Drug Overdoses and Government Stimulus Checks, Long COVID, and Gerrymandering

Sunday, February 13th, 2022

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What Happens Next is a podcast where an expert is given just SIX minutes to present his argument. This is followed by a Q&A period for deeper engagement.

Today’s topics are Drug Overdoses and Government Stimulus Checks, Long COVID, and Gerrymandering.

Our speakers are Casey Mulligan, Dr. Ari Ciment and Kyle Kondik.

Transcript

Larry Bernstein:
Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast where the speaker gets to present his argument in just Six Minutes and that is followed by a question-and-answer session for deeper engagement.

Today’s discussion will be on three topics: How the Government stimulus checks increased drug overdose mortality, what is new with COVID treatments and mask efficacy, and the US House elections and the Gerrymandering.

Our first speaker is the University of Chicago Labor Economics professor Casey Mulligan. Casey was the Chief Economist in the Trump Administration. He has just written a paper showing that there have been increased drug and alcohol related deaths that can be directly linked to the supplemental government stimulus checks.

Casey has spoken three times previously on What Happens Next and the last time, he mentioned this link between cash and drugs. I got a lot of push back from my audience, and I told Casey so, and then he went to work to look at the real data to prove the point. I think you will find Casey’s analysis to be quite provocative.

Our second speaker today is Dr. Ari Ciment who is a pulmonologist and works in the COVID ward at Mt. Sinai Hospital in Miami Beach. Ari is a regular speaker on the podcast and is back because of popular demand. Here are my topics for Ari this week:

Who should take the antivirals, and are they even available?
Does Omicron cause bacterial infections and should you take antibiotics to preempt the infection?
How do you treat Long Covid symptoms?
Will steroids have a renaissance to combat viruses?
Under what conditions should I wear my mask as Omicron caseloads decline?
Do these masks even work?

Our third speaker is Kyle Kondik who is the managing editor of Sabato’s Crystal Ball at the University of Virginia’s University Center of Politics. He will be discussing his new book The Long Red Thread: How Democratic Dominance Gave Way to Republican Advantage in the US House Elections. Our discussion will focus on gerrymandering and the likelihood of a Republican takeover of the House.

Every month since the outset of COVID, I have spoken about the BLS employment report. Well, it looks like we have to expand our analysis to the CPI report, because inflation is taking off and we need to understand what is going on here. For the past 20 years, inflation has been under control and incredibly low and stable despite aggressive monetary policy, well no more.
Let’s look under the hood at some of the detail of the CPI report.

Here are the headlines: CPI for the last 12 months was up 7.5%. I want that to sink in. 7.5% that is mindboggling high. This compares with the Fed’s inflation target for 2020 of 2.0%, oops. And during the past 12 months, the Fed kept the Fed Funds rate at zero. I think everyone including the biggest monetary doves would say the Fed is way behind the curve.

Energy is up 27%, Gasoline 40%, electricity 13.6% and this is even before a Russian invasion of the Ukraine. Used cars are up 40%, new cars are up 12% if you can get one.

Shelter makes up a third of the consumer basket. The government statistic for shelter includes a proxy for rent and housing. Shelter inflation was 4% year-on-year. But the increase in the median home price was 14% and that is an enormous discrepancy. Think about it, if we had used median home price instead, CPI would have been 11%.

We hear arguments that inflation will be transitory, but we are seeing inflation across services, goods, and labor. I am not sure that this is a supply chain problem that can be corrected at the LA Ports. My expectation is that interest rates will need to go up and that fiscal policy will need to be tamed. After the CPI release, the interest rate on US Treasury 2-year notes moved 20 basis points higher on the economic release. The Fed is considering a 50-basis point increase at their next meeting.

I am short long-term bonds as I think that rates are still too low. The market has a 10 year real interest rate of negative 54 basis points and a 10 year inflation forecast of 2.5%; I think both are too low.

Let’s change topics and let me welcome back University of Chicago economist Casey Mulligan.

                                                              
 
 
 
 

Casey Mulligan

Topic: Government Stimulus Checks Increase Drug Overdoses
Bio: Professor in Economics at the University of Chicago
Reading: Lethal Unemployment Bonuses? Substitution and Income Effects on Substance Abuse 2020-2021 is here

Transcript

It is becoming clearer that the pandemic produced an abnormal number of deaths of people who did not have the virus. Today, I share results using especially the Center for Disease Control’s online tool for tabulating death certificates through June 2021. Although we know from other sources that feelings of depression and loneliness were elevated during the pandemic, the good news is that suicide deaths during the pandemic were a bit less than before. This is also confirmed by some of the emergency department data on treatment for self-harm.

But deaths from drugs or alcohol are way up. Through the first 15 months of the pandemic, they were almost 50,000 above what they were before. A bit of this is a continuation of prior trends, but we are still 40,000 above that. Drug and alcohol deaths have never increased so much over such a timeframe. The people who died in this way are a lot younger than people dying from COVID. One measure is life years with more 7,000,000 life years lost from drug and alcohol during this time. For men, they’re part of the 7,000,000 is more than the life years they lost from COVID.

For every drug or alcohol death, there are more than 100 people with ongoing substance use disorder, which is modern parlance for drug or alcohol addiction. For the substance, alcohol, narcotics, and meth, I estimate that 47,000,000 Americans have substance use disorder, 8,000,000 of which are above the previous trend. They will show up in a lot of metrics of economic and social activity on an ongoing basis, and employment and labor force participation are likely among them. The economics toolkit readily explains what happened.

