A Bet We Cannot Afford to Lose

A Bet We Cannot Afford to Lose

In this article, I’ll be sharing my thoughts on how we should respond to Covid-19 by sharing some of the lessons I’ve learned from playing poker.

We’ll be discussing concepts such as taking calculated risks, decision making, asymmetric bets and more. Let’s dive in!


Before we jump in, I’m receiving a lot of comments from people who are confused as to why experts are recommending taking aggressive measures (like state wide lockdowns) with so few cases.

I’ll explain this using two simple to follow arguments.

The first is based on the known way that Covid19 expresses itself. Because there’s a 7-14 day delay in the onset of symptoms, and even longer for people to require ICU hospital care, reacting to the current situation will always leave us well behind the curve.

Most understand this.

The reason it’s difficult for people to take the threat seriously however, is because the problem only seems to be big enough when the absolute number of cases crosses each persons arbitrary threshold (which, due to extreme lack of testing is yet another reason we will always be behind the mark).

Even as documented case numbers rise, people still don’t react. Unfortunately, as we’ve seen in other countries, it’s only when the hospitals are overflowing that people begin to give the threat of coronavirus the respect it deserves.

If we wait until the moment of need it will be too late. Failure to change this mindset will have catastrophic consequences for our nation, and world.  

I’ve shared my thoughts about why the math of Covid-19 is so difficult for many of us to understand. I believe it’s so simple that it can be explained in a Tweet.

Covid19 Exponential Growth

In short, our failure to act is a result of not understanding the difference between linear and exponential growth.

Our minds are not hardwired to think exponentially, but this is the way in which Coronavirus spreads.

Exponential growth combined with the delay in onset of symptoms is why we must react by closing everything down well before our hospitals reach capacity. (For a full analysis, see this article).

Making Asymmetric Bets

Even for the naysayers who downplay the threat of Covid-19, a simple analysis of the potential outcomes and responses illustrates why taking early action is the correct play from a risk to reward perspective.

Let’s imagine for simplicity purposes there are two possible outcomes of Covid-19 (catastrophic and benign) and we can respond in two ways (react or not not).

For specificity, let’s define the above.

Outcome A is it’s a catastrophe (ICU full, hospitals turning away patients, and doctors and nurses are forced to decide between who lives and who dies.)
Outcome B is it’s benign (like the flu).

Now, for the responses.

Response A: We React by shutting everything down, people practice physical distancing and they use delivery services. Again, I’ll leave aside the fact the scientific consensus amongst the medical community is that this is the best thing to do.   
Response B: Not React. (i.e. live life as normal).

Let’s examine at how each of these bets play out.

Outcomes of Covid-19 Responses

Examining the chart makes it clear the most important outcome to avoid is the second, a catastrophic scenario resulting in tragic damage. Taking the necessary precautions now, (closing everything down and social distancing), although it can seem extreme to some), is actually the only logical step to take.

This ‘bet’ has what is known as asymmetric risk/reward, meaning the downside is minimal compared to the alternative and risk. Although it can seem like closing down everything for two weeks now will have dire consequences, it perils in comparison to not reacting, and then being forced to live this way for 18 months.

Another way to look at it is failure to take these measures, if we turn out to be wrong, will cost exponentially more lives and strain on the economy in the near future.

Asymmetric Bets in Life

In poker, asymmetric bets are the ones that are often the best value, as they have minimal downside and massive upside. Pros make their living by making these bets, for example, paying one additional bet to see the new few cards in hopes of winning a monster pot.

Life works largely the same way. Whether it’s an angel investor dropping a dime into a start up (think Shark Tank) or Michael Burry shorting subprime mortgages (the character played by Christian Bale in The Big Short), finding these asymmetric bets is how many professional risk takers make their living.

This is the very situation we find ourselves in with Covid19, yet far too few are making the correct ‘bet’ with their actions. This is tragic, as the merit of making these bets is most crucial when the stakes are highest. It’s precisely when you can’t afford to lose that it’s most important to hedge.

High Stakes Decision Making

It’s true the stakes have arguably never been higher as we’re betting on human lives. The United States having less hospital beds per capita than Italy, which has a world class health care system – ranked #2 by the WHO, compared to the U.S. at #37 and it is still overrun. The fact there’s a significant risk our fate becomes like theirs means we as individuals must take immediate and aggressive action.

One thing I love about math is that it never lies. In this case, the numbers are clear, it’s almost impossible to over react.

Many naysayers have thrown up the traditional arguments, such as the ‘flu kills more people’, or ‘my chances of dying in a car crash are higher.’ Even assuming both those things are true, even then, self-isolating is the proper, logical, and morally sound response.

This isn’t about your personal risk of death nor your individual freedoms as an American, it’s about slowing the exponential spread to ‘flatten the curve’ so our healthcare systems can absorb this tsunami.

Flattening the Curve to Covid19

It’s about protecting the vulnerable, the elderly and the unlucky who require ICU treatment.
It’s a statement with our actions that we value the lives of everyone in society more than we value drinking beer at a bar.
In short, it’s being human.

People often speak of panic and fear doing more harm than the disease itself. While I agree that behaving irrationally is never the right play, a healthy dose of fear can prompt people to take the necessary steps to plan appropriately, thereby resulting in the best outcome for all. (Ambra Meda Torelli, my wife, wrote a great article about this from her experience in Italy here). 

The Time Is Now

We must not wait for the ‘top down’ approach that forces the citizens to take the responsible measures to slow the spread of the disease. We’ve already seen from other countries that those measures are often enacted too late.

In order to beat coronavirus, we have to move 14 days ahead of it. And, as discussed above, with an exponential growth rate, that means taking seemingly extreme measures albeit small absolute number of documented cases.

Failure of government in mandating an absolute lockdown (which I believe is inevitable at this point), is no excuse not to act now. It’s up to each of us to be informed and do what’s responsible to give our healthcare systems the best chance of absorbing this threat.

If we’re ‘wrong’ and react, we’ll cost ourselves a few weeks of physical distancing, time for which could be used to reprioritize important things in our lives, come closer to family and reassess our path forward. Yes, it will be hard for some who are struggling, but again, nothing in comparison to the potential tenfold alternative.

If we’re ‘wrong’ and under prepared, we face an unfathomable situation where doctors are turning away care to our parents and grandparents to make space for younger adults who have a higher probability of surviving the 20-day period in which their intubated in an ICU.

At the poker table, one often faces a predicament in which there is no good outcome; regardless of the decision they make they will lose money (for example, folding now and conceding the pot, or going all in and losing the rest of their stack).

The professional still acknowledges that even with two bad options, one will inevitably yield a higher expectation, even if that simply means losing less money. Unfortunately, this is the very situation we now face with Covid-19. We must choose the least bad option.

The clock has been called and it’s your turn to act. Which bet you make will determine the fate of a nation. Please, act responsibly.

Alec ♠️

Further Reading and Viewing:

Scott Gottlieb (former FDA Commissioner) on Why the Best Case Scenario is We Over Reacted
Nassim Taleb on Ethics of Precaution: Individual and Systematic Risk
Nassim Taleb: Why It’s Better to Panic Early

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  • Reggie Young March 23, 2020 4:45 pm

    Excellent video and content. It was very informative and eye opening. Thank you Alex. Be safe in Northern Italy.

  • Alec Torelli March 23, 2020 8:18 pm

    Thanks Reggie, very kind of you. Much appreciated.

  • Branko March 29, 2020 1:58 pm

    Educationally fantastic. Keep up with your excellent work and stay safe.

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