The COVID-19 crisis is unprecedented in a number of ways, and according to Chicago Booth's Constantine Yannelis, at least one of those ways is good: the extraordinary availability of high-frequency data. Using such data, he says, researchers in various fields might be able to better advise policy makers and mitigate damage to both the economy and public health.
One of the last things I did before self-isolation was I went to see a play with my wife and one of my colleagues. And we saw Rahm Emanuel at that play, and to quote him, he said, “A crisis is a terrible thing to waste.” And as terrible as this crisis is, I think we’re going to learn a lot about how the world works.
Pandemics have been with mankind since the beginning of recorded history. If you think of the Spanish flu, the bubonic plague, or Justinian’s plague in the Eastern Roman Empire, there have been massive plagues throughout human history. This is first time in history that we actually have high-frequency data on how household spending changes during plagues.
I think that we won’t end up Monday-morning quarterbacking, as was very much the response to the last crisis, because we just have much more available data. Researchers can study the world, learn how the world works, and then policy makers can make informed decisions about how to respond to this new threat.
We’re using data from an online account aggregator. This is a service where people link their various accounts, and actually it’s a not-for-profit fintech that provides financial advice to individuals. So I think there’s a lot of that account data.
Something that’s ubiquitous today that was quite uncommon 12 years ago, during the last crisis, is that most households use some form of financial technology and some form of online banking. And that leads to very, very high-frequency data that hopefully can be shared with researchers in real time to see what’s happening to household spending. And there’s similar data for businesses, too, coming from credit bureaus and other companies that provide services to these businesses.
And I think this isn’t true just in business and economics, but in a wide number of fields. I don’t want to get too far out of the area of my expertise, because then I can get in trouble, but my understanding is that this data has tremendous potential in medicine, too. So, for example, in China there were apps that were created that track movement and, potentially, exposure to somebody infected with the virus. And at least from what I’ve heard, this has been effective in controlling the disease.
Now, of course, that raises a host of other concerns with privacy and whether people want to share this information. But, this technology raises quite a bit of potential to do both good and bad in the world.
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