theory-approach-to-coronavirus-decision-making-and-related-economic-loss-potential-making-b087b2a06755. As such I agree with Niall on this issue.
f.        Furthermore, while the governments had China-like tools to employ on enhanced surveillance of their populations; public opinion was a show stopper to limit executive power. However the virus has enabled a Brave New World moment of willing compatriots (who are afraid of health risks and consequently ready to turn in their individual citizen privileges) in the expansion of state powers. The hopeful expect that this will act as a double edged sword and put the onus on the executive to perform. The hopeless (sometimes called the realist) fear that it would be hard to step back to the previous democratic standard

4.       This response was a mistake:
a.       Niall: We copied the Chinese example in lockdown whereas we should have copied the Taiwanese example by following the right China.
b.      Niall: That response would be to ramp up testing and contact tracing alongside using technology to our advantage.
c.       My comment: Full lockdown is very hard to sustain and the virus might just lie in hibernation. The solution to the problem is smart and targeted action that is backed up by testing extensively and contact tracing. Check out some of the commentary I’ve put on my article https://medium.com/datadriveninvestor/a-simple-question-how-likely-to-get-back-to-normal-this-summer-at-the-current-infection-path-ccd28ebc3a69. On this issue as well as this article I’ve put on Medium couple of weeks ago that statistically supports this view https://medium.com/datadriveninvestor/covid-19-mortality-divergence-data-and-conjecture-783368effebf.

5.       Major future risk from monetary and fiscal measures:
a.       Niall: We sought to offset the shock imposed on ourselves by unprecedented monetary and fiscal measures. As we will not get a V shaped recovery, we will not get out of these measures in the foreseeable future.
b.      Niall: By effectively resorting to monetary financing of the governments, Central Banks have thrown out the rulebook. Given the high amount of debt prior to this episode and current levels now to surpass World War levels; there is inflation risk in the future in the long run and a fiscal crunch risk in the short run.
d.      Public trust in fiat is eroding, low growth lies ahead, debt is high and rising, low interest rates for longer appears to be the norm and coupled with all this a massive debt burden can indeed act a Japan moment for the US and the EU along with other notable economies. I fear that the economic fallout could be greater and more long lived that the health fallout once everything settles.

6.       No short term return to normalcy:
a.       Niall: Vaccine, even if effective, is at earliest due in 2021. Indoor events and crowded events should not come back for a while. However, in a smart phased manner, economic activity can be restarted.
b.      Niall: There is no single curve to suppress as pandemics historically had multiple curves. However with the lockdown financial and mental cost, neither population nor the governments are ready to tackle new waves.
c.       My comment: As the Swedish expert Prof. Johan Giesecke points out here on UnHerd https://www.youtube.com/watch?v=bfN2JWifLCY, once the lockdown is initiated; an abrupt stepping out is difficult and a one step at a time approach is necessary. This is my prime worry – which normalcy is hard to achieve and all sorts of setbacks are possible along the way. From a mutation to inadequate herd infection and from a second wave to a relapse in immunity; there are so many things that can jeopardize a so-called normalcy.

7.       China has a lot to answer:
a.       Niall: China has not timely shared the magnitude of the problem. It has not provided adequate information how the virus passed to humans. It has not timely curbed international traffic in and out of China once the virus broke out. China’s claim that it is helping the world is a Cold War level propaganda and a disinformation campaign.
b.      Niall: China has systematically has prevented fair competition, cheated on trade and refrained from playing by global rules. There is a way forward with a liberal economic order but only if both China behaves differently and the West hold it accountable.
c.       My comment: We’re in a unipolar hegemonic world order in which the hegemon is democratic and short of domestic popular support undertake the cost of being a global hegemon. Whether China answers up or not; from my vantage point, both the US is failing at the role and the nearest challenger is far from being a compelling alternative. The Coronavirus episode could add more unpredictability to the already struggling global political order.

8.       The US economy prior to this episode was already on steroids:
a.       Niall: Even at near full employment in 2017, the deficit in the US was unsustainably high. Trump’s tax cuts were a mistake.
b.      Niall: Conservative movement has sort of blown it and I don’t see how we can get back to responsible fiscal policy.

