Casey Mulligan on Vaccines, the Pandemic, and the FDA
May 22 2023

covid-vaccine-300x300.jpg When there's no vaccine on the market, people will look for other ways to be safe, including school closures and the handwashing of groceries. Listen as economist Casey Mulligan of the University Chicago talks with EconTalk's Russ Roberts about the costs of delaying a vaccine, the hidden costs of FDA regulation, and what we learned and failed to learn about the Covid pandemic.

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Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Krishnan Chittur
May 22 2023 at 10:27am

What I have found most troubling (since March 2020) is the feeling (and dare I say) and conclusion that technology now allows for more and more people to “work from home”.

So many people are ignoring how things happen because of the key, critical human/human interactions where people see each other (i.e. entire faces not covered by masks). If I were to start a study, it would be to examine the effect of “mask wearing” and “work from home” on economic growth – I would predict that both have negative consequences for growth.

(True, there are some jobs that can be done from home and giving employees flexibility to deal with personal issues is always a good thing – but to allow almost anyone to work from home for any reason is a terrible idea and will impact us all)

Ben Service
May 22 2023 at 5:59pm

There are pluses and minus though, background is I live in Australia and I am reasonably left of centre (I don’t really know why it turned out that way) and my parents are right of centre and we were discussing covid the other day and reflecting on the good things of covid.  One of them was actually the ability for me to work from home way more than I did, this allows me to be more involved in my community (kids school, swim club etc…) and family, I also work in a job where about 50% of the interaction I have daily is with people in other cities and countries so I have been doing that “remotely” for years anyway.  We also recognised that our memory of what covid was like might have been different from what actually occurred too, which comes back to Casey’s point about data

I do agree that knowledge transfer is not as good with the people I used to interact with face to face on a daily basis but I have made up for that by increasing the people I interact with face to face at work in different ways that I think are more productive, I run face to face (and online attendees as well) lunch and learn sessions, mainly attended by newer employees at my work.  I also make more of an effort to catch up with people outside of my work place.

All in all though I suspect you are right that there is too much work from home to maximise productivity, but maybe life is not all about maximising economic productivity, it if were we’d all work 100 hours per week (I might be wrong, maybe marginal productivity eventually goes negative).

It was a good podcast though I like listening to people who aren’t afraid to say points of view that might be considered controversial as long as they know what they are talking about and both Casey and Russ are that.  I have listened to Russ for years and he has changed the way I think about the world.

Peter Pitsch
May 22 2023 at 2:27pm

Best econtalk in long while. Our country needs to do a much better analysis of what we did right and wrong during the pandemic without fear or favor.

May 22 2023 at 3:21pm

I’m not sure which is worse — the self-congratulatory professional smugness repeatedly on offer in this episode regarding the specialized training afforded by economics (it is to laugh), or your litany of “incomplete sentences” where the costs and trade-offs of various pandemic responses either taken or not taken is concerned. There are few spectacles more reliably amusing than economists holding forth on any aspect of biology.

I’ll restrict myself to two observations for Casey and yourself. First, based upon the metric of per capita COVID deaths, the US record where pandemic response is concerned was simply world-class dreadful. Acknowledging as much could go some way towards repairing your credibility.

Second, the absence of any discussion on your part of the egregious behaviour by the Western world where distribution of the vaccines to the global south is concerned exhibits the profound un-seriousness with which you take the worldwide nature of the challenges posed by the pandemic. That’s unfortunate, because the biosphere is only getting warmed up, and nature always bats last …

Matt Ball
May 22 2023 at 4:45pm

A perfect example of this:

Many (white male) economists are exceedingly annoying in their arrogance and lack of connection to the real world. Humans are not rational animals; we’re rationalizing animals. Setting a policy that makes sense in some theory – e.g., abolish the FDA and let anyone take whatever they want – would be a nightmare in the real world. Please read The Poison Squad: One Chemist’s Single-Minded Crusade for Food Safety at the Turn of the Twentieth Century to see what the libertarian economists’ world would be like.

This is particularly frustrating – and dangerous – when economists who are involved in policy believe that everyone else is an idiot; e.g., Casey’s rant against closing schools during the pandemic, calling it “quack medicine.”

Now that is arrogant enough, but it is also deeply ignorant. Going into the teeth of covid, the “Spanish” flu of 1918 was the best model we had. That experience clearly showed that cities that closed their schools did better. This isn’t hidden knowledge; Michael Lewis goes into it in The Premonition: A Pandemic Story.

Of course, covid-19 is not the 1918 flu. And it might be that closing schools was not the right course in this case – maybe. Maybe. In retrospect, knowing what we know now (and being alive and safe on this side)

But to talk like it was obvious that we shouldn’t close schools, when the main data set we had said we should close schools, is so unbelievably pretentious, so hubristic as to be scary, and, of course, harmful.

This isn’t to say we can’t improve public policy with better cost/benefit analyses, taking into account tradeoffs and incentives. But I really get the sense that some economists are more interested in mocking others than helping others.

Jonathan Harris
May 23 2023 at 1:59am

I see flaws in  Mulligans overall assessment that FDA requirements that drugs prove efficacy have a net negative  impact. This is based on the assertion that Dr recommendations indicate that few medicines were ineffective before the 1962 law and that the market would eliminate ineffective products.

There are considerable reasons to believe this view is flawed. Most notably FDA review of drugs on the market before 1962 found that about 1050 out of 3400 were ineffective.

Also, the idea that MDs would figure out which drugs are effective outside of some obvious cases overlooks the complexity of the problems involved. Many medical conditions may get better regardless of the treatment . Without rigorous trials it is impossible to know whether the drug is effective.  Without insisting on such trials we would not know which drugs were effective except in the most obvious cases.

One can also look to the less regulated supplements market and the promotion of ivermectin as a Covid cure to see examples of ineffective products that continue to be sold.





Shalom Freedman
May 23 2023 at 7:17am

Working with others is invaluable but the idea of exclusively working at home is too extreme for many. Many people prefer flexibility and having the advantages of zooming at home and being at the workplace as the situation best for them. The working at home is as is well-known a great commuting time-saver among other things.

I was surprised to learn that FDA trials by delaying the coming of drugs on the market cause the loss of many lives. I always perhaps naively understood that the testing a necessity for insuring the efficacy of the drug and thus preventing much loss of life. And it is still not clear to me which of these policies is better.



Jonathan Harris
May 24 2023 at 6:16pm

I think Mulligan is operating under the mistaken belief that every problem is a market problem and practical engineering and medical aspects can be ignored. This drives his negative view of government.

One big example—he complained that we had a vaccine ready just when the shutdown started but it wasn’t until year-end that the vaccine distribution started. So much is wrong with this logic; I can give two examples.

First, he ignores the challenge of going from producing a complicated product such as an RNA vaccine in the lab and producing and distributing it to 300 million people. This manufacturing process is not trivial. Even though the government paid for manufacturing to start before approval, it still took over 6 months for enough vaccines to be produced and distributed.

Second, he does not understand the practical issues that impact vaccine effectiveness. Perhaps he did not hear of antibody-dependent enhancement (ADE), which caused a vaccine for the RSV virus to increase the risk of severe disease and resulted in deaths during the trials.  What appears promising in a lab could easily have failed or been found to be dangerous. Some other vaccines ultimately failed to have sufficient efficacy and had undesirable side effect profiles.

Finally, I note we have enough problems getting people comfortable with the vaccine and the limitations of the trials is one factor. Almost certainly much more resistance to using the vaccine would have been the result of more abbreviated clinical trials.

