There’s a lot of people stressing over government strategy. However, this only really works if the basics are being covered. For instance, housing market crash caught a lot of people off guard. However, there were a few firms that saw it coming, bought insurance against it in the forms of swaps, and made a killing. Now betting against the housing market when everyone else was doing the opposite is a risky move. What convinced one firm was that the investment bankers actually went onto the ground. They pretended to be interested in buying a house. When the estate agents weren’t even checking for proof of income, and casually told them that their loans will be approved within a week, they knew that a crash was coming. No matter how sophisticated the analysis is, if you’re not verifying income when dishing out loans, there’s going to be a lot of defaults. A defaulted loan can knock out multiple good loans. You only need a certain tipping point and you’re done.

This is the same with this virus. When I walked into the supermarket three days ago, half the people were not even wearing masks, and people working there had them pulled down under their chin. Some of the people who were wearing them had their noses out etc. I have heard people say that masks are not effective. One point is that the virus is a lot smaller than the holes in the mask. This is true, but you don’t breathe out pure virus particles. They mainly travel in the water droplets you breath out and they certainly are blocked by a mask.

I spoke to a friend of mine on the phone the other day. She’s a medical doctor who studied postgrad in epidemiology at Imperial and is now working in Ben Goldacre’s team at Oxford processing COVID data. Nature approached her team asking them to publish their findings in the largest COVID analysis done in the world and her computational approaches were also covered in the Economist. She’s a good friend and we’ve been coding medical simulation software as a side project together. When we rant about COVID on phone calls to each other, we do not about the cheap political theatre, but the lack of ability of the public to wear masks as she sees the same when she goes out shopping.

The thing is, over time, there’s a compound effect as infected people can go on to infect others. It’s similar to putting a little bit of money into an index fund every month. Over 20 years, the interest accumulates more interest, and you start to get an exponential rise. Let’s say you put in £400 a month. If the market averages at 1% growth, you’ll have £95,041. If the market averages at 8% growth (only a 7% difference) you’ll have £201,843. The same is with mask wearing. Even if mask wearing only reduces the chance of transmission by 30%, over time, because of compound affects you can get huge differences in outcome. The simulation that was a collaboration between Hong Kong, UCL, Cambridge, Paris, and Finland concluded that if 80% of the population wore masks properly, it would have the same effect as a strict lockdown [link]. The cost of wearing and operating masks is also super cheap. It’s a no brainer.

This experience has changed my reading. I’ve stopped reading academically adrift halfway through and picked up a couple of books on behavioural economics which is basically, why people do stupid things that are illogical and go against their best interests. We can always learn from great events like this. For me, I greatly underestimated how incompetent the general public is.