Opinion

Thinking appropriately in situations of uncertainty: Covid-19 and the economy

Thinking appropriately in situations of uncertainty: Covid-19 and the economy

Here is another way to think about what we have been through in the last couple of months and what is yet to come:

I read a statement by Harvard epidemiologist Marc Lipsitch a couple of days ago, which I find important to share. He said, these days there are:

  • Facts
  • Informed extrapolations from analogies to other viruses, and
  • Opinions or Speculations.

According to Lipsitch much of what we hear these days fall into one of the three categories listed above.

The truth is these days every one of us has the same data regarding the present and the same ignorance regarding the future and this really sums up the situation.

In actual sense, most of what we have today is opinion and much of it incline either optimistic or pessimistic. In such a situation, if a person read and/or listen just to the optimistic pieces, they might be tempted to think Covid-19 will soon be eradicated and the economy brought back to health.

On the other hand, if a person read and /or listen to only the negative pieces, they might as well conclude that humanity is done.

Altogether, the difference between the positive and negative views of most people is likely to stem from their innate biases and thus the data points (information) they choose to overweight.

The optimist takes cheer from the favorable outlook of positive information whiles the pessimist is depressed by the unpleasant possibilities of negative information.

In the real world we live in, there is rarely anything such as “knowing the future”. What we can tell from experience is that the future would be mostly like the past.

In the current state of things, I personally do not believe that anyone has superior knowledge regarding the outcomes of Government stimulus intervention programs, and the overall impact of Covid-19 on the economy.

One of the things we can say for now, is that pessimistic views to some extent has dominated many of the other relevant data surrounding us. All the same, much of the pessimistic views can only be defined as informed opinions or speculations and not actual realities yet to come.

To be on a much “safer” side, assuming neutrality and aggressively going with the flow is essential to winning in times of unprecedented uncertainties such as what we have today!

Your friend,

Elijah Otoo-Essien

The author is a Chartered Financial Economist