Our federal government was spending- sending people massive amounts of cash, on average, $30.00 per household per day. Normally, incomes go down during a recession, but in the pandemic, personal incomes increased record amounts. It would be wishful thinking to suppose that exactly zero of that money went to drugs or alcohol. It’s true that national savings rates went up a lot, meaning that, on average, households spent little of the money on anything. But we know from prior research that people with potential for drug and alcohol abuse are not average. I guess that they saved too, but still not as much as the average.

We know from prior research that liquidity is quickly followed by somewhat elevated mortality from alcohol and drugs. This effect is especially strong when the liquidity is not coming with any incentive to invest in job related human capital. Indeed, the pandemic payments were big disincentives to be working. To quantify the income or liquidity effect as well as price effects, I consider alcohol, narcotics, and psychotropics separately. Alcohol induced causes include acute alcohol poisoning, but also deaths from chronic alcohol related liver disease. By the CDC’s convention, it does not include drunk driving accidents.

Narcotics deaths are almost all involving opioids of one type or another. Deaths involving psychotropic drugs are primarily crystal meth. Alcohol has its own price changes which I relate to the shift of drinking from bars and restaurants, where alcohol is expensive, to home, where alcohol is much cheaper on a per gallon basis. As a quantitative matter, we know from historical data how much each percentage reduction in alcohol prices translates into additional alcohol deaths. The restaurant to home shift is much less relevant for illegal drugs. For them, I focus on the full price, which is the sum of a money price and an opportunity cost.

Consuming dangerous drugs requires time to acquire, administer, and especially recover from them. So, the full price involves the value of time, which is where the unemployment bonuses come in. Unemployment benefits have always been around, but what was novel in the last two years was very large bonuses. These are policy induced shocks to the value of time, in addition to changes to the value time coming from other sources. One prediction from this economic approach is that organic opioid deaths would not increase and may decrease, and this actually happened.

Another prediction is that opioid deaths overall would increase proportionally more than meth deaths, even though opioids include some of those categories with reduced deaths. Again, that happened. Another prediction is the combined deaths from alcohol and drugs, which were about 130,000 at an annual rate in 2019, would peak at about 180,000 in summer of 2020, which is exactly what happened. The economics predicts that 25,000 drop when the bonuses stop. Again, this happened. The economics says that when the bonuses come back on in January 2021, the death rate would go back up to 180,000. Again, that’s what happened.

The economic approach accurately predicts patterns by substance, demographic group, and time. For example, the double peak time series I described for drug mortality should vary across age groups because they have different rates of contact with the unemployment system. This actually happened. Throughout the pandemic, I warned, including on this show, that fiscal policy was wildly disproportionate and disruptive. Audiences were always upset that I even suggest that well-intentioned fiscal policies might have lethal consequences for thousands of people.

Perhaps all this happened as a coincidence. All I can say is good luck trying to understand the very real and serious substance abuse problems without touching the economics toolkit. This didn’t have to be a postmortem analysis.

Casey Mulligan Q&A:

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Dr. Ari Ciment

Topic: Covid Meets Cancel Culture and COVID Innovations
Bio: Pulmonologist and Critical Care at Mt. Sinai Hospital in Miami Beach

Dr. Ari Ciment Q&A:

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Kyle Kondik

Topic: US House Races, Gerrymandering and an upcoming Republican majority?
Bio: Managing Editor of Sabato’s Crystal Ball at the University of Virginia’s University Center of Politics
Reading: The Long Red Thread: How Democratic Dominance Gave Way to Republican Advantage in the US House Elections is here

Transcript
The Long Thread tells the story of US House elections from the early 1960’s, why the House went from dominated by Democrats from the New Deal through the early 90’s to one isn’t dominated by either side. Since the early 90’s the Republicans have an advantage.

There are three big takeaways.

First one is the nationalization of election results.

For many decades, the Democrats were able to win districts that had become Republican at the presidential level, and voters split their tickets. Vote Republican for president but vote Democratic for house or vice versa. Like 1976, the Jimmy Carter, Gerald Ford that race that Carter won by only two points over Ford. It was very competitive all across the country.

You had about 30% of the House districts in 1976 voted for Carter but then voted for Republican House, or they voted for Ford for president and voted for a Democrat for the House. In 2020 there were only 16 districts out of 435 that voted for one party for president, one party for house.

Presidential results in a district are likely to reflect the House results, and the median House district typically is a little bit more Republican than the nation as a whole.

A second thing is political realignment. The South is the most populous region in the United States, it has 30% of all the House seats in the 60’s, it’s up to about 35% now. The South used to be really Democratic. Democrats would routinely win 75% or more of the seats in that region. Now, Republicans control almost 70% of all the seats in the House.

Democrats dominate the West Coast and the Northeast. The Republicans dominate in the Midwest, interior west and Great Plains. But the realignment in the South has been very important for Republicans.

Democrats used to have a lot more control of the State government. Therefore, they would dominate the redistricting process. If you look in the 70’s and 80’s, you have many more instances of Democratic gerrymanders, districts drawn to benefit Democrats over Republicans. But over the course of the 90’s into the 2020’s, the Republicans exercise more control over redistricting.

Republicans started to control the drawing of more district lines than Democrats did, and that is helpful to them.

So, those are the three big factors that contribute to what I see as a small Republican advantage in House elections now where Democrats used to dominate.

Kyle Kondik Q&A:

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