Framework for Assessing COVID - 19

COVID - 19 is not the first virus to affect large populations, but its impact may be the greatest because of the global connectivity driven by debt-financed markets. In the past, lower economic activity was less frightening because populations relied on their reserves. However, today's propensity to borrow ourselves rich puts us in a precarious position. In thinking about this, I would break the analysis into cause-effect approach with a mind-body distinction:

1) determinate cause - virus
2) actual effect - economy
3) mental effect - stock market

In the first area, we still need critical data on the virus that will allow us to better asses the potential range of effects. The questions to answer are:

Transmissibility - when is the virus transmissible. The answer to this question can be then be quantified. Currently, the virus pathway is well understood in terms of human to human transmission as well as durability of virus outside human body. But the time of transmissibility is not clear. The less symptoms required to transmit, the greater the transmissibility. Transmissibility may even occur after someone is recovered. If understood, this factor can be quantified as somewhere between the flu and the measles.

Fatality rate - how the virus affects bodies. This virus has a wide range of outcomes on mortality. So far these are difficult to assess. Lower fatality rates could be ascribed to better testing or better genes or less overwhelmed healthcare systems. At the inception of this virus, people were unconcerned due to a perception of low ultimate fatality rates relative to the flu. That has changed. In the future, this fatality rate could be affected by treatments or vaccines.

The resulting TF could be assessed and grouped for % outcomes by a 2X2 square:

HighT*LowF: 50% - 75% (depends on treatment)
LowT*LowF: 25%
HighT*HighF: 25% - 0%

In the second area, we are gathering data on the impact of the only successful approach we have seen so far - social distancing. There are clearly degrees of social distancing. The impact on the spread is more positive the more radical the social distancing, but the impact on the economy is directly negative. In addition, the longer the duration of the social distancing, the more negative impact the economy receives. These could be grouped for combo impacts using some kind of normal curve:

LowSDLowEI:16%
ModerateSDModEI:66%
HighSDHighEI:16%

Taking these two areas together, an estimate of stock market impacts could be structured:

Market Collapse: High all: 4% or 1% (good treatment)
Series of Ws: Moderate all: 92% or 80% (good treatment)
V-shaped Recovery: 4% or 19% (good treatment)

There will be many kind of robust statistical models generating likely scenarios. From this crude model, it would appear that a muddle through period is likely ahead.