These new status behaviours are what one expert calls 'inconspicuous consumption'.
How will the current challenges to the global economy pressure it to change?
- Life is different everywhere—it is determined by the context of a unique culture and a unique geography. The same goes for economies. Local economies are unique to their contexts, says John Fullerton, founder and president of Capital Institute.
- "[I]magine if you thought about human economic development from a place-based perspective," says Fullerton. "You would have, instead of a global corporation like Apple, thought of as a single thing, you would have Apple's manufacturing plant in China as part of the Chinese bioregional economy."
- The pressure on the current global economy will cause it to shift and evolve into a healthier state of community-based economic development.
Economics professor Stephen M. Miller shares his insights in this exclusive interview.
- Stephen M. Miller, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, gives insight into how the COVID-19 pandemic impacts American economies.
- Calling it a "trade-off between public health and economic health," Miller explains why social distancing is a necessary measure to avoid a total crash of economies.
- The SIR model, which is a guide to assessing how much of the population is actively infected, shows what could happen if the active cases of infection goes above 10% of the population.
COVID-19 and the American economy<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjg5NTk0MC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMzk5NDY4MX0.3QVZb0barVNedh4PrHTG5T-rEDiTo0u0BPPvTDEy5LA/img.jpg?width=1245&coordinates=0%2C291%2C0%2C292&height=700" id="764b5" class="rm-shortcode" data-rm-shortcode-id="233e0e2ce8f36ebbfc0960588c1b77de" data-rm-shortcode-name="rebelmouse-image" alt="business window sorry we're closed sign" />
Photo by Maderla on Shutterstock<p>From non-essential businesses closing down to people experiencing temporary loss of work - what will the economic impact of this pandemic be in the near and distant future?</p><p><a href="https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=48097" target="_blank">Stephen M. Miller</a>, director of the <a href="https://cber.unlv.edu/" target="_blank">Center for Business and Economic-Research</a> at the University of Nevada, Las Vegas, agreed to chat with Big Think to answer some of the most pressing questions about how pandemics such as COVID-19 can impact the American economy. </p><p><strong>COVID-19 - the trade-off between public health and the health of the economy</strong></p><p><em>"The COVID-19 event caused a trade-off between public health and economic health," </em>explains Miller.<em> "In order to protect public health, governors felt it necessary to lock down their state's economies by closing down non-essentials and asking residents to go home." </em></p><p>This lockdown, according to Miller, is considered an adoption of nationally social-distancing regulations which has seen an instantaneous recession. He goes on to explain the risk of bankruptcy many small businesses are facing:</p><p><em>"The exposure [to facing bankruptcy] that businesses face depends on the liquid reserves they hold that they can use to survive a large loss of revenue from declining business activity." </em></p><p>While there is no way to tell just how deeply small businesses will be impacted, it will likely involve many small business closures. </p><p><strong>What is the trajectory of COVID-19's impact on the economy? </strong></p><p>Miller says that the effect on the American economy depends on the length of the pandemic. The longer COVID-19 lingers, the deeper the impact on the economy will be and the longer it could take for businesses and residents to recover. </p><p><strong>What can people do to help the economy during these difficult economic times? </strong></p><p><em>"People can follow the guidance of public health officials on social distancing and staying at home to solve the pandemic problem. </em><em>The federal government has a big role to play in building bridges across the time the pandemic shuts down the economy, bridges for workers and small businesses so that the economy can take off again after the pandemic ends."</em></p><p><strong>Can past pandemics give us an idea of what to expect about the short and long-term repercussions of COVID-19 on the American economy?</strong></p><p><em>"This event appears to conform to the characteristics of the Spanish Flu in 1918-1919," explains Miller, "[That] pandemic killed 675,000 individuals in the US (0.8% of the 1910 population). Given today's population of 331 million, that translates into about 2.6 million deaths." </em></p><p>Miller further explains that our healthcare system and the structures in place to re-balance the American economy are much improved since the 1900s – however, our much-improved geographic mobility makes the transmission of a pandemic more problematic than it was in the past. </p>
The SIR model<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjg5NTk0My9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY2MDY2NTU0NX0.LTUNv92-mvZe5vLxZLFd6KwLrFzSqyThPOxGj6btrYk/img.jpg?width=1245&coordinates=0%2C46%2C0%2C46&height=700" id="097eb" class="rm-shortcode" data-rm-shortcode-id="e27bad5095df1065d84481dfbdd50a9f" data-rm-shortcode-name="rebelmouse-image" alt="concept of damaged economy COVID-19 five dollar American bill with quarantine mask on" />
How can we estimate the damage caused to our economy from COVID-19?
