“USUALLY,” ALESSANDRA FOGLI SAID from yet another Zoom screen,
“economists look at facts afterward.”
COVID-19 changed all that for Fogli, assistant director of inequality research
and monetary advisor at the Minneapolis Fed, and for other Institute scholars.
The crisis called for immediate response. The economists dived into real-time
data, developed new models, offered fast but considered policy recommendations,
and forecast short- and long-term trends.
Like many of us, Institute researchers sheltered in place, assisted children
with distance learning, tired of home cooking, and worried about their aging
parents. Though living in isolation, these scholars helped build a worldwide
economic and public health conversation.
Quickly, urgently, they brought the Institute’s mission to life.
FOGLI WAS DOWNRIGHT PRESCIENT. More than a year before the deadly
pandemic exploded in early 2020, she wrote a Federal Reserve Bank of Minneapolis
staff report titled, “Germs, Social Networks, and Growth.” In it, she and colleague Laura Veldkamp examined how interpersonal
connections and social networks spread ideas and technology
that help to positively transform economies.
But those same networks and connections, they wrote,
also spread disease: “The bottom line is that the way in
which networks affect economic growth depends on the
disease environment.” (See Research Digest.)
“The Institute has the right
approach because, at times
like these, we’re thinking
work and synergies.”
That eerie foresight laid the foundation for
Fogli and her husband, fellow Minneapolis Fed
economist Fabrizio Perri, to quickly develop
an economic model of the social networks that
can spread both disease and prosperity. This
“ECON-EPI network,” as they call it, analyzes
connections between the coronavirus, global
networks, and economic shocks. Fogli also
helped organize a working group to conduct
weekly Zoominars on COVID-19 economics.
More than studying COVID-19’s effects, the
couple lived it. “It really hit home for us,” said
Perri, from their suburban Minneapolis house.
Their high school freshman, Sofia, saw her
gymnastics events canceled. College visits and
debate competitions went virtual for Alessandro,
their high school junior.
More serious were Fogli’s and Perri’s worries
about friends and parents in their native Italy, a global
epicenter of the pandemic.
“We were frightened,” said Fogli, whose parents live in
Bari, in southeastern Italy.
“We have really close friends who lost their parents,” said
Perri, whose 78-year-old mother, Fernanda, a retired emergency
room physician, was nearly called back at the height
of Italy’s pandemic curve. It didn’t come to that, but for Fogli
and Perri, economic research and real life were never so
EVER SINCE WORKING ON HER PH.D. about the Russian
banking system in the 1990s, Institute Advisory Board member
Lisa Cook, an economist at Michigan State University,
has thought about alternative ways for people to exchange
money. Back then, Muscovites carried excessive amounts of
cash, creating security concerns. Later, conducting research
in inflation-burdened Nigeria, Cook witnessed shoppers
carrying thousands of naira in bags.
Cook’s solution was for cash to go mobile, carried in
The research intensified when she was a member of President
Barack Obama’s Council of Economic Advisers. But a
decade ago, cybersecurity concerns in government circles
weighed heavily, and mobile money in the United States
“I think [people are] going to
have to have a lot more
mental health support.”
Times change. Apple Pay, Venmo, Zelle, and other mobile
payment systems now have worldwide reach, and Cook
advocates that they be used to distribute government aid in
the wake of COVID-19.
Three days after the Coronavirus Aid, Relief, and Economic
Security Act passed, Cook published a three-page article
for the Washington Center for Equitable Growth about using
mobile devices to deliver urgently needed stimulus aid.
It caught the attention of financial institutions and media.
Policymakers asked for details.
Cook writes that 81 percent of Americans have smartphones
that can receive and send mobile payments. People
of color and those earning less than $30,000 a year rely more
on their smartphones than on broadband. The 16 percent of
Americans who are underbanked could especially benefit
from the speed and flexibility of mobile payments. Plus, in
a pandemic, where might people shelter in place? A paper
check in the U.S. mail could go to their home in Pittsburgh
while they’re with parents in Houston.
“We just don’t have time for checks—that’s what I was
thinking when the stimulus package was passed,” she said.
She’s also advising policymakers and employers to be
mindful of a traumatized labor force—a force that has gone
from historically low unemployment to meteorically high
unemployment in the wink of an eye, from fairly safe workplaces
to those demanding distance, masks, and barriers.
“I think we’re going to have to have a lot more mental
health support,” she said.
Cook was speaking from her home office in Ann Arbor,
Mich., a particularly inspiring venue in quarantine. Years ago,
pioneering polio virologist Jonas Salk lived in the same house.
“It’s actually comforting to know that somebody worked
really hard on this right here, and a solution was found,” she
said. “A vaccine was found.”
HEADPHONES ON, BLUE SKIES ABOVE, Misty Heggeness
chatted from what looked like an enchanted forest. It was,
instead, her faux, virtual Zoom background, replicating her
actual rural Maryland surroundings. There, while helping
her sixth-grade daughter and fourth-grade son with their at-home schoolwork, the Institute visiting scholar and U.S.
Census Bureau economist, produced an Institute policy brief
urging government officials to upgrade data collection, storage,
and use in a time of crisis.
“Sometimes, I feel when we have these privacy discussions, we
researchers do ourselves a disservice by not being vocal enough.”
(She also wrote a provocative Institute working paper
titled, “Why Is Mommy So Stressed?” that examined the juggling
act of working mothers—including herself—during the
pandemic. The paper generated widespread media attention,
from the Wall Street Journal, Bloomberg, The Hill, and
other news outlets.)
