Much of the research published in Chicago Booth Review since its launch in 2016 has been connected to the Great Recession of 2007–10. It has taken academics time to digest the data from that crisis, and the work is far from completed.
But in the past decade, the availability of high-frequency, real-time data has exploded, enabling researchers to analyze crises as they happen. The cliché is that journalism is the first draft of history. This time around, so is academic research.
The rapid spread and economic impact of this pandemic have been breathtaking. And in this crisis, more so than in previous ones, it’s possible to use research to help navigate the fast-changing situation. Working from home, Booth faculty have been collecting and analyzing data, documenting the developing situation, and producing findings that we hope are helping leaders in government and business to make sense of what’s happening.
Some of the research had been in progress before the lockdown, but other projects were conducted immediately and urgently, with the knowledge of the immense challenges facing policymakers.
Some of the research could help save lives, such as that by Dan Adelman, the Charles I. Clough Jr. Professor of Operations Management, who studied how US states could share ventilators to maximize their use.
Other research could help companies to continue functioning, such as the analysis conducted by Eric Zwick, associate professor of finance and a Fama Faculty Fellow, and his coauthors on how the US government could use insurance and loans to keep small businesses afloat.
And it could help to save entire economies: Chang-Tai Hsieh, the Phyllis and Irwin Winkelried Professor of Economics and the PCL Faculty Scholar, explains the coordinated effort that would be needed to stave off a wave of sovereign-debt defaults.
Over the course of spring and early summer 2020, Chicago Booth Review covered more than 50 projects and conversations, by and with more than three dozen Booth faculty, all of whom are making sense of our rapidly changing world. Much of that work was captured in the Summer edition of Chicago Booth Review. Below, we spotlight some of this research as faculty have pivoted their research and analyses, even as—like most of the rest of the world—they themselves navigate personally through an unprecedented global crisis.
Adelman: Better Allocating Ventilators Could Save Thousands of Lives
In a new research study released in late April as a fast-tracked article in Health Affairs’ Ahead of Print series, Booth professor Dan Adelman assessed the benefits of a potential nationwide logistical operation—a state exchange plan for ventilators during the COVID-19 pandemic that could save thousands of US lives.
Adelman is a leading expert in business analytics, helping firms and institutions deploy data and decision analysis to build world-class strategic and tactical management capabilities. He leads the Healthcare Analytics Laboratory at Booth, in which teams of students work on real-world projects with providers to improve health-care delivery through the analysis of large datasets.
According to Adelman’s research, if the government organized a mechanical-ventilator exchange that made the best use of all available ventilators in the country—including the national stockpile—the number of lives saved could range from 7,070 to 28,197, which could require performing more than 18,000 individual ventilator moves between states.
“It might be that the ventilators we have around the country are enough to save many more lives. The problem is they may be in the wrong place at the wrong time,” said Adelman in a Q&A this past spring. “If COVID-19 were to peak in all states at the same moment, we wouldn’t have enough. But in the way this pandemic is evolving, states will peak at different times. As that happens, ventilators will become less in need in some parts of the country and more in need in other parts. They could be moved.”
Booth Research: Small-Business Loans Didn’t Reach Their Targets
Some areas of the United States, such as New York, have seen their economies particularly hard hit by the pandemic, as measured by business shutdowns and hours worked. But government-relief funds didn’t necessarily get to these areas—and had a better chance of reaching less-affected ones, such as North Dakota. That’s according to research by João Granja, associate professor of accounting and the Jane and Basil Vasiliou Faculty Scholar; Constantine Yannelis, assistant professor of Finance and a FMC Faculty Scholar; Booth professor Eric Zwick; and MIT’s Christos Makridis.
Granja’s research interests include disclosure regulation, banking, and regulatory enforcement, while Yannelis focuses on household finance, public finance, human capital, and student loans. They found that just 15 percent of businesses in most-affected regions received Paycheck Protection Program funding prior to the disbursement of loans, while the percentage was double in the least-affected regions.
“The fraction of establishments receiving PPP loans is greater in areas with better employment outcomes, fewer COVID-19 related infections and deaths, and less social distancing,” the researchers wrote.
Hsieh: We Need a Plan to Avoid a Humanitarian and Economic Catastrophe
Booth professor Chang-Tai Hseih’s research focuses on growth and development. When the pandemic hit, he and his coresearchers looked at what was happening in industrial and retail sectors in several Chinese cities during and after the lockdowns. He’s also been closely following economic rescue packages around the world and what it means for various countries to be taking on large amounts of debt to meet urgent social needs.
“There are two questions to think about. Where exactly is that money going to come from? A country has to borrow money from somebody. Let’s put that question to the side for now,” said Hsieh in a mid-April Q&A, on the topic of sovereign debt defaults. “The second thing to think about is: Who is affected by this crisis? It’s not just China, or Europe, Canada, and the United States, but every country in the world. It’s Mexico, Argentina, Colombia, Indonesia, Malaysia, the Philippines, India. Every single country has exactly the same problem. It’s a shock that hits everybody equally.”
Lyman: What We’re Losing by Working Remotely
When she’s not in the classroom, clinical assistant professor of entrepreneurship Lindsey Lyman, ’08, helps companies build profitable new businesses through Growth Studios, her innovation consultancy. Leveraging her experience from 10 years spent at McKinsey & Co., where she helped build McKinsey’s global innovation practice, she also aims to make executives themselves stronger innovation leaders.
Lately, Lyman has been writing about how the COVID-19 crisis is forcing companies to quickly adapt and what tools should become a replicable part of corporate innovation practices after the pandemic subsides. In a Q&A this spring, she also discussed the reality of remote work for employees right now, and the hidden costs that could come with working from home.
“There are consultants saying virtual sales models are going to be the new norm. Why do salespeople have to call on customers anymore? What we’re learning now is that this can work just as well. There are articles saying big tech is going to take over how we work, and so on,” said Lyman. “As I step back, I think, yes, technologies are enabling us to work, and yes, maybe we’re getting the job done this way, but there are significant costs that we’re not sufficiently reflecting on.”
Guerreri: How Policymakers Can Help Save Jobs
Should lawmakers focus their COVID-19 policies on giving direct aid to people or on trying to save businesses from closing? Veronica Guerrieri, the Ronald E. Tarrson Professor of Economics and a Willard Graham Faculty Scholar, suggests doing both could speed recovery down the road. Guerrieri is a macroeconomist with research interests in labor and financial market frictions, search theory, dynamic contracting, and growth theory. “Since I come from Europe, the malfunctioning of labor markets has always attracted my attention,” she said. “My research explores frictional labor markets and other market imperfections.”
In a video with Chicago Booth Review, Guerrieri explained how factors including social insurance, labor hoarding, and human capital should guide policymakers as they envision recovery efforts. “When you don’t have an insurance system in place, the demand effects are going to be even larger. And this important ingredient—that is, incomplete markets that amplify the demand effect of the COVID-19 pandemic—bring us to think that an important ingredient of policy is social insurance,” said Guerrieri.
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