Laws of compounding to beat the corona virus spread

compounding

I have always spoken about the magic of compounding. Knowing the interest rate and the tenure can help you generate wealth.

However today all over the world you are seeing the negative impact of compounding. The corona virus is following the same compounding logic. You can use the same rule of 72 to determine how soon something will double. Wherever the the rate of growth has been allowed to cross a threshold it suddenly starts doubling every few days.

Countries like the US and Italy and overall Europe where there was a delay in putting lockdowns in place, the rates have galloped to almost 30%/day. By the rule of 72 it means that every 2 odd days the number of cases is doubling.

What has to be understood is that medical infrastructure, facilities. and staff, cannot keep growing at the same rate at which the virus is spreading. So the rate at which deaths will take place going forward is going to be even higher. The medical infrastructure needs respite if it has to be able to take care of people. In developed countries, the population is dispersed and the medical facilities are very good. For developing nations like India where the population density is so high and medical infrastructure is still not so good, it’s a time bomb.

Since there is no cure yet for this, the only way to handle is by ensuring reduction in contact between people.

Now that’s the good news.

Since it can only spread through contact, you can dramatically cut the rate of growth by not coming in contact with another human being. And since the compounding equation is exponential in nature you can take benefit of reducing the spread dramatically.

If the rate of growth is brought down from about 30%/day to 1%/day then it will take 72 days for the number of people infected to double. If you bring it down to 0.1%/day, it will take 720 days for the infected people to double. That will then ensure you are able to take care of the people infected better.

The PM of India along with the government of has been taking pro-active measures to ensure that we keep the growth rate low and has also put a 21 day lock down to essentially cut the growth rate. But somehow there are still people who are not realising the gravity.

I have been locked in my house for the last 8 days except to bring essential items like milk and bread but I still see some people walking in the open and talking to others in the open without masks and essential safety measures. I can understand about the poor, uneducated people who don’t understand the gravity, but I see even well educated people doing the same things.

Not sure if you have read the book “Triggers” by Marshall Goldsmith. If you haven’t, highly recommend you read it. In chapter 2 of the book – he talks about belief triggers that stop behavorial change – and one of them which come to my mind because of which people are not willing to change – item 5 – ” I shouldn’t need help and structure” . Most people overestimate themselves and don’t like simplicity and structure.

The virus spread can be brought to a grinding halt with such a simple solution of just staying locked up….but we have a problem adhering to this simple solution.

I just hope you and your families are safe and continue to stay locked to bring the growth rate down dramatically.

Till next time….

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s