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22 June 2020 | Story Andre Damons | Photo Anja Aucamp
Herkulaas Combrink.

A lot can be said about forecasting and modelling, its accuracy, and how it works. Forecasting and modelling provide any decision-maker with plausible predictions or outcomes to give some kind of estimated consequence. Without this field of science, planning would be difficult, as one would simply make decisions without knowing what might potentially happen to a specific cohort, market, or product. Forecasting as a concept can be seen as a set of mathematical, statistical and/or computational tools applied to a set of assumptions about something.

This is according to Herkulaas Combrink of the Centre for Teaching and Learning at the University of the Free State (UFS) and PhD candidate in Computer Science at the University of Pretoria (UP), following the South African government’s modelling of how many people would contract COVID-19 and die, which has come under fire in recent times – with one expert saying it was “flawed and illogical and made wild assumptions”. 

Combrink is of the opinion that South Africa – by using the MASHA Consortium – is using the best minds that the country has to offer. The fact that the leadership took a pragmatic stance and reached out to the scientific community has mitigated a medical disaster in a healthcare system that was not ready a few months ago.

“The government is looking at as many models as they can, but is working very closely with MASHA and the CSIR” says Combrink, who has been involved in clinical surveillance, and also forms part of the modelling team during his secondment to the Free State Department of Health. 

Prof Shabhir Madhi, the former head of the SA National Institute for Communicable Diseases (NICD), recently said that the initial modelling and fatality estimates were “back-of-envelope calculations”.

According to a news report, the government’s initial model also predicted that 600 COVID-19 patients would need treatment in intensive care units (ICU) in SA by April 1. But by April 18, the last publicly released figures showed that there were 32 COVID-19 patients in ICU.

Tried-and-tested models
The models currently used are tried-and-tested epidemiological models, mathematical models, and economic forecasting models that have been used in the past. It has now been calibrated to the specifications that we know of this disease, which come from publications. The reason why you would use more than one model is to compare models retrospectively, so that you can see what is going on.

“The government immediately reached out to the best minds in the country, and with the aid of the consortium, took a stance to throw scenarios at the different models and stress test them so that they could know that they are using the best possible models to assist in resource management and decision-making. If government responded in a different way and didn’t reach out, we might not have had a lockdown and subsequently would probably have been in a different position where the country wouldn’t be ready.” 

“We can say with a high degree of confidence that the lockdown really helps to ease and flatten the curve in the country. In light of flattening the curve, the right decisions have been made,” says Combrink.

COVID-19 still new
Unfortunately, says Combrink, during the COVID-19 pandemic, there was not enough information related to the disease assumptions and it lacked the rigour and perfection associated with the already existing prediction models. Although it may feel like a lifetime, the first COVID-19 case was only reported in December 2019. Add to this that not all the parameters related to the disease were known in January, it was challenging to determine all the ‘ins and outs’ of this disease. 

“Luckily, the mathematics and statistics of an outbreak have been extensively studied, and as a result, we only needed to use the correct parameters to estimate the spread of the disease in some of the outbreak models. The Minister of Health, Dr Zweli Mkhize, and the national modellers led by Dr Harry Moultrie, were transparent with not only their projections, but also how they derived their conclusions and what parameters they used,” says Combrink.

The most important thing in modelling is to calibrate according to what is known about the disease and people, explains Combrink. “It is impossible to predict people and a disease100% accurately, because you don’t always know how a virus will react to every single person’s body and you can’t predict human behaviour.” 

“So, there is a certain degree of error and a certain degree of confidence that lies within each model, and that is why you evaluate these models on a regular basis. And this is important. You will never be able to say this is the exact number. Just like the weather. If the weather patterns were predicted to be 12 degrees tomorrow, and it turns out to be 16 degrees, you at least packed a jersey. You knew it was going to be cold. The chances that the weather predicts that it will be 12 and it turns out to be 57 degrees, is virtually zero. It gives you more or less an indication what to prepare for

Models are useful, but can also be wrong
Combrink says if you want to apply any model, you need to understand the assumptions and the limitations of the models. Given a certain set of criteria – what are the assumptions you are making and what are the expected outcomes – you can only act according to that. He says, as time goes by, we can now see that there are some models that yield much better results because we can now compare what was predicted two months ago and what is actually happening. 
 “Some models are useful. We can get a better understanding of the pandemic’s possible trajectories or gain an understanding of the impact that different interventions have made. Models are used for decision-making. These decision-making strategies can save lives. That is the purpose of models and modelling during these times.”

Combrink uses the weather forecast to explain how modelling works and that models can be wrong. “Yes, models are wrong all the time. Take the concept of weather as an example. How many times has the weather forecast predicted that there is an 80% chance of rain, and then it doesn’t rain? Models can give you a certain degree of confidence in an outcome related to a specific event or scenario, so that you, with some degree of confidence, can go forth and plan accordingly.” 

“However, models can’t tell you what exactly will happen tomorrow, or the day after. It is not a crystal ball, and it is not a mirror into the future, but it can give you an indication of what is likely possible related to a specific scenario if you used the right variables. Let us consider that there is an 80% chance of rain in the weather forecast; will you a) go to work without an umbrella or b) with an umbrella? If it doesn’t rain, you are at least prepared for the rain because you took your umbrella. If you didn’t take the umbrella and it does rain, you may run into trouble because you did not appreciate the warning of the weather forecast. I think it is this concept that makes modelling so powerful. You can use it as a tool to prepare for things, in the event that it does happen, with a certain degree of confidence. Just like the previous example, there is also a 20% chance that it might not rain, but wouldn’t you want to be prepared?” explains Combrink. 
 