I shall state that I differ from John and Niall on the importance of climate change as they’ve ended up downplaying it perhaps in relation to criticize the failure of Western leadership to recognize this current crisis but nevertheless it came out way below their analytical capacity.

In conclusion, I recommend that you watch the interview and thank you for taking time to read my highlights and commentary on it.

April 2020, Istanbul

Thursday, April 23, 2020

Decision Assessment Score


Decision Assessment Score

Methodology matters. As a graduate of political sciences, I’ve been indoctrinated in the importance of method alongside essence. Back when I was younger and more idealistic, I argued against the relative weight of the method in favor of the essence. No matter what the method would matter I said but that pales if the essence is missed. Somewhere along my university education, I took Methodology from Ilter Turan who was also heading our department at Koç University. I admit it does not sound inspirational but it was an epiphany moment for me.

Come on, methodology does not cut it I hear almost hear you say. It should have been Political Theory to make you jump you might be thinking if you’re paying attention. The reason why it cut it was like going back to high school days in a chemistry lab with liquids and instructions. There’s a reason why such instructions are to be followed starting from safety issues to actually getting the experiment done in a comparable manner to your schoolmates. Similar to the physical lab, politics have ways of doing things that are related to the thing that is being done but nonetheless have a logic in how it is being done as well.

Take for example the rules for parliamentary procedure. It makes a huge difference how something gets taken up – does it go through sub committees or comes directly to the final voting body? How many votes are necessary to suggest an amendment? How many votes are necessary to make the motion pass? Is there an appeal mechanism? How does it get implemented? Politics is altogether different with various method choices for such procedures. A system can be highly centralized and authoritarian or relatively decentralized and inclusive without changing the essence but altering the method of implementation.

The final impact of all decisions are effected both by the quality of the decision as well as the implementation factors. Further making an impact is the timing aspect. After all, the decision to shoot for the goal with the best striker on the team makes sense if the match is still on. After the fact timing would kill the best implemented highest quality decision.

Wondering if a Decision Assessment Score (“DAS”) could be devised, I sat down to devise a very simple formula so that it can be used easily for a decision maker before finalizing the decision making process. I identified Decision, Implementation and Timing as the simplest key factors in calculating the DAS. Incidentally I realized that when simplifying the process; one could focus on critical factors for their own needs.

To illustrate the point, consider a situation in which the decision seems very clear to you and the timing is already late. With these two factors out, it is the implementation quality that will have the biggest impact on the DAS as others are already set. While the analysis might seem self-evident, this approach is specifically intended to make it evident. By dividing up the process in to Decision, Implementation and Timing; the process helps to point out to whatever is self-evident thus to save time and focus on those other factors that can be effected by the decision maker. I would expect that it most situations, the decision maker will have a lot more clarity with the implementation metrics than with the quality of the decision and timing being on either side as per the question at hand.

Before I lay out the formula, I will start by declaring my ultimate suspicion that any life simplifying formula is inherently problematic. As such, this should be taken with a big grain of salt and its relevance should be scrutinized. Beyond this caveat emptor, I think its usefulness will lie in providing a comparable framework to assess the viability of different options or in analyzing decisions made by actors that can be compared.

In the formula design, Decision component has 4 sub-factors:
·         Alternatives Assessed rates the decision making process in being thorough with alternatives the question at hand.
·         Relevance to Question looks at how relevant the answer is to the question. So for example suggesting to drive to location without a proper road will have a low relevance.
·         Resources Considered focuses on the analysis of relationship of the decision with the resources to implement it.
·         Other Factors is a plug-in to add alternatives.

Implementation component has 3 sub-factors that are:
·         Effective that looks at the effective implementation of the decision. Consider that if this an ex-ante situation, this factor as well as the Efficient factor is an estimation. However, if you are using the method as an ex-post analysis, then these factors will reflect the actual outcome of the implementation of the specific decision.
·         Efficient that looks at resource usage.
·         Other is a plug-in to add alternatives.

DAS 1


While I’ve used this design, I encourage you to change the input components as well as the sub-weights for your own needs and experiment with them to suit your question at hand.

