Economists have been getting bad press because of the antics of the Bank of England and its Monetary Policy Committee. We are suffering from what we, as economists, describe as a “negative externality”. It might be convenient for you to drive your car, for example, but the emissions which this creates have a negative impact on others. In the same way, the errors of the Committee are giving rise to a bad impression of economists as a whole.
There has recently been one notable and important exception to this. In his evidence to the Covid-19 Inquiry, the government’s former Chief Scientific Adviser Sir Patrick Vallance seems to have undergone a dramatic conversion.
He called for a strong representation of economists in any group which is set up to advise the government of the day on how to deal with future pandemics. Vallance argued that economists could help assess the “difficult trade-offs that occur” during a pandemic emergency. In other words, economists should assess the costs and benefits of following any particular policy.
During the pandemic, SAGE, the Scientific Advisory Group for Emergencies, was of course dominated by epidemiological models. The errors in their forecasts made the Bank of England look like a paradigm of scientific accuracy.
Economists were far from silent during the pandemic. Several assessments were made during the summer of 2020 of the costs and benefits of lockdown by distinguished authors.
In a paper published in the Oxford Review of Economic Policy in August 2020, for example, Bob Rowthorn, a former head of the department of economics at Cambridge, argued that lockdowns lasting 10 weeks could only be justified if the value of each individual life of those who died of Covid-19 was more than £10m.
Of course, each single death was a tragedy both for the person concerned and for their close friends and relatives. But given that many of the victims of Covid-19 were aged 85 or more, normal NHS criteria for resourcing would have applied but weren’t.
David Miles, now of the Office for Budget Responsibility and based at Imperial, published an assessment at the end of June 2020. He argued that it was essential to normalise how we viewed Covid-19. Its costs and risks are comparable to other health problems, such as cancer, heart problems and diabetes, where governments have made resource decisions for decades.
The lockdown is a public health policy and Miles and his medical collaborators valued its impact using the standard tools developed by the National Institute for Health and Care Excellence to guide health care decisions in the UK public health system. In the authors’ own words, “we find that having extended the lockdown for as long as three months consistently generates costs that are greater – and often dramatically greater – than likely benefits”.
Economics can be of great value in the policy making process as these examples show. It was the choice of the government of the day to follow another route.
Patrick Vallance’s change of mind on the role of economists is to be applauded unreservedly. It takes courage to do this in the context of public policy.
But open mindedness and a willingness to carry out a fundamental reappraisal of previous policies are essential if we want to get better, as a country, in the way we value the costs and benefits of our strategies.