Mark P
May 23 2023 at 10:39am

I have been an Econtalk listener for close to 15 years and in recent years rarely  listen because of Russ Roberts’ lack of backbone.  In closing this podcast they discuss the failure of economists to speak out against what was happening in 2020/21 in regards to lockdowns and mandates.  Russ now speaks out  about the wrongness of lockdowns and mandates, but where was his voice during 2020/21, when it really mattered?   There is much I have learned and loved about Econtalk, but in my opinion Mr. Roberts has revealed himself to be gutless in the face of adversity.

Russ Roberts
May 23 2023 at 5:19pm

I didn’t think that accurately captures my views then or now.

When Covid first appeared, I challenged people who blamed government lockdowns for various negative results making the point, as I still do now, that many decisions to stay away from others were made privately before government mandate. At the time, that seemed prudent, given how little was known.

What was known fairly early on was the difference in impact by age. I was very glad to host Emily Oster who courageously spoke out against school closings. Government mandates and lockdowns often persisted well past what was prudent. And from the beginning, I have tried to remind people that masks come with a cost of reduced human interaction. And in trying to learn lessons for the next pandemic, treating everyone equally with respect to risk, when the actual profile varies dramatically by age, for example, is very costly.

I appreciate your encouragement to stiffen my spine, but much of what I have learned from this experience is what I would call humility. Humility is not spinelessness.

Nick M.
May 23 2023 at 6:30pm

I think its very easy to forget that “focusing on the vulnerable” would have also removed the implicit and nearly explicit mandate to take the vaccine.

Every action taken throughout the pandemic, when viewed through the lens of needing to get everyone vaccinated, even after it was clear it didn’t work, can only be rationalized when assessed through the lens of the complete capture of the government by the health industrial complex.

The guest was wrong all the way through. The vaccines don’t work, didn’t work and would never have worked even if they were deployed in January of 2020.

The efficacy of the vaccination was never challenged throughout this discussion and I found that disappointing.

Nick M.
May 23 2023 at 6:35pm

I stand corrected, I had ten minutes left and Russ mentions some of these possible issues. I apologize for speaking out of turn.

Ronald Spinner
May 24 2023 at 3:59am

One of the most interesting points was that people’s opinions are influenced by who they are.  Many of the decision makers and influencers were elderly and the most vulnerable. Therefore they naturally tended to favor isolation and closures during the pandemic.
My daughter-in-law is a speech therapist and told us how much damage masks made to toddlers who were learning how to talk. They didn’t have enough representation in the discussion.
A similar point was made by Tyler Cowen on a previous Econtalk when discussing the possibility of AI killing us. And how the personality of people in AI may result in them being unduly worried about AI. 
I am in a group with other architects from the university where we studied. Almost all of them believe in big government and government planning. Probably because planning is our profession. 
My masters thesis compared Architects planned use of rooms in community centers to what they were actually used for. My results strengthened the old adage: Man makes plans and G-d laughs.
Maybe we need to pay more attention to who is making an argument and how their background may influence their position.

Nick Ronalds
May 25 2023 at 10:40am

Casey Mulligan is one of the all-too-few who emerged from the Covid era as someone with rock-solid integrity and courage. His obviously sharp mind gets to the nub of the problem. He led a team that accomplished an enormous amount of good, not only with Op Warp Speed but in regulatory policy and, it seems, just by providing sound economic guidance to all he dealt with, whether or not they took it to heart. Admirable in every respect, not that he has or will get the appreciation he deserves from our elites.

John Foster
May 28 2023 at 2:00pm

“There are no libertarians in a pandemic” would be better expressed as “Emergencies expose ‘libertarians’ who are all hat and no cattle”.

However, heroes DID exist, who stood boldly against the lockdowns and vaccine coercion.  One such was Jay Bhattacharya, who you mentioned.  Another was the MIses Institute under Jeff Deist.  In March of 2020, Mises made the case for uncertainty in the data, opportunity costs, and the fundamental importance of freedom.

“On a fundamental level, freedom really is more important than security—or, in this case, an illusion of security… Security has never been the sole or even primary goal for a country born in rebellion.

“Government cannot decide what aspects of our lives are essential or nonessential. The American people cannot simply sit at home and wait for government checks written on funds that government does not have.”
 When the world needed economics most, most economists abandoned their stations and hid under their beds.  They weren’t alone; plenty of other institutions also failed, but this was a time that Humanity needed Economics, and with a few notable exceptions, Economics failed miserably.

We should celebrate and learn from those who had the courage, integrity, and grit to stand in the face of near-universal panic and abandonment of principle.

That needs to be the takeaway.  We need a hard look in the mirror, and need to figure out how can we instill backbone into a profession that seems to retreat and cower deep inside the Ivory Tower as soon as life gets a little dodgy.

Kevin Ryan
May 28 2023 at 6:07pm

Peter Pitsch commented above that a much better analysis is needed of what was done right or wrong during the pandemic.  To me this discussion and the comments on it highlight why such an analysis is impossible in practice – namely that there is so little agreement on what happened during the pandemic and what the important issues were.

Personally my belief that I understood what was happening in the first year or so has since turned into lack of confidence that I knew anything.

That said, and while I am in the UK, I am pretty sure the early story was that action needed to be taken to prevent the hospital system being completely overwhelmed by Covid, which seems to be totally absent from this discussion;  people mused on estimates of ‘R’ and the consequent exponential growth in cases which would hit the bulk of the population;  while the reported deaths of many doctors and nurses – highlighted by Russ in the discussion – in addition to implying a collapse in Covid treatment capability also played against the narrative that only the old were at risk of dying.

I was much taken by Casey’s expanded scope of ‘quack medicine’.  But he was entirely wrong to say that ‘other countries were not (closing schools)’;  and I was disappointed that Russ did not pick him up on this.

Similarly his statement that ‘the Covid deaths have basically stopped’ is just not true and Russ should not really have allowed this to pass unchallenged.

That said, while I enjoy nearly all of the Econtalk podcasts, (including all the ones on Covid), after listening to these for many years I have come to the conclusion that most (with some exceptions) of these are really Russ giving a platform to people he agrees with;  and any pushback is usually pretty mild.

I was nodding my head vigorously when, in the context of the opioids discussion, Casey said ‘you have to recognise what the alternatives are in the real world – not what … wish your alternative is, but what the real world alternative is.’

But how could this idea be consistent with the defence that Russ then went into on the authors of the Great Barrington Declaration;  whose idea that the population could be split into vulnerable and non-vulnerable segments is surely a classic example of a superficially attractive idea whose many practical problems of implementation in the real world were ignored.  While hiding behind the almost Orwellian misleading slogan of ‘Protect the Vulnerable’.

I was left with the takeaway that although the expanded definition of quack medicine is attractive, once one thinks about it a bit  – almost any action OR decision NOT TO take an action can be characterised as ‘quack medicine’

[Misformatted comment fixed–Econlib Ed.]

May 31 2023 at 2:18pm

I was struck by listening to this and remembering a project I recently happened across that organizes, summarizes, and keeps up-to-date findings on COVID treatments: (Really impressive work!)

What I was struck by while listening to this conversation with Casey Mulligan was that (1) all of the currently “treatments” for COVID recommended by the NIH are FDA approved (either ‘normal’ or ’emergency’ approvals:, and (2) that all of the “recommended” drugs were relatively costly…

Specifically, cost and efficacy data based on current studies can be found for the current (four) recommendations (last updated March 6, 2023: Remdesivir, Paxlovid, molnupiravir, and high-titer COVID-19 convalescent plasma (CCP)) on the website noted above (  ) in the table entitled “All studies (pooled effects, all stages) May 2023”; the comparison is rather stunning.