So Decision and Implementation sub-factors get graded on a scale of 1 to 10 which are each multiplied by their respective weights. Summation of the sub-factors yield Decision and Implementation scores. The final calculation is made by multiplying Decision, Implementation and Timing scores to arrive at the DAS.

I tested the scoring with a current issue by comparing Germany’s preparedness to coronavirus to Trump’s January position on the virus. While being overly simplistic, I wanted to compare the decision to prepare for a potential epidemic from years ago to downplaying the risk.


No wonder Trump Ignores comes out to be a poor decision. In retrospect we have this answer. What is more interesting is that Trump’s Implementation and Timing is not that bad. Hear me out on this – Implementation looks at the implementation quality with regards to the Decision component. So Trump Ignores looks at how good was the implementation of the ignorance. The 8 score on effectiveness could have been 10 if across the US, all decision makers joined in. The 2 point cut on this score is due to the fact that some experts and elected officials came out against him. As for the Timing, Germany Prepares looks at the timing quality of a preparation decision which was made perfectly i.e. Germany was able to prepare on time before the incident. As for Trump Ignores, Timing deals effectively with a short period of time before Trump got more serious about the matter. For this decision, Timing considers how Trump responded to the ongoing crises in the making. So even if the playing down decision could be poor, the timing of that decision was not behind the curve. It was simply that the decision was quite wrong.

DAS 1 effectively gives equal weight to Decision, Implementation and Timing. Consequently failure in one of these aspects will hurt the final score so much that improvements in others will not be able to make up.

Once I reviewed DAS 1, I wondered if there could be an alternative (totally in line with the spirit of this article).

DAS 2

In this alternative version, DAS is calculated in a different way:
·         Decision and Implementation scores are calculated as in DAS 1 with each sub-factor getting assessed.
·         However than each category is multiplied by its weight (note that Category Weights should add up to 1).
·         Then Decision and Implementation scores are summed up and then multiplied with Timing.


Note that DAS 2 still gives higher markers to Germany’s decision to prepare upfront but the Trump approach fares comparatively better than DAS 1 formula.

The reason is twofold – one is the equal weighting of Decision with Implementation and the other and more important factor is giving emphasis on Timing. Note that DAS 1 had 3 components in multiplication where DAS 2 has Timing multiplied with the combined Decision & Implementation score.

I actually think both approaches are valid depending on the needs of the user. For example. The latter one is more useful if Timing is more relevant to the analysis.

As indicated before, feel free to change headings and weightings to suit your needs.

In concluding, I will point out the combined inspiration for this analysis. On a practical level, I was involved in making an important recruitment choice with a group of esteemed colleagues. Through that process, I tried to quantify the effect that a new team member would have on the management quality for what can be done to improve this effect. On a more philosophical level, my attention was drawn to behavioral economics and decision making by a comment by Mustafa Şeref Akın who is always very wise and inquisitive in such matters. His comment made me think (contentiously with a hypothesis I would not be able to prove) that there is a profound difference in how Turks think differently than the Americans regarding decision making. I surmised that Americans with decentralized institutions and individualistic history are inclined to think decision making important enough to devote theories to it. On the other hand, Turks coming from a more centrist authoritarian background tend less to focus on the mechanics of decision making and more on the decision itself and the impact of the decision.

Istanbul, April 2020


Monday, April 13, 2020

Change in Relative Competitiveness Post-Coronavirus: Individual, Industry and Country Level Thoughts


Change in Relative Competitiveness Post-Coronavirus: Individual, Industry and Country Level Thoughts

Part 1: Individual Level Effects

Will Coronavirus episode effect the relative competitiveness of countries, companies and individuals? If so, how can we measure this? How can we make a projection or at least some sensible prediction on the subject?

Starting from bottom up, individual positioning will be effected by the following factors:
·         Individual’s knowledge base (a)
·         Individual’s economic organization (company, organization etc) (b)
·         Individual’s country or relevant superstructure (c)
·         Global developments (d)
·         Good old random factors sometimes called luck (e)

While sometimes the most effective, let us leave out the effect of random events and/or luck, as it is hard to quantify yet effective on all other factors. The equation for an individual’s competitiveness based on these factors will be something like:

( (a x w1) x (b x w2) x (c x w3) x (d x w4) ) x e

In this equation, w figures represent the relative weights of each factor and e is a global effect.