Her call to action around data was, fundamentally, for
“non-statistical agencies”—such as the National Institutes
of Health or the Department of Health and Human Services,
which simply gather data—to work more closely with “statistical
agencies”—such as the Bureau of Labor Statistics and
her own Census Bureau, which are expert in producing useful
Heggeness recognizes the mistrust that exists when some
agencies are asked to give data to another, particularly public
health data. But she believes that individual privacy isn’t at
risk and that the reward can inform the public and policy.
“We’re interested in aggregate trends; we believe in the law
of large numbers,” Heggeness said of economists. “We’re not
interested in identifying a certain Sally Jones. For us, that could
easily be just Person Number Five in our data set. Sometimes,
I feel when we have these privacy discussions, we researchers
do ourselves a disservice by not being vocal enough.”
History shows that desperate times fuel statistical innovation.
It wasn’t until the Great Depression, with policymakers
wondering exactly how extensive unemployment was, that
Census scientists began conducting a household survey to
learn the depths of the Depression’s impact on workers. For
the first time, Census statisticians experimented with sampling
that produced accurate estimates. It laid the groundwork
for the long-standing Current Population Survey and
some instant surveys the Census Bureau launched earlier
this year as COVID-19 pummeled the U.S. economy.
Heggeness hopes that history of innovation will repeat
itself in these desperate times.
INSTITUTE SENIOR SCHOLAR Aaron Sojourner knew unemployment
figures were going to be bad, just not how bad. So,
like most of us in search of answers, he Googled it.
His was no simple search, but a scientific approach that
helped him and Yale colleague Paul Goldsmith-Pinkham
create a model to accurately predict what the nation’s unemployment
rate would be on March 21. That’s when COVID-
19’s initial impact generated what was, at that point, the
nation’s largest one-week share of unemployment insurance
(UI) filings in history.
Analyzing UI claims was nothing new for Sojourner, a
University of Minnesota labor economist. As the pandemic
took its early toll, he believed that determining the severity of
unemployment could assist policymakers in developing an
assistance package for workers.
First, he pieced together official data and news reports
from 35 states and the District of Columbia, which accounted
for 77.5 percent of the nation’s unemployment claims.
But what about claims in the other 15 states? That’s where
Google came in.
Using Google Trends, Sojourner and Goldsmith-Pinkham
looked at how many people in all states used the search term
“file for unemployment.” That filtered out people seeking
just news and information. Sojourner discovered that search
spikes for UI filings were similar across states. Knowing that,
he extrapolated from the 35 states plus D.C. to forecast the
total increase for all 50 states.
He had some competition in that effort.
Investment bank UBS predicted an increase of 860,000
unemployment claims, Goldman Sachs said 2.25 million
new claims, and Bank of America forecast 3 million. In a blog item for the Economic Policy Institute, Sojourner and Goldsmith-Pinkham projected 3.394 million.
“I am interested in being
in a dialogue with not just
the academic economics
important, of course—
but also with the public.”
“We were going out on a limb,” Sojourner said, with such a
Actually, they weren’t. When Department of Labor figures
were released, the official number was 3.283 million. Pretty close.
Throughout all this, Sojourner was working in his southwest
Minneapolis home with his public school teacher wife and two
teenaged daughters doing their distance instructing and learning.
His mother was in a nearby nursing home, where several
residents had died from COVID-19. He had a lot on his mind.
His scholarship, though, was easy for non-economists to
understand and available daily to his more than 9,000 Twitter
“A big part of my job is to help the public understand what’s
happening in the economy, help them understand what
evidence is pointing to and what policy options we have,”
Sojourner said. “I am interested in being in a dialogue with not
just the academic economics community—which is important,
of course—but also with the public.”
INSTITUTE SENIOR SCHOLAR Sophie Osotimehin felt anxious.
She had nowhere to go during Montreal’s strict stay-at-home
orders. From long distance, she warily monitored the
health of relatives in France and Nigeria. She wondered what,
if anything, she could add to the proliferating COVID-19 scholarship
that might make a difference.
In late March, a colleague from the French Council of Economic
Analysis called, knowing Osotimehin had done research
on linkages between different economic sectors. It got her thinking
about the differences between “essential” and “non-essential”
workers in their exposure to health and economic risks.
“All other social and economic
issues have not disappeared.
We don’t know what the next
shock or crisis will be.”
While many scholars were looking at the decline in the
“upstream” supply of products because of shutdowns, Osotimehin
decided to also examine the demand side, or the “downstream”
impacts—if retail stores are shut down, for instance,
how will that affect clothing manufacturers and cloth suppliers.
She and her co-author, Latchezar Popov, modeled the health
risk associated with maintaining essential goods and services
during lockdowns and the economic risk associated with the
shutdown of stores, restaurants, and retail establishments.
What they found was a remarkable cascading effect of
health and economic risk that accounted for as much as 25
percent of total worker exposure to both. The high level of
such connected risks surprised her, but also made
her wonder how policymakers might intervene in the
future when similar public health and economic crises
spread across the economy.
What also surprised her was how quickly she
could produce such a well-developed working
paper—five weeks, rather than years that others have
taken. “Shortest project I have ever done,” she said.
Still, she wondered if too many economists have
jumped on an academic bandwagon and, perhaps,
over-analyzed COVID-19’s effects. The pandemic
cannot, should not, be economists’ sole focus in the
months ahead, she said.
After all, she said, “all other social and economic
issues have not disappeared. We don’t know what the
next shock or crisis will be.”
BUT WE DO KNOW THIS. The community that
the Opportunity & Inclusive Growth Institute has
become will clearly have a role to play in the future.
“The Institute has the right approach,” said Alessandra Fogli,
“because, at times like these, we’re thinking about interdisciplinary
work and synergies. When you specialize too much on one
thing, you’re vulnerable. But if you’re working with people from
different areas and with different expertise and backgrounds,
you’re better positioned to deal with something new.”