In particular, while only 13 of the roughly 60 drugs/treatments evaluated and summarized has a cost over $500 (and most are under $10 and many are $1 or $0), the four currently approved by the FDA and recommended by the NIH range in cost from $529 to $5,000. Furthermore, none of the four are in the top-25 in terms of estimated effectiveness.

Potentially other info could be brought to bear to help understand these data a bit better, but when paired with conversations like this one with Casey Mulligan, the effect is generally to further erode my trust in the named agencies/bureaucracies.

Greg Silverman
Jun 3 2023 at 11:40pm

Casey Mulligan made the unqualified statement that European countries did not shutdown schools during covid. Germany to shut most schools to slow coronavirus spread | Reuters. Not a very accurate or thoughtful statement on his part, makes less credible than more credible. The same for Russ in his acceptance of that statement.

Jun 5 2023 at 12:09pm


Casey’s statement and Russ’ acceptance are accurate. School closures in Europe were relatively short and rare compared to US. Germany’s approach was actually one of the outliers in Europe, not the norm.

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TimePodcast Episode Highlights

Intro. [Recording date: April 20, 2023.]

Russ Roberts: Today is April 20, 2023, and my guest is economist Casey Mulligan of the University of Chicago. This is Casey's third appearance on EconTalk. He was last here in October 2016 talking about Cuba.

Our topic for today is drug regulation, including Operation Warp Speed, which was the government's program to expedite and encourage the creation and distribution of COVID [coronavirus disease] vaccines. Casey, welcome back to EconTalk.

Casey Mulligan: Hi, Russ.


Russ Roberts: So, our conversation today is loosely based on a recent article of yours late last year in the Journal of Law and Economics. It's part of a special issue in honor of Sam Peltzman. The title of your article was "Peltzman Revisited: Quantifying 21st Century Opportunity Costs of Food and Drug Administration Regulation." The Food and Drug Administration also goes by the acronym--the abbreviation--FDA.

Let's talk about Peltzman's original article on the FDA that you're revisiting, the 1973 piece that really got an immense amount of attention and had a huge impact. What was his finding? What was he looking at?

Casey Mulligan: Well, the FDA began in the early 20th century. I forget the exact time, but they were just supposed to check that new drugs coming on line were safe. [Note: In this transcript, I am going to use the two words 'on line' meaning coming into existence, which has nothing to do with the one word 'on line' referring to the internet--Econlib Ed.] Whether they achieved the clinical goals or not was a different issue.

And then, in 1962, I believe, they were given a second mandate, which is to confirm that the new drugs were also effective.

And, Peltzman's study, which was published in the early 1970s, was looking back at some--how's it gone since 1962 now that the FDA has gotten into that new business? And, he had a famous chart. I don't know, you'll probably include it with the podcast here, showing new drugs coming out in the market; and they just take a nose dive after 1962. And, that's what people usually remember about the paper.

Then the idea being--two ideas. One idea would be: Well, there's entry barriers to entering that market. So, fewer people entry when you raise the barrier. Because getting that extra approval from FDA requires time and resources.

Now, the other point of view is: Well, that's the whole point. There were ineffective drugs--I'm taking the charitable view to FDA here--there were ineffective drugs that were making it through before 1962, and now they're not there. So, they're not in the total.

The part that of Sam's paper that people don't remember as well but is crucial, is: Well, how do you distinguish those two? What are the character of the drugs that would have come on line after 1962 but we didn't see? It's not so easy, because we don't see them.

So, he did two things. One is he said, 'Well, we had other judges of the efficacy of drugs before the FDA got in that business, so to speak.' And, he points to two. One being: doctors, physicians, I believe was the AMA Physician Association [American Medical Association Physician Association] had taken upon themselves to recommend to their members: 'Should you use this drug? Is it achieving the clinical goals?' And, Sam used that to show that there weren't a whole lot of ineffective drugs coming on line before the FDA became a gatekeeper.

Then the other thing he did, he said that, 'Well, the market. The market will eventually figure it out.' So, what he did, and we look at the rate of decline of sales of new drugs. Because before 1962, the charitable FDA view would be, 'Well, we got drugs coming on line. Some of them are ineffective and the market eventually figures it out and they're not able to sell that drug after a period of time.'

So, new drugs should have pretty low growth rates in their sales on average before 1962. And then, the Fed [??] would clean that up because they would censor out the drugs that market would be in the process of discovering their wastefulness. And, so, drugs would grow at a higher rate. And, those are two things you look at.

Russ Roberts: You said, 'The Fed.' You mean the market would clear that up?

Casey Mulligan: Yeah, the market, yes.

So, those are the two things he looked at. And both of them pointed to very little addition of the FDA to those market and expert processes that were already in place before 1962. So, Sam concluded they're just a barrier to getting in here and they're not a very good censor[?sensor?] on top of what the market was already offering.


Russ Roberts: And, this became a--I think economists cared more about this than the average person, in many ways. Our profession, going back to Frederic Bastiat, the French economist, we're interested in not just the seen, but the unseen. And the claim, which Peltzman effectively was making--and other economists have echoed it since--is that the FDA kills people. That, drugs that would have otherwise come on line or come on--been available--sooner because the regulatory process would've been shorter, were delayed, or it didn't happen at all. And, it discouraged innovation. And, while it's nice that people didn't waste money on ineffective drugs, it was not nice that drugs that might otherwise have come along didn't or came along later. And that was horrible for human health.

Something it can--to take a strange, perhaps for a non-economist, a strange analogy--things that make airplane travel more expensive and push people into driving their cars, which of course are much more dangerous than traveling by plane. And because demand slopes downward, because people respond to prices--and certainly in travel--less so in drugs because they're often paid for by third parties. But, that this: the FDA is a bad. It's a bad. It's not just like, 'Oh, they were maybe imperfect.' They were having negative effect on human wellbeing.

Did Peltzman try to measure the magnitude of the harm?

Casey Mulligan: Yes. It was based mostly off that picture that I mentioned, the number of drugs that were missing. And, I think his conclusion was: Well, this particular new mandate of the FDA is costing prescription drug consumers on average about 5% or 10% of their spending. He analogized it to having a 5% to 10% excise tax on prescriptions.

Russ Roberts: Which seems kind of small.

Casey Mulligan: Yeah. Back then, especially now, the prescription drug market is quite a large market now.


Russ Roberts: But, it wasn't seen as small. In my view--and at least it was my perception in the profession was viewed as devastatingly bad--for people.

And, through most of my lifetime as a professional economist--I've mentioned this many times on the program--the complaint about the FDA among economists is they just take too long. And, that has a costly effect on the incentives to innovate, but also just availability of things that might help people lead healthier, longer lives.

In recent years--and we'll get to COVID in a second--but in recent years, my feeling is that the FDA approves things. They take a long time still. They're a little faster maybe than they used to be, but they still take a long time. They approve a lot of drugs that are, quote, "effective" but only marginally more effective than the existing drugs on the market. And thereby maintain the profits of the industry with very, very, very small benefits for consumers in terms of health.

We've talked a lot about this with Vinay Prasad and others that on average, you might get an extra month of life and that preserves the monopoly power of a new drug that isn't much better than its existing drugs, delays the advent of generics. And, that that is the biggest complaint one could have with the FDA now. Do you agree with that assessment?

Casey Mulligan: What you're referring to is the me-too drugs or--they're marginal additions to what's already available. And, maybe FDA gets some of the blame for that. Certainly, there's a relationship between the industry and the FDA. George Stigler told us not to be surprised by that.

Russ Roberts: Yes, he did.