To put this in perspective, let us take three practical examples. John is a waiter at a busy city center restaurant, Mary is a software engineer working for a videoconferencing company and Sarah is a nurse with an intensive care specialty. For this example, let us base them all in London.

For John:
·         John is undertaking a generic job, which worker replicability is high and barriers to entry are low. On a ranking of 100, he gets 20 for this job (a).
·         Restaurant sector is relatively hard hit but with restrictions easing in couple of months, a significant recovery (albeit maybe not to the previous level without some competitors going out) is to be expected. On a ranking of 100, restaurant sector gets 70 (b).
·         UK’s and London’s performance during the pandemic and following it will not have a material positive or negative impact is my assumption. Thus as one of the primary global locations, the rating will be 100. (c)
·         However, with global travel demand falling, the prime location status will be negatively affected even if for a shorter duration. The rating is 70 for this factor as well. (d)
·         For John alone, the most important factors in this specific line of business go as follows: John’s performance w1 (30%), specific business w2 (40%), and w3 and w4 getting 15% each.


For Mary:
·         Mary has a specialized job with global high demand now. On a ranking of 100, she gets 80 for this job (a).
·         Videoconferencing software is going through a boom now. On a ranking of 100, her sector gets 100 (b).
·         London or any other city is not a solo defining competitive characteristic for this industry and the ranking is a positive natural with 60 (c).
·         Global demand for videoconferencing is high and expected to rise. However, there is intensive competition reducing this rating. The rating is 80 for this factor as well. (d)
·         For Mary, the most important factors in this specific line of business go as follows: Mary’s performance w1 (30%), specific business w2 (35%), , w3 gets 5% minimum and w4 gets 30%.

For Sarah:
·         Sarah has a specialized job with global high demand now. On a ranking of 100, she gets 90 for this job (a).
·         The hospital Sarah works for is on the frontlines now and other hospitals might engage her services. On a ranking of 100, her sector gets 100 (b).
·         London as a big city is relatively more robust with job opportunities for Sarah: 90 (c).
·         Global demand will remain very high for the next 2 years and furthermore might keep up with national epidemic planning. However, there is a big personal health risk factor in this occupation: 80 (d).
·         For Sarah, the most important factors in this specific line of business go as follows: Sarah’s performance w1 (15%), specific business w2 (40%), w3 gets 15% and w4 gets 30%.

If we tabulate the inputs, this the summary output:

 


 





Based on the output, the following inferences can be made:
·         Each occupation along with the setting where it is performed and global trends requires a different weighting to analysis.
·         There are marked differences in the competitiveness of different jobs.
·         However, this is a dynamic analysis as factors favoring or disfavoring will change. For example in a high demand situation such as today, a nurse’s performance is less important than the fact that he/she is a nurse. Such a factor will normalize and emphasis on performance will take more weight in a normalizing situation. 

In summary, as we all knew different occupations had different attractiveness and competitiveness before the coronavirus episode. However, coronavirus has amplified some expertise and sectors over the others. While most of these effects will normalize over time, prevalence of certain skill sets pertaining especially to digital expertise along with adaptation to new modes work will have even greater role. Combined with the quickening of the general business cycle with emphasis on new modes of doing business (videoconference before you meet, collaborate remotely on the document etc) and change in relative growth differentials among sectors will have a profound effect on individual competitiveness in the very near future.


Part 2: Company / Sector Level Positioning


I have prepared a subjective assessment of a variety of industries and listed a number of factors effecting them all and grading them on -10 to +10 scale. The data table is presented below.





The validity of the assessment is subjective and with most of the work I am doing with the coronavirus episode, it is mostly intended to foster further thinking on the subject. To that end, there are various observations of note from the data:

·         There is a huge divergence in the Total Score with industries such as Airline, Luxury Items, Automotive, Tourism and Restaurants hit very hard while Online Media, Pharmaceuticals, Healthcare, Telecoms and Software benefitting from the situation.
·         This reaffirms the premise of this article as to the point that while the capitalist superstructure will be intact, relative distribution of winners post coronavirus episode will change meaningfully.
·         Individual effect of factors are interesting to watch as Digital Transformation and Government Intervention (most to provide support with different measures) will have positive impact in general.
·         No change in long-term growth potential or consumer behavior is predicted via this table.
·         However, current measures are having and will have a major toll on certain industries as to be expected.