Image by Ascannio on Shutterstock<p><a href="https://www.researchgate.net/figure/Markov-chain-of-transition-probabilities-in-the-S-I-R-model_fig1_224124116" target="_blank">The SIR model</a> is a guide to assessing the spread of an epidemic in a population in which the total population is divided into three categories:</p><ol><li>Susceptible (S)</li><li>Actively Infected (I)</li><li>Recovered/Deceased (R) </li></ol><p>How an epidemic pans out vastly depends on the transition rates between these three categories. According to <a href="https://www.nber.org/papers/w26867" target="_blank">recently published working paper</a><a href="https://www.nber.org/papers/w26867">ecently published working paper</a> by UCLA professor Andrew Atkeson, special attention will need to be given if the fraction of active infections throughout the population exceeds 1%. At this point, the health system forecast will be severely challenged.</p><p>Trajectory shows that if the fraction of active infections were to reach 10% or higher, this would result in staffing shortages for key financial and economic infrastructure, which could have devastating results. </p><p>The main conclusion of this paper is that the evolution of COVID-19 in the United States (and worldwide) will likely require social distancing measures to be maintained for an entire year or longer until a vaccine can be developed to avoid severe public health and economic consequences. </p><p>The economic costs of social distancing will be felt deeply across every state's economy as businesses close and employees are instructed to stay home, but the cost of a large cumulative burden of lost work time due to the disease further spreading could be much higher. </p>
From understanding human aggression to epigenetics, Stanford University offers all 25 lessons of this fascinating course for free on YouTube.
- Stanford's Human Behavioral Biology course explores the interconnections between physiology and behavior.
- Most of the course is taught by Robert M. Sapolsky, a professor of biology, neurology, and neurosciences at Stanford, and also an author and contributor to Big Think.
- Check out some highlights from the course below.
The limits of categorical thinking<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="e9e4d03d604596d6aa3364e481ff311d"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/NNnIGh9g6fA?list=PLpXaCv0b7h12LpVunZ361VfCBQSwi_2e8&rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>In the first lesson of the course, Sapolsky quickly reads a bunch of phone numbers, and instructs the students to write down as many as possible. For the first few examples, Sapolsky breaks up the phone numbers into the familiar "123-4567" pattern of which we're accustomed. He then starts reading them in unusual patterns — "1-23-456-7" — in an attempt to confuse and disrupt categorical thinking patterns.<br></p><p>Sapolsky says that categorical thinking helps us make sense of the world and store information more easily. But he uses this example to get the class thinking about how paying too much attention to the boundaries in categorical thinking can cause you to lose sight of the big picture. (Sapolsky elaborates at 16:45 in the video.)</p>
The "worst urban myth of evolution"<p>In the first lesson on behavioral evolution, Sapolsky introduces the class to applying Darwinian principles of evolution to behavior.<br></p><p style="margin-left: 20px;">"The first thing we need to do is unlearn something we all learned back when, on all those National Geographic specials that would consistently teach us something about this aspect of evolution, and would always teach it to us wrong."</p><p>Another scenario: A herd of 2 million wildebeest is migrating toward greener pastures. The herd eventually comes to a river. It's teeming with crocodiles. The wildebeest stop. Then, one elderly wildebeest steps up to the riverbank, jumps into the water, and gets eaten by the crocodiles, creating an opportunity for the rest of the herd to safely cross.</p><p>Was this a heroic sacrifice? Sapolsky says that popular science programs like National Geographic have long claimed that animals tend to "behave for the good of the species," an idea described by <a href="https://en.wikipedia.org/wiki/Group_selection" target="_blank">group selection</a>. But this is the "worst urban myth of evolution," he says.</p><p>If you look closely at the wildebeest scenario, you'd see something decidedly less heroic, the professor says: the herd is actually pushing the elderly wildebeest up to the front of the line. "All of the other ones are saying, 'Yeah, get the old guy on the river!' Sacrificing himself, my ass."</p><p style="margin-left: 20px;">"Animals behave in order to maximize the number of copies of genes they leave in the next generation," Sapolsky continues. "Remember: not survival of the fittest, reproduction of the fittest."</p>