Casey Mulligan: But, another factor is the threat of price controls. So, if you have a radically new drug that's really valuable because it's not just replacing some previous drug, you're not going to have competition by definition of that, and you're going to charge a lot. Then, the do-gooders in Washington are going to come and take your profits. So, that's another force toward, trying to escape regulation in the future. You just do a me-too innovation rather than a blockbuster.

Russ Roberts: Yeah. It would be interesting to get some measure of the magnitude of those effects. A lot of drugs that are effective, much better than the existing stable of treatments that doctors have and patients have to choose from, still do charge an immense amount of money for them. And, those prices are set kind of bizarrely in that often the government--Medicare isn't allowed to negotiate. Foreign governments do all the time. My drugs here in Israel are dirt cheap. It deludes some people into thinking that the Israeli healthcare system is great. There are parts of it that are pretty great. I've been lucky so far and enjoyed my interaction with the healthcare system. But, drug prices are a particularly good example.

And, devices generally--medical device pricing--is similar, where something looks very inexpensive, but that's because we here in Israel and elsewhere around the world are free-riding on the only place where manufacturers can make money. And, that's in the United States market--often providing--50% or more of the profits of a new drug are coming from that unregulated monopoly opportunity for American drug companies.

I think there's some still pretty big opportunities for profits there for the industry. You could argue it's not big enough. Drugs that are thousands of dollars a month and mostly paid for, of course, by Medicare subsidy is--and then to the rest of the world, dirt cheap because they negotiate--is a very strange model. Doesn't seem like a very healthy model for the system.

Casey Mulligan: I'm not sure the free ride is so free. In Israel, a little bit unusual: You guys pay with your data. But, putting that aside, in Europe in general, they're getting the drugs later. I believe the average delay is like three years on new drugs. You look at cancer oncology where we have all kind of new drugs, and look at: what are the cancer patients in Europe getting treated with? They're getting treated with the older stuff. And it's showing up in survival, conditional on the size of the tumor they discover. If they discover the tumor in the United States, you're going to live something like 18 months longer. And, yeah: those new drugs are more expensive. It is not free.

Russ Roberts: Why is there a three-year delay? They don't usually have more regulatory hurdles for approval. Is that an approval then of the dispensary, essentially?

Casey Mulligan: Yeah. A drug is not just a chemical. It has to be distributed. The doctors need to be informed and brought on line.

And, what's your hurry when you're not going to make any money in England or France or wherever it is?

Whereas in the United States, we also have this pharmaceutical benefit manager system that helps. On Day One--when FDA does thumbs up, there's a whole financing there, ready to go for the patients to get it on Day One. And, they're incentivized to do that because there's a lot of money on the table.

This is a mistake we economists try to discourage. It's like the product is not just some chemical--or Coke and Pepsi, it might be the same darn chemical--but there's other parts to the product and they can be boring.

Look at the socialist systems. They focus just on the narrow definition of what a product is and they miss all the other things--distribution, understanding, and information. These are boring, but they make the world go round. And, guys making money do the boring stuff and allow us to have what we have.

Russ Roberts: Yeah. A lot of people think that coming up with a good idea is the road to wealth. It's a very small part of it.

Forgetting pharmaceuticals for a moment. Most areas of our lives, there are a lot of other pieces to it, as you suggest, that are often more important. And, you'll hear somebody say, 'Oh, well, they had that idea. I had it, too,' as a person in the street, forgetting that having the idea is only a very small part of putting it into a--it's not just a question of marketing or distribution. It's also a question of making it actually usable. And, that is often an enormous piece of the innovation story.

I make an analogy--I don't know if you agree with this--but I'm an enormous fan of Adam Smith; but I'm happy to concede that many of his ideas came from other people or he certainly wasn't the first to develop them. But, he developed them very well and he wrote very well and he wrote clearly and with a little bit of humor. And, that counts. It's not a small thing. It's a big thing. And, to say, 'Oh, well, yeah, all he did was write up ideas that other people come up with.' Some of them, yes, he was able to pull them together in a way no one had before. He had some of his own insights; but above all, he packaged it in a way that was palatable and was pleasant to consume because he was a brilliant writer. And, I think that's not unimportant.

Casey Mulligan: I agree. And then, there's an example in the paper that we're talking about today where I believe I pointed out in this paper that you take the Oxford vaccine. They got a formula--not the same as Pfizer's formula--but for our own purposes, they basically got the formula. That's the thing you're talking about: they invented the thing. But, they were philosophically opposed to working with for-profit companies. So, they broke their deal with Merck. Merck is capable of doing all the boring stuff, like making it a billion times over.

Making the first three batches is exciting. The remaining billion are very boring. But, they weren't capable of doing that--the whole distribution. So, they fired Merck because they were going to earn a profit and that's evil. And, they ended up getting AstraZeneca, which promised to earn no profit, but it delayed the rollout of that vaccine by about three[?] months. And, that had a tremendous cost.


Russ Roberts: Well, let's turn to the COVID vaccine. We had Greg Zuckerman on the program talking about the science and the intellectual innovation that the mRNA [messenger ribonucleic acid] vaccines were represented. It is an amazing story. What role did Operation Warp Speed--the government program to subsidize that process--what was the idea behind Operation Warp Speed?

Casey Mulligan: And, I don't know if you mean historically, but we had in our National Security Council, the lady, Luciana Borio, who had worked back to the AIDS [acquired immunodeficiency syndrome] era. And, she was concerned about national security implications of disease. And she felt that vaccine was a very important national security tool to protect us, from that perspective. We happened to be across the hall from her, a bit of an accident. We were working with her because we had economic expertise on vaccines, particularly in FDA in general. The idea--we didn't call it Warp Speed back then--but the idea is, well, in the pandemic, there are different trade-offs between speed and efficacy. It makes no sense to wait three years to have the super-effective vaccine versus having one that's kind of effective right away.

And so, we concluded, more on the economic side, that the regulatory hurdles must be different and lower.

And second of all, there may be some role for advanced purchases so that the manufacturers can do some of the boring stuff without worrying whether they're going to--the drug is going to be even worth doing the boring stuff with.

Russ Roberts: So, what year is this, Casey, and what were you doing across the hall?

Casey Mulligan: 2018. I was working in the White House Council of Economic Advisers. We were--it's across the driveway from the West Wing of the White House, the Eisenhower building--and we were on one side of the hall. And Ms. Borio was on the other side of the hall in the National Security offices. And, we had a team of very good economists in general, but also experts on health. So, we were engaged actually with a lot of FDA issues before getting into this national security issue. So, that was in 2018 when we began that project. President Trump was very excited about it.

Normally, we do a project, we roll out a report; nobody pays attention. But the President said, 'Please don't roll this out quite yet, because I want to get a spot on my calendar so I can be engaged with this. Because, I think this is really important.' So, we did. So, it wasn't until 2019 that we rolled out the report. The President wanted--he doesn't do reports. He does executive orders. So, he put an Executive Order and said things like: We may get a virus, it might be from a bioweapon, it may be from escape from an animal, but we need to have--I'm ordering all my agencies to do things different, do it fast. We're going to have advanced purchases.

And, he had a signing ceremony. Dr. Fauci dressed up in his doctor outfit and came over. First time he had met Trump. Nobody paid attention except those of us around the White House. We were very excited by it because this was September of 2019. And, five months later, we would have COVID and we would call it Operation Warp Speed.


Russ Roberts: So, I like the idea that EconTalk will be valuable for a long time, maybe even after I'm gone. And, either it is archived or renewed with a new host. But it already seems like ancient history. I'm imagining that 20 years from now, people will be studying the COVID pandemic, and this conversation may help provide some background.

So, I want to move forward to March of 2020. I remember my father was dying and I went and visit him many times in the hospital. Turns out he had SARS [Severe Acute Respiratory Syndrome]. He may have had COVID. I don't know. But, to go visit him in the hospital at that time--he had many other things wrong. The SARS just was like a side thing.

