When regulators engage in "white lies"
By Scott Sumner
Regulators are supposed to protect us from making foolish decisions. When doing so, they often believe the public interest is served by promoting “white lies’, that is, false statements that are intended to be for our own good. If fact, the short run benefits of white lies are almost always outweighed by their much bigger long run costs.
1. Early in the pandemic, experts said there was no reason for a travel ban. Presumably they were trying to prevent panic, or xenophobia, or something. But in retrospect, an international travel ban would have been helpful if instituted back in January. Indeed travel bans largely explain why some countries have mostly avoided Covid-19, although in fairness other policies such as masks and test/trace/isolate also played a big role.
2. Early in the pandemic, experts suggested that masks don’t help average people. Even then they must have known that was wrong—why else would doctors wear masks? Their white lies seem to have been motivated by a feeling that masks might make people feel overly self confident (which might be true), as well as the fear that a mask shortage might deprive health care workers of masks. Unfortunately, these “white lies” had extremely negative long run consequences.
3. More recently, Dr. Fauci suggested that it was important for the FDA to spend several weeks evaluating the Pfizer trial data before making a decision. According to experts cited by Tyler Cowen, that also seems to have been inaccurate. Alex Tabarrok suggests that the motivation seems to have been to make the public feel like the FDA was being careful:
I am getting very angry at people like Anthony Fauci who say that FDA delay is necessary or useful to alleviate vaccine hesitancy.
Fauci told Fox News that the FDA “really scrutinises the data very carefully to guarantee to the American public that this is a safe and efficacious vaccine. I think if we did any less, we would add to the already existing hesitancy on the part of many people because … they’re concerned that we went too quickly.”
The WSJ says much the same thing just with a slightly different flavor:
…this regulatory rigmarole is essentially a placebo to reassure the public it will be safe to get inoculated.
The ‘we must delay to allay’ argument is deadly and wrong.
Tabarrok points out that the effect could easily go in the opposite direction, making the public even more wary of vaccines, and Matt Yglesias is rightly skeptical of public health officials becoming amateur social psychologists:
The internet is full of conspiracy theories about almost everything. Most of the theories are unsubstantiated. Unfortunately, if our experts believe that white lies are frequently in the public interest, this will gradually erode confidence in expert opinion, breeding even more conspiracy theories.
As an analogy, deposit insurance is often useful in the midst of a financial crisis. But in the long run, the existence of deposit insurance encourages banks to take excessive risks, and this makes financial crises more likely in the long run.
Tabarrok and Yglesias are right that Dr. Fauci should not try to be an amateur psychologist. And this is true for reasons even beyond those that they cite—the fact that he’s not very good at it. Even if Fauci were an expert in knowing just how to manipulate public opinion at a point in time, the long run effect of his action would to reduce public trust in experts, with consequences much greater than any short run benefit.
When it comes to regulators, there are no “white lies”.