What to ask about any scientific study<p>In 2007, scientists published a major study showing that first-borns tend to have higher IQs than their siblings. The researchers controlled for nearly everything you might think of: differences in parental investment, parents who only have one child, age of the children when tested, etc. Media outlets ran with study, but lost in much of the coverage was a simple question: How big of a difference did the study find? The answer: 2.3 points.</p><p style="margin-left: 20px;">"You sneeze while you're taking an IQ test and have to wipe your nose for eight seconds afterward, and that's going to cost you 2.3 IQ points," Sapolsky says.</p><p>The study was a great example of how the results of a study can be impeccable and statistically reliable, and also unimportant. At the <a href="https://www.youtube.com/watch?v=P388gUPSq_I&list=PLpXaCv0b7h12LpVunZ361VfCBQSwi_2e8&index=8" target="_blank">9:30 mark in the 8th lesson</a>, Sapolsky uses a "Chutes and Ladders" experiment to illustrate how to better interpret the results and methodology of scientific experiments.</p>
Epigenetic programming<p>Near the end of the course's first lesson on behavioral genetics, Sapolsky discusses how early experiences can shape long-lasting behavioral dispositions. These dispositions might appear to be genetically inherited. But Sapolsky notes that <a href="https://www.nature.com/articles/nn1276" target="_blank">epigenetic research on rats</a> shows that environmental factors — like mothering style — can influence how likely a pup is to express certain genes. Such genes might be responsible, say, for making receptors for stress hormones. <br></p><p style="margin-left: 20px;">"Your early experience is going to cause life-long changes in your brain, which will make you more likely to reproduce the same experience for your offspring," Sapolsky says around 135:15 in the video below.</p>
When facing a tough decision, it pays to trust your gut.
- A recent study examined the accuracy of predictions of soccer matches on a popular betting website.
- The users were allowed to revise their bets up until the match started.
- Surprisingly, the results revealed that the revised bets were much more likely to be incorrect.
Why did users change their minds?<p>"We can only speculate, but we might imagine that game players input their initial forecast, following which they look at the latest online betting odds on the match, or look for other information which might affect their judgement, such as news on team selection for the match," the researchers wrote. "Alternatively, these revisions could simply be the result of changes to initial judgements without any new information."</p><p>You might think the ability to revise your prediction would be an advantage. After all, maybe you had more time to carefully consider which team is more likely to win. Maybe public opinion on the two teams had shifted over time. Or maybe one of the teams had recently begun an incredible winning streak.</p><p>But the results of the study showed that prediction accuracy decreased significantly — by about 17 percent — when users revised their original predictions. Why? Given that the study controlled for variations by players and teams, it's unlikely that the drop-off in accuracy was due to some matches being harder to predict than others, or some users being better predictors than others.</p>
Pixabay<p>One possible explanation is a behavioral bias that describes how people are likely to overreact to news that is salient. So, when you learn, for instance, that a player on one of the teams was injured, you might respond excessively to that news, leading you to revise your original prediction.</p><p>The results revealed that revisions made after a longer period of time, as opposed to just a few minutes, were much less likely to be correct. Also, users were less likely to predict correctly when their revised predictions included <em>higher scores</em>, for example, changing a 1-2 outcome to a 2-3 outcome. Interestingly, most users underestimated the likelihood of a 0-0 draw. Broadly, this suggests that we tend to falsely believe it's more likely for <em>something to happen </em>than <em>nothing.</em></p>