These are short notes I wrote to myself in March 2020 on the high-level framework Bridgewater Associates used to think about covid-19 at the beginning of the pandemic (link to their article). Here is a link to my original notes.


When you face the outbreak of a new infectious disease, you can look at the situation on 3 levels:

  1. Medical
  2. Psychological
  3. Infrastructural

The Medical perspective

From a medical perspective, the critical parameters are:

  • Case-fatality rate
  • Incubation and infectious periods
  • Geographic dispersion
  • Reproductive number of the virus (R0)

Psychological perspective

From a psychological perspective:

We know that human estimation of extremely low probability events is bad: people tend to rely on heuristics like availability or vividness as proxies for probability. As a result, events like are 2019-nCoV are much scarier than they objectively need to be. But this does not render the problem imaginary. In fact, quite the opposite. Thousands or millions of people imagining the same thing can become self-reinforcing, amplifying the currents of fear running though society with each snippet of information or new anecdote.

Infrastructural perspective

From an infrastructural perspective:

One of the areas in which real-world impacts appear most swiftly is in the operation of the physical infrastructure that modern society depends on. The transportation sector is typically one of the first to be impacted. This can lead to interruptions of supply chains for food, medical supplies, or industrial inputs.

Market response to Covid-19 versus SARS

From a financial market perspective, the response to Covid-19 has been more severe than during SARS (see the figures below).


Source: Bridgewater Associates


Source: Bridgewater Associates