And, we, as the visiting family, had to gown up and mask up. And, by the way, the employees didn't pay any attention to those rules. And, I'd say, 'Why aren't you wearing a mask?' They'd say, 'Oh, everybody here has SARS. It's in everybody's system already.' 'Okay.' My dad was 88, I think, at the time, or 89. For him, SARS wasn't--he needed some help with his lungs, sadly. But, here we are wearing these masks and we had already begun to hear reports. This is March. Very early March, late February, we heard reports of some possible scourge that was coming our way. We had no idea of knowing anything about how likely that was.

But, the part I remember is we were using masks very cavalierly, meaning: Yeah, you put a new one on, you tried this one, you put another one on. They would break, you put. And, I joked with the nurse that, 'Hey, maybe these are going to be really valuable.' She had a box of them.

And of course, the other thing that was memorable about that time--again, pre-COVID, a week or two, three weeks before it really hit here--there was Purell running wild in that hospital. As an economist, I remember thinking, 'I think we're a little too clean here. This is a little bit unhealthy to be killing every germ.' But there are dispensers on every wall and in every hallway. And, it's easy access, baby. And you--one pump, you get a big giant dollop of it. And, you use it multiple times.

So, shortly after this, again, there are--now at the end of March, I would say, I might be wrong--three, I'll count in a second, three things that I as an economist was deeply worried about. Availability of masks, availability of ventilators, which at the time seemed to be the only lifesaving treatment for people who were struck by this first version of COVID, and a vaccine. So, we had no vaccine. We, quote, "had a ventilator shortage." We had not stockpiled them. Trump was talking about doing crazy things like getting General Motors in the ventilator production business. And, third, we didn't have enough masks.

And, one of the things that upset me--I'd love to hear your thoughts, insight at that time--was that there was zero discussion of any market process that might help with this. Masks--people who sold masks at a premium were either sometimes arrested or threatened with jail or fined for price gouging. Ventilators similarly seemed to--there didn't seem to be any market response. And, of course, we were told that vaccines, 'Oh my gosh, even if someone could create a vaccine, I mean it's going to take years, at least a year and a half or more to get, if not more than that, to get government approval. So, don't count on vaccines.'

And, ventilators went into the special program to create them outside the market, through the government. And, masks: 'Well, we'll just do the best we can.' Fauci at this point was telling people masks are not effective. I debate this with listeners occasionally because somehow Fauci becomes another way to express our partisan politics. But, my memory is that the medical establishment, whether it's Fauci or not, discouraged individuals from using masks because there just weren't enough. Instead of finding market ways to increase them, we were told, 'Oh, they don't work that well.' And, that way, medical people who were doing God's work, I mean it was a terribly frightening time; and, very brave nurses and doctors who felt a sense of responsibility did put their lives on the line and died. Many died.

So, my heart goes out to them, but I wish we had chosen a different way to increase the availability of masks rather than telling the public that we should not use them. And, I wish that ventilators had not been some special program, and I wish that vaccines had been given a price incentive.

But none of those things happened. So, tell me in your view at the time, in real-time, what kind of conversations do you remember from that time, and what did we end up doing in each of those areas?

Casey Mulligan: Sure. Well, my last day in the Oval Office was February 13, 2020. After that, you had to quarantine two weeks every time you returned. So, I said, 'That's it. I'm in Chicago from now on.' But, on that day in the Oval Office--we had a whole background with FDA policy prior to that because one of the President's key promises was to bring down drug prices. And, we had a major battle within the Administration: Do we bring down drug prices with regulation or with deregulation? And, the econ team was like--Peltzman showed us. Deregulation is the way to bring down prices. We had already seen it work--cell phones and other areas--so let's do it.

And, we did. I mean, Scott Gottlieb was brought on board very early. And, Scott's approach was: We're going to bring down some of these FDA barriers.

Russ Roberts: He was Commissioner of the FDA.

Casey Mulligan: Yeah, he was first commissioner of the FDA in the Trump Administration. And, drug prices fell in nominal terms for the first time in 46 years after going up beyond the rate of inflation in many years.

So, we had that background. The President himself had that background. It wasn't easy to get the FDA to approve these--especially generics--back then. So, the President himself had been engaged with the agency, learning how to turn that ship a little faster.

And so, at this day in the Oval Office--now we're in COVID, I actually think there were 13 COVID cases known, probably many more actually. But, on February 13th, we were dealing with COVID. And, a bunch of us staff are there and we're demoralized. We were like, 'The FDA, we just can't move them. They're too slow. They don't want to do anything different.' And, I remember the President saying, 'Guys, I've done this already. I'm going to do it again. Leave that to me. Don't worry. And, I know you're frustrated, but the FDA will go quick on this, and I'm going to make it happen.'


Russ Roberts: There was a fourth thing I forgot about, which was the availability of tests. And, we had Paul Romer on the program very early in the pandemic talking about how allowing people to test themselves, even imperfectly, even if they didn't honor the result of the test and stay home, would have been a huge improvement in reducing the spread of the virus. I don't know if that's true. My suspicion is he is right. That was another terrible mistake.

So, in none of those cases did we use the market in any way to respond to that emergency. Do you agree with that?

Casey Mulligan: Well, first of all, there are regulatory barriers on the test, which shouldn't have been there. The University of Illinois created its own test it was allowed to use on its own employees and students, but they couldn't sell it to your college or any other place because that would be illegal. The FDA needed to approve that. So, there were regulatory barriers, for sure.

Certainly, the mentality in government and our profession was not around, number one, supply. 'I hear you describing supply.' 'Yeah. Let's all[?] flatten the curve.' 'No, let's build more intensive care units.' Let's--not try to choke off demand by some other method, even with the Chinese, were building hospitals like crazy. So, there's a supply element.

Again, innovation--boring types of innovation--by having everybody stay home from work where workplaces are the place that we formed to come up with ideas and implement things and cooperate together. And, we weren't allowed to be together and cooperate; and we would've discovered some boring stuff like how to implement tests or whatever. It would've been very boring, but it would've kind of worked. And, we weren't allowed to do that. And, I complained about that. I wrote about that in March of 2020 already: that we're killing innovation here, and innovation on the boring stuff is going to be crucial.

Now, you said we didn't have a vaccine. We had a vaccine. The same day we closed schools in Chicago and most of America, March--I believe 16th or 18th, it was a Monday--was the day the vaccine was administered to humans. Now, it was under FDA auspices and everything. So, I think Warp Speed was great and it got it quicker, but Warp Speed should have been even quicker. In March, we should already had people voluntarily: If they want to be first in line to get this vaccine, they could do it. Throughout the summer, more and more people would've tried. They wouldn't have grown[?] horns; other people would've signed up. So, by the fall, we would have a lot of people already vaccinated.

So, the FDA was still a barrier there. Thankfully, they didn't take the normal 18 months, but the nine months was too long, in my opinion.

Russ Roberts: So, it was a miracle. There was a scientific miracle, an incredible intellectual achievement of human beings to find a remarkably safe--not entirely--remarkably safe way to protect people from this disease. Then, for the government, they did it, I think, what? Was it a week? Was it a week that Moderna took to--

Casey Mulligan: January 6th when they had their formula.

Russ Roberts: And, they'd started?

Casey Mulligan: I'm not sure when they started.

Russ Roberts: It's slightly misleading. Obviously, it was the result of literally years and maybe decades of progress. Slow and false starts, bad--things that didn't work.

