Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020

By Austan Goolsbee, Chad Syverson. Journal of Public Economics, 2020

766 citations recorded by the source corpus.

The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that collapse resulted from government-imposed restrictions versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the economic slowdown using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior over the crisis within the same commuting zones but across state and county boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the massive changes to consumer behavior (and that tracking county-level policy conditions is significantly more accurate than using state-level policies alone). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 percentage points of this. 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 influenced by the number of COVID deaths reported in the county; and showed a clear shift by consumers away from busier, more crowded stores toward smaller, less busy stores in the same industry. States that repealed their shutdown orders saw symmetric, modest recoveries in consumer visits, further supporting the small estimated effect of policy. Although the shutdown orders had little aggregate impact, they did have a significant effect in reallocating consumer visits away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Subfields: Economics and Econometrics, Global and Planetary Change, Modeling and Simulation

View Paper: https://www.semanticscholar.org/paper/b9f0d07fe1787438c2e1b1b9f4f5b11128aad1e9

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Citations in the corpus

THE ECONOMIC IMPACTS OF COVID-19: EVIDENCE FROM A NEW PUBLIC DATABASE BUILT USING PRIVATE SECTOR DATA (2023, result): “Consistent with this hypothesis, Granja et al. (2020) show that states and congressional districts that experienced more job losses prior to April 3 actually received fewer PPP loans.”
Exploring the impacts of COVID-19 on travel behavior and mode preferences (2020, neutral): “In addition, evidence suggests that voluntary social distancing played a significant role during COVID-19 besides mandatory lockdowns (Goolsbee & Syverson, 2020; Yan et al., 2020).”
Do Stay-at-Home Orders Cause People to Stay at Home? Effects of Stay-at-Home Orders on Consumer Behavior (2020, neutral): “19 [20] Austan Goolsbee, Chad Syverson.”
Consumer responses to the Covid‐19 crisis: evidence from bank account transaction data (2020, neutral): “…attempts to isolate the effect of lockdowns and re-openings on consumer behavior using variation in lockdown policies across countries with similar ex ante exposure to the virus (Sheridan et al., 2020) or across geographical areas in the U.S. (Chetty et al., 2020, and Goolsbee and Syverson, 2021).”
Wage inequality and poverty effects of lockdown and social distancing in Europe (2020, neutral): “5 This curve is an adaptation to our framework of the Growth Incidence Curve (GIC) proposed in Ravallion and Chen (2003) . For a view on the literature that studies the capacity of economic growth to reduce poverty see also Kakwani and Pernia (20 0 0) , Kakwani and Son (2008) and Bluhm et al.”
Did the paycheck protection program hit the target? (2020, neutral): “Focusing on within-state estimates is particularly important because many lockdown and reopening policy decisions occur at the state level, and there is some evidence that state shutdown orders partly inﬂuenced the decline in economic activity ( Goolsbee and Syverson, 2020 ).”
Poverty and economic dislocation reduce compliance with COVID-19 shelter-in-place protocols (2020, neutral): “Though the economic consequences of these policies are substantial ( Goolsbee and Syverson, 2020; Stapleton, 2020; Baker et al., 2020; Gormsen and Koijen, 2020 ), local non-compliance creates public health risks and may contribute to regional spread ( Lewnard and Lo, 2020; Chen et al., 2020 ).”