Part 3: Country Level Competitiveness

I have looked at changes in GDP and relative share of global GDP per country to look at historical change in country level competitiveness. While there could be other and better factors to explain relative competitiveness changes, in a 10-year period or longer GDP performance would be a general all-inclusive metric to reflect most other factors combined.

Let us look at the data first. Note that Data is primarily from World Bank and I have updated 2019 figures with Countryeconomy.com data. 







 

 

In this part, the emphasis will be on historical context with the premise that current conditions can speed up historical factors (on the same or on the opposite trajectory – but faster). As such, this is what the data shows in general terms:
·         From 2001 to 2019, the most notable change is China’s rise from 4% of World GDP to 16.4%.
·         Similarly big relative increases are observed for India and some emerging markets to a lesser degree.
·         For this period, the relative loss is shouldered primarily by the US and Japan.
·         However once we change the scope to 2009 to 2019, then the picture is different. The US for example stays at 23.9% of World GDP for that period. China goes up by 7.9% - this time from Japan and Europe.



 

 

 



Once we look at the the even closer period from 2017 to 2019, except for China the global effects are limited and contained in certain economies with either country specific potential or problems. Yet China’s ascendance continues.

 


The table below is built on the same data but shows the ratio of a country’s share Vis a Vis different periods.








To sum everything up, there will be a major change in competitive position of both individuals, sectors and companies. The combination of these three headline variables could have profound effect on each one of us. However, it is my expectation that this major redistributive effect will still take place within the general parameters of the current global economic order. That change is yet to come later and we have enough of a change within the current system as it stands.


April 2020

Sunday, April 12, 2020

Covid-19 Mortality Divergence: Data and Conjecture


Covid-19 Mortality Divergence: Data and Conjecture

Why is this Article Written?
I am not a statistician and the scope of this article in statistical terms is beyond my capability. However I believe I can be helpful in asking the questions that others can pick up on and develop further. As such this article is an attempt to draw attention to important yet nonetheless out under the sun issues regarding the Coronavirus episode. Its primary aim is to help our understanding by fostering analysis and deeper thinking about the issues at hand.

The Question: Why such a big divergence in mortality?
Coronavirus world level data shows big divergences in number of deaths among countries. There are the likes of Belgium, France, Italy, Netherlands, Spain and United Kingdom where mortality from the confirmed cases are 10% and upwards. At the same time; Canada, Germany, South Korea, Switzerland, United States and Turkey report 4% and below mortality. Data quality and stage of breakout in each country notwithstanding, the divergence is too great to ignore. What could be causing this divergence?

Potential Answers: Focusing on available data with testing, cases and deaths
Data quality and stage of breakout are both potentially important factors but given the size of the data and the length of the breakout, a sufficiently large sample size might negate analytical problems with them.

A reasonable answer is that higher mortality is reported by countries who do not test extensively. This is a tricky issue as extensive testing is not only related to numbers but also to sample distribution. While a high number of tests is more likely to indicate a wider country level distribution, it does not necessarily have to be so. In addition, number of tests does not mean number of individuals tested. Indeed the total test size might include multiple tests for same people including repeated tests for healthcare workers lacking any qualitative data to smooth for this factors, number of tests was used as the main indicator for coverage. Prior to data analysis, my hypothesis was that those countries with higher mortality rates would have (i) less tests per 1M population and (ii) higher confirmed cases per test. The first implying relatively limited coverage and the second showing focus on more symptomatic cases (and potential overextension of healthcare system due to high number of cases).

Another answer was the quality of the healthcare system and yet another was the effect of preventative measures on the overall progress of the epidemic in that country. Higher mortality question has an answer that probably is a composite of these and other reasons (genetics, demography and such) but for the purposes of this article, I’ll cover the testing, cases and deaths angle to see if it helps to tackle the question better.