But, once they got focused on it and were able to use that past knowledge, it was week I think, or weekend. My memory is a weekend that they actually were able to specify the formula they thought would be effective. We didn't know if it would be, of course. As you say, we could have tried it on humans right away. Many people would've lined up to be those Guinea pigs because they were scared, and they would've maybe seen it as a national--a contribution to the country and to humanity. But, that was not allowed. And, so the process did have its somewhat normal stretch.

So, you could argue that: Well, nine months compared to 18 versus three and a half years was also a miracle for the government. It's incredibly fast.

But your point is that nine months was incredibly costly. And, in the case of an emergency like this that they might have taken a political risk. The President couldn't or didn't want to push that through. Instead, what he did is he subsidized the purchases of those--of the first millions of vaccines to reduce the uncertainty that the industry faced in worrying about pricing and confiscation.

A lot of people argued we should just, once they figured it out, we just confiscate it and they should get no money at all. It's immoral to profit from a vaccine. So, again, whether the glass is half full or half empty doesn't really matter. But that's what happened, right?

Casey Mulligan: Yes. And also, the manufacturing: we wanted those companies to get the assembly line going, because they got to make billions. And, this is something we had emphasized in the Executive Order in 2019: You're going to have to make billions of these things. So, get working on it and maybe the thing that you're going to make billions of doesn't even work. And, you're not going to end up shipping any out the door. But, we want your assembly line ready. And, that's where the advanced purchase came in.

Russ Roberts: And again, although I would have preferred probably a market response with charities being able to find ways to get access to these vaccines for people who couldn't afford a market price, that's not the way we went. You remember the budgetary cost of Operation Warp Speed, the expenditure?

Casey Mulligan: It was $10 billion.

Russ Roberts: That's a really small amount of money. Explain.

Casey Mulligan: Yeah. Having the vaccine allowed us to get back to a more normal life. The other side of that is to cut these opportunity costs, the things that we weren't able to do because we were trying to escape that virus.

Maybe some of those things are wasteful, but certainly public schools were explicitly linked--their opening was explicitly linked to having the vaccine. So, blame that on the Teachers' Union if you want. But, we lived in a world with the Teachers' Union, so the vaccine allowed those public schools to get open again, eventually. So, that allowed us to get back to normal. What's normal worth in our economy? Something like a trillion every six months.

So, we were saving a trillion, $2 trillion--something like that--by accelerating the distribution of this vaccine. And, it cost the government $10 billion. Many decimal places different. It was a spectacular rate of return on a government program. Although, I focused more on the deregulation part of it than what the government was spending out of the Treasury. But, if you want to put it in those terms, it was a great rate of return.


Russ Roberts: As an economist, my favorite part of your paper: You try to measure the benefits. It's hard to do. You have to make a lot of assumptions. The value of a life--the life of a 20-year-old is not worth the same as life of an 85-year-old--and so on. And, it's hard to put a monetary value on that. We understand that.

But, it's large, the benefits. What I enjoyed particularly about your paper as an economist is a recognition that when you don't allow certain things on the market--like a vaccine--people don't just go, 'Oh, okay.' They look for other ways to be safe.

And, so, all the behaviors that we followed as individuals using the knowledge of--the local knowledge of--time and place, these include things like washing your groceries. And, for those of you who are too young to remember this, because it was three years ago. In the early days of the pandemic, when you went to the grocery, you wiped down your cans and your packages of pasta, because you did not know, and you were worried that the virus could spread through contact. I don't think that turned out to be true, but there was a lot of things we did. That's one.

We stayed away from our friends. That's two.

People didn't go to school. That's three.

All these things we did were the normal, incentive-based responses that people have in periods of uncertainty and risk. And, it's incredibly important that--one of the great values of economics is reminding people that those things are going to happen. Certain chains of events are--of causation--are going to be put in place.

And, as you say, every day that that vaccine was not available deterred the return to normal life. And, that was very costly.

Casey Mulligan: Yeah. I think one of the theoretical contributions of the paper, conceptual, is to crystallize that idea that the alternatives--because the FDA has a limited jurisdiction, there are plenty of quack medicines outside their jurisdiction.

And, closing the schools is a quack medicine. Sold to us by the Teachers' Union. Other countries weren't doing it. But the Teachers' Union is not under the jurisdiction of the FDA. So, they can sell closed schools as a quack medicine, and people fall for it. And, that's what we did. Doesn't have to be tested. Whatever. We just did it.

This is an issue I actually discussed with Scott Gottlieb toward the end of both of our terms. We weren't in COVID yet.

I also saw this in opioids. And, I was objecting. I said,' Scott, when you guys think about opioid policy,'--which comes in their jurisdiction because some opioids are prescriptions--'You guys totally ignore and you refuse--not only ignore it, you refuse--to consider other quack medicines that people will pursue if they can't get the prescriptions, such as heroin or fentanyl,' which is outside their jurisdiction. And, they were very much like lawyers: 'That's not our jurisdiction. We don't care.' I asked, 'Do you even make a phone call the Department of Justice or DEA [Drug Enforcement Administration]? No, they just totally ignore that.

And, we've had a lot of studies in economics making this pretty good case that by cracking down on prescriptions, actually more people died from opioids because they went outside FDA jurisdiction.

So, it's just conceptually the same point. And, it wasn't easy, hard for me to see in COVID, we were dealing with that issue.

Russ Roberts: Yeah. The point on that, opioids, which you write about in the paper, is that oxycontin, which is a very powerful opioid that made a lot of people's lives more pleasant because it reduced their pain, who did not get addicted to it. But, other people had struggled to deal with it. So, they would be going to prescription mills. They were going through legal channels. They would go to a doctor, pretend their knee was in pain or whatever it was, and get access to this drug that was giving them solace in other ways than reducing the pain of their knee. And, when that was not available, they turned to other methods.

We've had Sam Quinones on the program talking about how people who distributed fentanyl and other drugs would be outside those prescription drug places looking for opportunities to sell their product on the street. They'd give them away. It was a loss leader. They gave away free samples to get people addicted to it.

And, your point is that the last thing we want to do is make it hard for people to get the dangerous drug, because there's an even more dangerous drug they're going to be taking instead.

I think part of it is jurisdictional, legal. 'Oh yeah. That's not our area. We don't want to worry about that.' But, I think it's also just, again: If you don't have the economist's mindset of, 'And then what?'--the worry about unintended consequences--I think it doesn't come as naturally to people who aren't trained in that style of thinking.

Casey Mulligan: No, definitely. Our bread and butter, if we're still doing economic reasoning, is, 'What's the alternative?' That demand curve we draw, it's the quantity of this compared to the next best alternative from the consumer's point of view. So, you're right, it's very natural for us.

I don't know how the prescription opioid thing comes out[?], but no doubt in my mind has to be part of the calculus. You have to recognize what the alternatives are in the real world--not what the doctors wish your alternative is, but what the real-world alternative is.


Russ Roberts: I want to go back to the quack medicine of closing schools--which I have to confess, when you said that, Casey, I did get a little bit of a tremor in my stomach, that level of blunt honesty. What convinced--I remember at the time, the argument was: While it's true that children are less vulnerable to COVID, they will get it at school, spread it among themselves playing on the playground, sitting in class, etc., etc. And then, they'll go visit their grandparents and kill them. Or their teachers, who are older than they are. And of course, that was the Teachers' Union--who you're blaming--that was their concern, which is normal. That would be the incentives we'd expect them to [?] to protect their rank and file, to pay their dues. How convinced are you that that was an error and what convinces you that that was an error given the logic that was made at the time, that was put forward at the time?

Casey Mulligan: So, everybody recognized that the children were much less harmed by that virus, in terms of the direct harm. Also, their parents, if their parents weren't terribly old, not an issue. Brothers and sisters, not an issue.