Models are tools that can be used to base decisions on
No one truly knows how the pandemic will play out, and according to Combrink, it can be said with a high degree of confidence that if nothing is done about the pandemic, we know how it would turn out from a healthcare perspective. 
“If you look at some of the global projections they gave months ago (in January and February) and compare it to what they said for March and April, you can see that they predicted, with a fairly good degree of confidence, what actually happened in certain countries. We have a good idea in terms of numbers and how it will play out, but what we will never know is what the impact will be on the socio-economic status of a person, the economy, and the impact on other diseases.”

“We do not know what is going to happen when it comes to mental health and COVID-19, for example. This is why modelling is a multidimensional approach, requiring inputs from various fields. Models can help us in the same way the weather forecast does. It is a tool that we can use to base certain decisions on, to be more prepared, because without it we won’t know to pack an ‘umbrella’ if it is predicted to rain or pack a ‘jersey’ if it is projected to cool down.”

News Archive

Inaugural lecture: Prof. Phillipe Burger
2007-11-26

 

Attending the lecture were, from the left: Prof. Tienie Crous (Dean of the Faculty of Economic and Management Sciences at the UFS), Prof. Phillipe Burger (Departmental Chairperson of the Department of Economics at the UFS), and Prof. Frederick Fourie (Rector and Vice-Chancellor of the UFS).
Photo: Stephen Collet

 
A summary of an inaugural lecture presented by Prof. Phillipe Burger on the topic: “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

South African business cycle shows reduction in volatility

Better monetary policy and improvements in the financial sector that place less liquidity constraints on individuals is one of the main reasons for the reduction in the volatility of the South African economy. The improvement in access to the financial sector also enables individuals to manage their debt better.

These are some of the findings in an analysis on the volatility of the South African business cycle done by Prof. Philippe Burger, Departmental Chairperson of the University of the Free State’s (UFS) Department of Economics.

Prof. Burger delivered his inaugural lecture last night (22 November 2007) on the Main Campus in Bloemfontein on the topic “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

In his lecture, Prof. Burger emphasised a few key aspects of the South African business cycle and indicated how it changed during the periods 1960-1976, 1976-1994 en 1994-2006.

With the Gross Domestic Product (GDP) as an indicator of the business cycle, the analysis identified the variables that showed the highest correlation with the GDP. During the periods 1976-1994 and 1994-2006, these included durable consumption, manufacturing investment, private sector investment, as well as investment in machinery and non-residential buildings. Other variables that also show a high correlation with the GDP are imports, non-durable consumption, investment in the financial services sector, investment by general government, as well as investment in residential buildings.

Prof. Burger’s analysis also shows that changes in durable consumption, investment in the manufacturing sector, investment in the private sector, as well as investment in non-residential buildings preceded changes in the GDP. If changes in a variable such as durable consumption precede changes in the GDP, it is an indication that durable consumption is one of the drivers of the business cycle. The up or down swing of durable consumption may, in other words, just as well contribute to an up or down swing in the business cycle.

A surprising finding of the analysis is the particularly strong role durable consumption has played in the business cycle since 1994. This finding is especially surprising due to the fact that durable consumption only constitutes about 12% of the total household consumption.

A further surprising finding is the particularly small role exports have been playing since 1960 as a driver of the business cycle. In South Africa it is still generally accepted that exports are one of the most important drivers of the business cycle. It is generally accepted that, should the business cycles of South Africa’s most important trade partners show an upward phase; these partners will purchase more from South Africa. This increase in exports will contribute to the South African economy moving upward. Prof. Burger’s analyses shows, however, that exports have generally never fulfil this role.

Over and above the identification of the drivers of the South African business cycle, Prof. Burger’s analysis also investigated the volatility of the business cycle.

When the periods 1976-1994 and 1994-2006 are compared, the analysis shows that the volatility of the business cycle has reduced since 1994 with more than half. The reduction in volatility can be traced to the reduction in the volatility of household consumption (especially durables and services), as well as a reduction in the volatility of investment in machinery, non-residential buildings and transport equipment. The last three coincide with the general reduction in the volatility of investment in the manufacturing sector. Investment in sectors such as electricity and transport (not to be confused with investment in transport equipment by various sectors) which are strongly dominated by the government, did not contribute to the decrease in volatility.

In his analysis, Prof. Burger supplies reasons for the reduction in volatility. One of the explanations is the reduction in the shocks affecting the economy – especially in the South African context. Another explanation is the application of an improved monetary policy by the South African Reserve Bank since the mid 1990’s. A third explanation is the better access to liquidity and credit since the mid 1990’s, which enables the better management of household finance and the absorption of financial shocks.

A further reason which contributed to the reduction in volatility in countries such as the United States of America’s business cycle is better inventory management. While the volatility of inventory in South Africa has also reduced there is, according to Prof. Burger, little proof that better inventory management contributed to the reduction in volatility of the GDP.

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