Methodology
I wanted the work to be as timely as possible but April 9 figures was the most up to date I can get with enough of a sample. To this end, I extensively used the data from Our World in Data https://ourworldindata.org/coronavirus along with Statista https://www.statista.com/statistics/1028731/covid19-tests-select-countries-worldwide/ and Worldometer for population figures https://www.worldometers.info/world-population/population-by-country/.
For France, Germany and Sweden, I took the test figures from April 8 and extrapolated quite liberally to April 9. Given the short duration, I believe my extrapolation should not cause a meaningful statistical divergence.
I took a sample of 28 countries that have a cumulative population of over 2.7 billion people. I left out China as its testing data and its stage in the epidemic was not compatible with most others in the sample.
I’ve used 4 metrics for the analysis: Population, Tests, Confirmed Cased, and Deaths. From these main data points I’ve looked at the following derivatives:
·         (a) Case / Test ratio: Is there a meaningful average among countries?
·         (b) Deaths / Case ratio: There should be a closer relationship here than (a).
·         (c) Deaths / Test ratio: Does this make any sense? If so, what sense?
·         (d) Tests per 1M: This is a coverage check for the country.
·         (e) Cases per 1M: This is an infection spread check for the country. Its relation to coverage could be meaningful.
·         (f) Deaths per 1M: This is to compare countries on the population metric.
·         (g) Tests / Population: To verify as a percentage how much of the population (given reservation in Potential Answers section) was covered.
·         (h) Cases / Population: Same as (e) but to see spread as percentage point.
·         Average, Median and Standard Deviations for these results.
·         Ratio of Standard Deviation to Average to see which factor has a bigger divergence.


Results Table






Observation – 1: Case per Test Relationship
On average 10.65% of tests yield a positive result – a Covid-19 case. However data among countries differ widely from Bahrain’s 1.49% to France’s 32.92%. More importantly there is a clustering effect here. Once the average is breached upwards as is with Switzerland, then the figures are noticeably higher on the higher ratio countries. One explanation could be that, these countries above the average are testing patients with symptoms that are more likely to be infected. Let’s look at this when we examine if there is a correlation between these countries and the number of tests they’ve done in relation to their population which different from the lower Case / Test ratio countries here (*Follow-Up Point 1*).




 Observation – 2: Deaths per Case Relationship
On average 3.97% is the mortality rate from confirmed cases. However, similar to Case / Test statistic, there is a wide difference among countries and cluster effects persist with a group of countries scoring very low or very high on this matter.

As we have the Case / Test ratio as Observation – 1, if the Follow-Up Point 1 was valid then the countries with higher Case / Test ratio should be the ones with higher Death / Case ratio. This would strengthen the fact that these are countries with healthcare systems under strain (along with possible other factors that limit their testing dispersion).




Of the 10 countries with Case / Test averages above the sample average, 7 have Death / Case averages that strengthen that these countries are under the strain of incoming patients (*Follow-Up Point 1*). But 3 out of 10 divergence with Switzerland, Turkey and the US is still worth investigating. I would speculate that Turkey and the US examples are due to their relative lag to the other countries in the sample. This lag could be helping them with better treatment options. Switzerland with its older population and Central European position that probably clocks a similar time needs more explanation. Perhaps its data will converge or perhaps its resources are greater to combat the deaths. Furthermore, Turkey and the US data in to the next couple of weeks is worth observing on this metric.

Finally please note that the ratio of Standard Deviation to Average on this one is greater than Case / Test ratio. As you’d see in Observation 3 – the Standard Deviation to Average ratio would increase further on Deaths / Test metric.

 



Observation – 3: Deaths per Test Relationship
On average mortality is 0.69% of tests made. Similar to Case per Test and Deaths per Case observations. There is a visible clustering effect here. As this is a derivative of the first two observations that uses two variables which were covered in Observations 1 and 2, let us check the validity of this expectation with a table.





Deaths per Test ratio seems to point out to countries which have relatively a bigger problem dealing with this pandemic. Note that Switzerland, Turkey and the US drops from this list as well from the Death / Case list. The countries on this list are the ones that have trouble with containing their death figures.

Please note that the analysis is based on the sample as of April 9. Spain for example would possibly on this list but its data was not readily available in the sources I used.