Now, elderly people was an issue. Now, did elderly mean 60, 65, 70, 75? We didn't quite know at that time.

So, first, there is a principle in public health that you protect the vulnerable. You don't take healthy people and rearrange their lives. So, the children were healthy, they were not vulnerable: shouldn't be rearranging their lives. And now, if there's some elderly teachers who need to be taken out or stay home, given permission to stay home. So, that would be just a public health principle we already had: somehow forgot it all of a sudden.

Also, economics is a quantitative science. So, I could think through, 'Okay, how many elderly teachers are there?' How many not-elderly teachers maybe live with their parent or have an elderly spouse at home? We can calculate.

And, I wrote a paper calculating these kind of things. And yes, even if I acknowledge that there would be some extra deaths by having schools open, they would be quite rare compared to all the lost human capital among the children.

So, I estimated something like the risk of teaching in person. I was the only one in my department by the way, teaching in person. But, the risk of teaching in person is something like driving a couple times around the block. If I drive a couple times around the block, that's all the more time that I might get in a car crash. But, it was a minuscule--on the orders of pennies per hour that you're teaching in person. It's not a zero in that view. So, that's one part of economics.

Another part of economics, what I mentioned earlier: These big organizations are good at cooperating, good at--that's why we have these organizations. So, my view is that workplaces and schools may end up being safer. Holding constant prevention activity, they'd be less safe because that's what the epidemiologist tell us: When you're together it's going to spread more. But, prevention is not going to be held constant; and an organization is better able to supply these local public goods. That's their whole point.

And so, you'll have more prevention--which my prediction and we were quickly seeing, like with the University of Illinois inventing its own test. These larger organizations were doing a lot more preventions than people were at home.

Also, the demand is lower at home. The Samuelson formula for public goods as well--we add the willingness to pay once for each person. And so, a big organization has got a willingness to pay orders of magnitude bigger, willing to pay for prevention than the family does or people living alone.

And then, the final part is Bayesian. I mean, is Bayesian economic statistics? I don't know. But we can update. It's kind of like automobile accidents. I gave that analogy. If we had a new traffic pattern on Lake Shore Drive in Chicago, we don't have to wait for people to die. We can just count the accidents, because the accidents are much more common. And, you can say, 'Oh, we're getting a lot of accidents, we better go back to the drawing board.' In COVID, you had accidents. They're called cases. So, you could be measuring the cases before maybe anybody died and deal that way. Whereas if you never open the schools, then you never know what the cases are.

So, then there's also that Bayesian bias in favor of trying it out and doing some measurement. There was a very strong economic case for having the schools open. Maybe a lot of my colleagues weren't speaking up about it, but I think it was obvious.

Russ Roberts: Yeah, Emily Oster has spoken about it very early and we've interviewed her about it here.


Russ Roberts: I want to go back to your--it was almost an aside. You said we forgot this public health principle to first protect the vulnerable. There was a paranoia which was hard to avoid, which was: other people are dangerous and so I need to stay away from them. I think if we had not locked out schools, not locked down workplaces, places of entertainment--for example, bars, restaurants--I think a lot of people would have stayed home for a while. They did. We saw this--you can see it in the data--on cell phone, leaving the house, and other travel, movement. There was a voluntary lockdown that took place as people sought to escape other people.

And, my favorite was I'd see people--and I'm sure you can still see it--people driving in their cars with a mask on, with no one else in the car. Or people walking on the street outside 10 feet away from other people wearing a mask. Some of that was ignorance. We didn't understand it fully. But, some of it I think was literally superstition, magic--I don't know what you want to call it--but a feeling that here's a--I can't remember the word right now. Talisman. That's the word. I've got a talisman. I have a magic thing that I'm doing the right thing and therefore I will be safe. So, that was going on in the beginning.

But after a while, I think people adjusted their views of the danger of it. And we learned more about it. But, we never went to the place that you said, before this we all knew was the right place, which was: Protect the vulnerable. Three epidemiologists--one of them, Jay Bhattacharya, who has been on the program--suggested that we should have focused on that and we should continue to focus on, in the middle of the pandemic. They have been vilified beyond imagination, which I think is one of the darkest moments in public health and certainly institutional honesty.

The role that government institutions played in trying to suppress that viewpoint is deeply disturbing to me. And of course, those brave people paid a price for that; and I salute them--the people who spoke out.

But, the point I want to add, and I've never spoken, I don't think about this on the program, but somehow it's now easier to talk about with the passage of time. An economist--who I will not name because I haven't gotten his permission--but, at the time, I remember him telling me, 'Don't tell anybody I said this, but do you think the following is true?'

And, the following was: 'You know, most of the leadership of America's political institutions and a lot of America's corporate institutions, they're old. And, if we focus on the vulnerable, we're going to have trouble keeping our positions of influence because younger people are going to step forward and we're going to be potentially the only ones who are quarantined. Let's quarantine everybody.'

Now, only an economist would have a thought like that, an economist trained in public choice and incentives. You want to react to that?

Casey Mulligan: One of my early papers in my career was called "Gerontocracy." So, what can I say? I mean, you look--a lot of the redistribution that government does, I mean, it has this reputation of redistributing from rich to poor--it's not true. It redistributes from young to old. The government has been doing that for over 100 years now. And this was a regulatory element of that instead of, through the fiscal Treasury activities. So, you could see the pressure there.

But, what we were saying earlier that other people are a source of germs, viruses, bacterias, all this microscopic, nasty stuff. Yeah.

But the economists, our job is about being with other people, the value it has. I mean, that's why we're not cavemen, because we come to a workplace with more than just our family and get together, combine our talents, and do amazing things. And, I think it was malpractice to not be pointing that out. Let the doctors do their part and tell us about the germs, but let the economists do their part and say, 'Being together is essential,' even for health. Even for health.

And, we've seen a lot of people dying from non-COVID causes--even to this day dying from non-COVID causes--beyond the normal rates. And, I think, the disrupting, all the amazing things we do together is at the root cause of that.


Russ Roberts: Well, there's a subtle point here, which--really, we lose a lot of friends and invitations to the best cocktail parties because we point this out as economists--but, the goal of life is not to live forever or as long as possible. The goal of life is to get the most out of life. I wrote that--it turned out, by the way, I first heard that from a graduate student at George Mason University who heard it from, who said the goal of economics is to get the most out of life. And, she said she heard it from a professor, didn't remember which one. And, I recently--I quoted it in my Adam Smith book.

And, I want to confess that in my next book, Wild Problems, I don't like that formulation, that 'get the most out of.' I don't like the maximizing flavor of that. I know it's essential in a way to our methodological approach to the world. But, I think there's a skill to getting the most out of life without trying to. It's a subject for another time.

But it turns out the quote is--it appears to be from George Bernard Shaw, which is incredibly amusing. I just recently stumbled across that.

But, whether you debate about this maximizing--get the most out of--economists don't think that the goal is to take zero risk. Because, risk comes with reward, and reward is important.

You know, I see these people walking around still--in Israel, we haven't paid attention to masks for forever--I went back to the United States a month or two ago and I went to San Francisco. And, there were a lot of people wearing masks, a lot of people worried about COVID. And, I feel like I'm in an alternative universe. And, just the wearing of the mask, which I don't want to debate whether it's efficacious or not; I have no idea. But, I know what the cost is: I don't see your face, I don't see your smile. The look in your eye is not the same as the look I can perceive when you're not wearing a mask. And, it degrades the human experience.

