Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020
The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries--symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.
- Similar businesses suffered similar declines in customer visits, regardless of whether they were in counties covered by shelter-in-...
- Author(s): Alexander W. BartikMarianne BertrandFeng LinJesse RothsteinMatt UnrathRaj ChettyJohn N. FriedmanMichael StepnerThe Opportunity Insights TeamOlivier CoibionYuriy GorodnichenkoMichael WeberAustan GoolsbeeChad SyversonSumedha GuptaThuy D. NguyenFelipe Lozano RojasShyam RamanByungkyu LeeAna I. BentoKosali I. SimonCoady WingThuy D. NguyenSumedha GuptaMartin AndersenAna I. BentoKosali I. SimonCoady WingSumedha GuptaLaura MontenovoThuy D. NguyenFelipe Lozano RojasIan M. SchmutteKosali I. SimonBruce A. WeinbergCoady WingEliza ForsytheLisa B. KahnFabian LangeDavid G. WiczerPeter Zhixian LinChristopher M. MeissnerThe 2020 NBER Summer Institute's Economics of Social Security meeting featured a panel discussion on the implications of the COVID-19...
Goolsbee, Austan & Syverson, Chad, 2021. "Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020," Journal of Public Economics, Elsevier, vol. 193(C). citation courtesy of