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Rotman Insights Hub | University of Toronto - Rotman School of Management Groundbreaking ideas and research for engaged leaders
Rotman Insights Hub | University of Toronto - Rotman School of Management

How data can help us address the COVID-19 crisis

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Mara Lederman

In the early weeks of the pandemic, virtually  everyone was talking about four things: shortages of personal protective equipment (PPE) and how to produce more of it; ventilator shortages; finding treatments for COVID-19; and producing a vaccine. The CDL team chose not to focus on any of these things — for two reasons.

“First, other people were already focusing on them — and doing a great job,” says Lederman. “We also knew that vaccines and treatments would likely take significantly longer, and that those  solutions would not likely come from start-ups.”

The second reason was that the team approached the problem differently. “Our approach was  motivated by my Rotman colleague (and CDL Chief Economist) Joshua Gans. Early on, he said to us, ‘Wait a minute, what we have here isn’t just a health crisis  or an economic crisis  — it’s an information crisis’.”  COVID-19 is caused by a virus, he explained, but the pandemic is caused by a lack of good information. “At its core, a pandemic is essentially an information problem: how can we figure out who has it?”

This insight not only formed the basis for Gans’s book (The Pandemic Information Gap: The Brutal Economics of COVID-19), it would be embraced as the overarching principle by the CDL Recovery program going forward. “As Joshua argues in his book, when  we don’t know who is infected, we have to act as if everyone is infected. The vast majority of people weren’t getting sick — and they still aren’t,” says Lederman. “When we close the economy and send everyone home, it’s not because we think most people are sick. Even early on, we knew that less than one per cent of people were sick. The problem was, we didn’t know who the sick people were.”

In short, we had a health problem that didn’t have any solutions yet, and that health problem created an information problem. If we could actively manage the information problem — by figuring out who was infected and with whom they have had contact — we could suppress the virus and get the economy back up and running sooner rather than later.

Information-based solutions would involve predicting who is infectious and who is immune and developing tools to leverage this information. For example, if the system detects that someone in an office has an elevated temperature, security would be notified to direct that individual to a testing station for further examination.

Most of the solutions we have been using to date are what CDL calls "always-on solutions": "everyone must stay at home" or "let’s surround our workers with plexiglass". 

“These are entirely un-innovative solutions,” says Lederman. “They are the bluntest form of measure — and the most costly, in terms of economic impact.” She notes that shutting down businesses for months at a time was costing the economy trillions of dollars per day. “That’s where we wanted to have an impact. Nobody else was focusing on this, and we knew information-based solutions would enable us to begin to reopen the economy.”

If you enjoyed this presentation, check out our other short talks, from our video series 4 Short Talks about a Healthier Society:

Mark Britnell on Addressing the Other Healthcare Crisis:

Jay Cone on Creativity and Compassion in a Time of Chaos:

Mara Lederman on Leading the Way to Recovery:

Janet Krstevski on Unlocking Employee Potential:

Mara Lederman is a professor of strategic management at the Rotman School. She does empirical research in the areas of industrial organization and organizational economics, and is best known for her work on loyalty programs and organizational design. On the teaching side, Mara delivers courses on competitive strategy, data analytics and business problem-solving, at both the MBA and executive level. Mara also serves as a moderator at CDL-Toronto.