Finally note that Standard Deviation to Average increases further on this metric. I would speculate that the increasing magnitude of this metric from Case/Test to Death/Case to Death/Test shows the divergence of epidemic progression in different countries. While the difference is observable in the case confirmations, it is amplified in how the discovered cases fare afterwards. For further analysis, there is a follow-up point here as to the validity of some countries doing a lot better in dealing with coronavirus.

 




Observation – 4: Coverage Ratios
Coverage Ratios deal with how much of the population was tested and what were the results per 1M of population or as a percentage of the total population (whichever method is easier to look at).
On average 9,440 test per 1 million population has been conducted as of April 9 with our sample set. This corresponds to testing only 0.94% of the total population. However given multiple tests, actual number of population tested would be below this figure.

On average 750 cases have been confirmed for each 1 million of population corresponding to 0.07% of the corresponding populations confirmed to be infected.

The averages look pretty low and the distribution is a bit different from other observations. Some countries such as Bahrain, Norway, Estonia, Switzerland, Germany, Italy and Austria among them have done extensive testing. Most of these countries have fared better except for Italy in the number of deaths. This is similar to the others in the top of testing list. I believe this is beyond coincidence and there is a clear positive link between number of tests conducted (as a percentage of population) and the success of a country dealing with its epidemic.

There is a subset of countries that are more than 1/3 below the average in Tests per 1M ratio. These are Malaysia, Costa Rica, Ecuador, Japan, India and Indonesia. All these countries have below average Cases per 1M ratio. This reaffirms that only with adequate testing, cases are discovered – once again underscoring the importance of extensive testing. Note that of these significantly below average testers, Ecuador and Indonesia have statistically high Case/Test and Death/Case ratios that hint at their inability to detect the extensiveness of the problem in their respective countries. However, on a contrarian note; Costa Rica and Japan have done limited testing and faring well. There is another follow-up point here regarding those two.





Please recall that in Observations 1 and 2, I had a follow-up point contained within this article that was: One explanation could be that, these countries above the average are testing patients with symptoms that are more likely to be infected. Let’s look at this when we examine if there is a correlation between these countries and the number of tests they’ve done in relation to their population which different from the lower Case / Test ratio countries here (*Follow-Up Point 1*).
I was basically asking whether the high Case per Test ratio was due to lower testing coverage for those countries. Let’s tabulate the answer with data from Observation-4.


 

Of the 10 countries that had higher than average Case / Test ratio, 7 of them have lower than Test / Population ratio. An observation that needs further verification is that these 7 countries are dealing with incoming patients that skew their positive test results to the upside. This on one hand is positive for their future progress but it can also hint at potential bottlenecks for their healthcare systems. For the third time, this derivative analysis shows the importance of increasing testing coverage. To this end, Turkey and the US following the date of this data set have increased their daily testing which in my opinion is a step in the right direction. As for Italy and Belgium that have higher test coverage but still have faced tough times in dealing with their cases, I raise another follow-up point for future researchers. They might have suffered under the onslaught of rapidly increasing infections that needed hospitalization and their testing might not have caught up in time. The answer is not in this data covered by this article.


Observation – 5: Those with the Best Ratios
This article focuses on the problems with the intention of being helpful. While the data is evident in the tables and charts, we can also learn from those countries that were more successful so far. To my surprise, they come from all around the globe. I have defined the success metric as follows: Those countries with below average deaths per 1 million of their population and above average tests per 1 million of their population.

Ranked in order of less deaths, the countries below have tested extensively and prevented deaths. A cursory glance implies all have high income levels but I leave it up for another follow-up point to pinpoint similarities among this sample and comparisons with others in the data set.

 



Conclusion
It is my sincere wish that this article contributes to thinking about the problem at hand.

I am 100% confident that we will manage to deal with the virus problem. This cycle will peak in April and second half of May will feel somewhat better.

We will have to learn to live with coronavirus for some more time and  the follow-up cycles will test us. To that end, the problem is less to do with the virus than in our response to it. I hope that we learn from each other, co-operate and improve our methods in dealing with it. Success is inevitable but the cost of success is to be determined by our methods.

April 11, 2020

Coronavirus Active Cases Graphs: Different Paths for Different Countries

Coronavirus Active Cases Graphs: Different Paths for Different Countries All the data in this article is from - https://www.worldomete...