Is COVID-19 Disruptive to Traditional Economic Models? [VIDEO]
In this exclusive expert video briefing from the IMS COVID-19 Research Insights Series, we speak with economist Donald House about how the pandemic has affected current economic models and how to move forward.
Christopher Ritter: Traditionally when an economist comes in and testifies, they don't testify on any of the liability issues. Their job is really to kind of let those issues be resolved somewhere else, but to come up and decide what level of damages are appropriate? And typically, how is that done? And how do you see that changing if at all as a result of COVID?
Don House: Well, it changes what is to be expected normally, if for instance there was a fire, and there was a shop that burned down and was rebuilt, we have the historical record. And perhaps how quickly you can recover back to normalcy, especially if it's a relatively short period of time. Here however, you've been shut down for maybe two and three months, and you have a customer base that may be hesitant to come back and shop at the same patterns that they did before COVID-19. And this is untraveled waters. We don't know how long it will take for the local markets really to come back to what we would call a normal situation.
So in terms of calculating future damages, and that's what economists often are trying to do, it's very difficult to find a parallel. That is, is there any kind of comparable industry that you could look at? No, they're all affected. Is there a before and after? Can we go back to a period of time when this happened before and track the recovery period? No, we don't have that either. So it's going to be difficult to calculate future damages, which would include some notion of recovery from the COVID-19, which we haven't seen before.