Now, I think for a lot of non-economists, they say, 'But, that is irrelevant compared to death.' And, the economist's natural response is, 'Well, some things are worth dying for.' And, I would say living is worth time for. I don't want to live a life that's long without--devoid of human contact. And this[?]--it's just[?] radical. Go ahead. What are your thoughts?

Casey Mulligan: Well, of course, yeah: Economics says that. Our use of the value of a statistical life is acknowledging that. And, it's not imposing it from on high and saying, 'Here's what I think life is worth.' This is what people on their own lives have historically revealed life to be worth. They get in a car to do something other than save a life, and that there's a risk that they would die from that. All of us were using that concept. So, in that sense, we were all acknowledging that.

But, it ended up being so perverse in the United States, at least--and other countries, I think:maybe not Israel, but a bunch of European countries--is: We actually weren't getting more life--the big effect on life expectancy through non-COVID causes. People dying from alcohol, drugs, traffic, homicide, diabetes, heart, stroke--that's a huge number of deaths. And, these tend to be in younger people, certainly compared to the COVID deaths.

And, the COVID deaths have basically stopped. These other things I talked about haven't stopped.

So, I think in the end of the day, we wound up--we lost more life-years from trying to avoid COVID than COVID actually got out of us.

And, that kind of goes back to what I say: that being with other people is how we do amazing things, and including enhancing our health. Including treating our diabetes, including treating our alcoholism, etc., etc., etc. So, we actually got [?]--you're talking about the trade-off. We actually got, I think, in the part of the Frontier where the tradeoff might have gone in the other direction. Or, wasn't a trade-off, or--

I'm not 100% sure about that, but it's just how perverse that you even got in the zone that we could have a conversation that by trying to save lives, we actually costed lives.

Russ Roberts: But, you feel very confident--and this would be my default--that the vaccine, the first two doses, which were the doses that were the original shots, were very powerful in reducing risk of death. I stopped after three. I was told, by the way, that that proved that I was a partisan, obviously. I actually had a person tell me that my ideology had overwhelmed my rational sense, that I wouldn't take a fourth dose. And, I know people who have taken five, and I know people who have a lot of health issues that they attribute to the vaccine. I don't know if it's true. I don't think we know that yet.

There are some obvious things that are attributed to the vaccine. Heart damage among young men, for example, seems to be a problem. But, I don't think we know very much about the impact of multiple times toying with our immune system. But, I worry about it. And, it seemed to me, and I still believe this obviously, that the risk from COVID now is quite small with the variants that are on the table. Is that an accurate summary of how you feel as well in terms of the efficacy of the vaccine?

Casey Mulligan: Yeah, I mean a lot of that's not my expertise. What I did focus on early on was the death rate in the nursing homes, which was very high. And then, miraculously through COVID deaths went to nothing in a few weeks' time. And, that few weeks was the same few weeks that we rolled out the vaccine. Did something else happen at the same time? I'll leave it to somebody else to discover. But again, the sort of Bayesian approach is, like, there's a significant chance that vaccine was good for elderly people in terms of getting them to live longer. And, I think that's the approach you're going to have to take.

Was it good for everyone? Totally, it should have been voluntary. In the work we did on vaccine innovation during the pandemic, we never suggested this should be forced on people. It should be a matter of choice. And, that's caused a lot of problem, forcing it on people.

Russ Roberts: By forcing it, you mean you can't work here? You can't go eat in this restaurant? and so on? Is that what you mean?

Casey Mulligan: Yeah, right. You want to visit somebody in a prison in Illinois, if they're not vaccinated, you can't visit them. That's for example. It's not that the visitor has to be vaccinated--that's also true--but the visitor can't even consider visiting. They use it as such a weapon and a cudgel against people. My own employer required us to get the vaccine, the first two doses and the bonus dose. We dropped it. We were pretty quick to drop compared to our competitors, but that really backfired.

It's one of the regrets I have when we worked on Warp Speed. We were working on Obamacare at the same time, and every time we had Obamacare meeting, we're like, 'Can you think of a dumber marketed product than Obamacare?' Because people were paying not to be on Obamacare with the mandate penalty and things like that. But then I'd have a meeting the same day, later in the day, about Warp Speed. And, I never thought to say maybe our report needs to say that the marketing should be in the private sector. The government should not be marketing this stuff because they're going to ruin the brand.

We didn't say that. I take personal responsibility. And, we saw what happened. First, when it was viewed as a Trump vaccine, the Democrats were saying they'd never take it. And then, when it became a Biden vaccine, the Republicans wouldn't take it. That should have been left to Madison Avenue, who knows how to reach people and their heterogeneous populations we have.


Russ Roberts: Looking back now again, we're almost, I hope, in a position to think about this as a moment in history rather than an ongoing problem. What do you think is the biggest--you've named a few things--but what do you think is the biggest lesson from the pandemic that we have failed to learn as a world? I'm struck by how little we've learned, period. But if you had to prioritize and say, 'I wish we had drawn this conclusion, at least,' what would be the one that you think is the most important?

Casey Mulligan: I think the power of freedom. I think freedom really showed well. I'm going to confess, I underestimated freedom. I was talking about it in March 2020, but in hindsight, I've been more aggressive with this idea that when we can get together and trade with each other and cooperate together without directions from on high--just what we and our groups think is going to be progress for us--that really leads to flourishing. We've known it from history, but it really helped to see it again.

The idea of opportunity cost is related to that. Opportunity costs went from the Number One hardest thing to teach in economics classes, to the Number One easiest thing to teach through the pandemic.

So, that can be a lesson that we take away, because we all got to see really how voluntary behavior works.

Russ Roberts: I'm not going to name any names, but when the pandemic started, I remember vividly many people saying--it was a riff on the phrase, 'There are no atheists in a foxhole.' The riff was, 'There are no libertarians in a pandemic.' The people like yourself--people like yourself, not you--people like you, people like me who have championed freedom and the virtues of the kind of local interactions that you're talking about, the cooperation that takes place among individuals voluntarily, using the knowledge that only people on the ground have and how the market mobilizes that information through cooperations. It's a story that we will be telling for the rest of our lives in our profession because it's a story that's hard to understand and it's hard to internalize. But that's our story.

But, at the pandemic, many people who were, when it hit, many people felt that the risk was so large of association that we had to stay home in every dimension as much as possible. I don't think anyone, besides a handful of people who, most of them are I think, that I know of--not by chance, but most of them are economists; I'm sure there are others outside our field--but I don't think most people feel that that was a mistake at all.

I think they're glad we closed the schools. They're glad we locked down entertainment events. They're glad we shut down the NBA [National Basketball Association], which was voluntarily by the way that they ended their season, the NCAA [National Collegiate Athletic Association] Tournament; March Madness basketball was shut down voluntarily, maybe out of threat or fear of government reaction. But I do think there was a big reaction of fear. And, I don't know if that would be any different the next time. And certainly, people in responsibility were not eager to take the blame for that mistake.

There's two types of errors you can make, One and Two. And, I think in general, people will always make the error of omission and will do something that looks safe, but the costs are hidden. Do you have any more optimism than I do about that?

Casey Mulligan: Well, I think those of us whose profession is to examine opportunity costs, hopefully, we're better at articulating that and delivering that message. And, I think it will be an easier message to deliver, both in terms of the messenger having confidence, but also the receiver hearing it. Anyone who lived through this pandemic will not have as much trouble understanding the opportunity costs because they saw it. Now we have a new generation who never saw this pandemic. They may have to learn anew. But, opportunity cost is an obvious thing now, even to those who think that schools are worth shutting down or acknowledging the opportunity cost--because it's obvious.

Russ Roberts: My guest today has been Casey Mulligan. Casey, thanks for being part of EconTalk.

Casey Mulligan: Oh, it's a lot of fun, Russ.

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