The Cheat Sheet

Who wants to be a ‘corona crorepati’?

Venky Vembu | Updated on May 21, 2020

Wait, did Nirmala Sitharaman announce that?

You wish. That’s not what I’m talking about.

What then?

It’s an unconventional idea that some economists have put forward to minimise the risks of a second or a third wave of coronavirus infections, now that countries around the world are opening up after lockdowns that hurt their economies badly.

Yeah, I saw some pretty big numbers.

Barclays estimated that every week of the shutdown in India translated into an economic loss of $26 billion or ₹2-lakh crore. In developed economies, it was even higher: in the US, the economic loss was estimated at $125 billion a week.

So what’s the crorepati plan?

Hang on. You’ll have to earn your money: that means understanding the rationale behind the plan.

Okay, shoot.

It works like this. Although officially under lockdown, India is opening up gradually, but it still hasn’t managed to “flatten the curve” of infections. That opens it up to a higher risk of Covid-positive waves, particularly if, emerging from the lockdown, asymptomatic carriers start spreading the infections.

That is scary.

Yes, and when infections rise, both the Central and State governments may be compelled to enforce more lockdowns — inflicting a ruinous cost to the economy.

So what’s the way out?

Epidemiologists say the only way to control the infection spread is by “testing, testing, testing”, followed by contact tracing and quarantine. In India, state capacity to conduct tests in large numbers was limited, and officials were initially not testing anyone unless they had a symptom or had had proximate contact with an infected person. But the protocols have since been revised. Testing capacity has also vastly improved.

Again, what’s the crorepati plan?

I suppose I should think you are very money-minded, but in fact it’s a good thing. You’re validating the premise that led economists Steven Levitt, Paul Romer and Jeff Serverts to propound their proposal to incentivise people —even asymptomatic people — to submit themselves for testing.

How would it work?

In an op-ed article in USA Today, they noted that in order to get people, even asymptomatic people, to take the test, it would be better to incentivise them with money. Not a small cash handout, but a chance to win big in a weekly ‘Covid lottery’, called ‘Pandemllions’. A completed test would convert into a ‘ticket’ in the lottery, with winners announced every week.

Remember, testing is not a one-time occurrence: each person may have to be tested several times a year.

How big a lottery would it be?

Oh, it could be big. As we’ve seen, every week of the shutdown inflicts huge costs. And in their reckoning, a person who is infected but not in quarantine imposes costs on everyone else — of at least $2,000 per week. “Even if we gave away $200 million per week, the annual cost of the lottery would only be over $10 billion,” they noted. In an Indian context, it could even be ₹100 crore a week. It would still be much less than the economic loss from a lockdown.

Will it work?

As Levitt says, the real consideration is not of cost-effectiveness. Even a bad version of the ‘lottery’ plan, he says, will work as long as it incentives people to get tested, and as long as those who test positive are quarantined. The economic value of the lottery — and the value in terms of lives saved — would be astronomical compared to the costs.

Makes sense.

Then get in line, if you want to be a ‘corona crorepati’.

A weekly column that helps you ask the right questions

Published on May 21, 2020

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