The Value of Big Data in a Pandemic

Abstract

Although digital contact tracing apps have been widely used to combat the COVID-19 pandemic, little empirical evidence regarding their effectiveness is available. This paper exploits the staggered implementation of a digital contact tracing app across 322 Chinese cities and finds that this big data technology significantly reduced virus transmission and facilitated economic recovery during the pandemic. A macroeconomic Susceptible-Infectious-Recovered (SIR) model calibrated to the micro-level estimates shows that this technology reduced the economic loss by 0.5% of GDP and saved more than 200,000 lives. The trade-off between economic benefits and privacy costs is also discussed.

Keywords: Big data, informational friction, COVID-19, lockdown

JEL Classification: D80, I10, E60