Opportunity Insights, a research and policy organization co-directed by University Professor of Economics John Friedman, has led national efforts to study the impacts of the COVID-19 pandemic on the United States economy through its Economic Tracker, which launched in May. The tool has helped inform former Vice President and 2020 U.S. presidential candidate Joe Biden and running mate Sen. Kamala Harris in crafting policies.
The Economic Tracker provides real-time national data on the economic impacts of the pandemic from a national level down to individual cities. The tracker includes data for a range of indicators: spending, businesses, employment, education and public health, which reflect the state of the economy. It also includes breakdowns by income level and industry, according to the Economic Tracker website.
The team behind the project developed the tracker to “produce something new, novel that could be helpful to policymakers in this time of need where data and information are some of the most important things we could be giving them so that they are making smart, informed decisions,” said Shannon Felton Spence MPA’17, director of communications at Opportunity Insights.
“I’m hoping these data not only provide more information for existing policy pathways but help encourage new policymaking pathways,” Friedman said.
After the idea for the Economic Tracker was conceived in April, the first version underwent rapid development and launched May 7. Since its launch, the amount of attention the tracker has received from both policymakers and the media has been unprecedented for the organization, Felton Spence said.
Economists from Opportunity Insights spoke at length about the tracker with Biden and Harris in recent weeks, Felton Spence said. In addition to advising policymakers at the national level, the Opportunity Insights team has directly conversed with state government officials, including members of the Rhode Island government.
The tracker ties back into Opportunity Insights’ overall mission to “use big data to do research to understand upward mobility and long-term outcomes for kids,” he added.
Rather than focus solely on understanding the average effects of the recession caused by the COVID-19 pandemic, Friedman and his team examined how the recession is differentially affecting communities across regions of the United States. Opportunity Insights released an “Opportunity Atlas” in 2018, which measured how characteristics of certain neighborhoods affected prospects for upward mobility using data from people tracked since childhood, The Herald previously reported.
The Economic Tracker is the first of its kind to draw primarily upon private sector data such as credit card data from company partners to track COVID-19 impacts on the economy, according to Felton Spence. Companies had “never even considered that their data could be useful in this way, so it really is remarkable that we were able to do it,” she added.
The process of using private sector data involves first benchmarking the data against national governmental surveys to ensure that it is nationally representative, Friedman said. The Opportunity Insights team then looks beyond plotting summary statistics to consider what the data could reveal about the story of the recession, the different pathways through which the recession is hitting the economy and the types of policies most appropriate to help families and cities in need.
Low-income workers within relatively wealthy communities, like Manhattan, New York and Santa Clara County, California, have been hit the hardest during the pandemic, despite being among the least affected by past recessions, Friedman said. The negative impact in these areas is likely due to the pullback in spending of high-income consumers at in-person, often local, businesses that typically served these consumers, he added.
Such findings fundamentally could not have been realized without access to data on the local level as opposed to only the national level, an attribute unique to the Economic Tracker, Friedman said.
Not only were labor market impacts much larger for lower-income workers, but the economic recovery has also stalled for this sector of the workforce. While employment for higher-income workers returned to pre-pandemic levels by the middle of June, five million jobs for lower-income workers have not been recovered since March, Friedman said.
Opportunity Insights has utilized its Economic Tracker to help address the pandemic’s economic impacts by informing leaders, who can then take governmental action.
For example, Friedman and his team have begun working with policymakers to use the tracker data to redesign the Paycheck Protection Program, which provides loans to small businesses under the Coronavirus Aid, Relief and Economic Security Act passed in March. Current proposal drafts to improve the program have added revenue thresholds — estimated using the Economic Tracker — to better target the businesses that most need loans, Friedman said.
The education indicator of the Economic Tracker has received a particularly large amount of interest, Felton Spence said. While categories like consumer spending, small business revenue and unemployment are standard for tracking immediate economic impacts, the team added education because it is “such an important indicator to longer-term economic mobility” and could provide a broader picture of how COVID-19 shutdowns impact child outcomes, she said.
Opportunity Insights analyzed the change in student participation in online math coursework and in student progress down to the city level using data from Zearn, a partner organization and online math learning company founded by Shalinee Sharma ’99. Zearn monitors income status along with lesson participation and progress data in accordance with its mission to support all kids in learning math, especially those most in need, Zearn’s Director of Research and Strategy Billy McRae said.
Zearn identified a large nation-wide divergence between low and high income students’ lesson completion in mid-March and hoped to highlight this divergence through its partnership with Opportunity Insights, McRae said. He also noted the “bright spots” that have emerged from the data — counties that “have reversed the national trend and enabled students in low income zip codes to really keep progressing in math during school closures.”
“There is really no one that’s making decisions right now … that can’t use this information,” Felton Spence said about the tracker.
John Haltiwanger ’77, economic researcher and professor of economics at the University of Maryland, first referred to the Opportunity Insights’ tracker the day it launched and has since been using the tool to validate the results of his work as an advisor to the Census Bureau.
Opportunity Insights has been “on the leading edge” in tracking how the crisis has hit workers at different income levels, Haltiwanger said. “I suspect this economic tracker to not only be valuable in this current crisis, but going forward, to help push us toward an environment where we’re more regularly integrating data from both private sector sources and from the national statistics agencies.”
Friedman and his team are also looking into what the future holds for the Economic Tracker post-pandemic, and the ways it could dramatically change how policymaking is approached. The real-time and localized aspects of the data could “support a whole new data-driven form of macroeconomic policymaking and fighting recessions that will allow us to get the policies well-matched to whatever particular circumstances (there are) in the moment,” Friedman said.
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