Direct and Spillover Effects from Staggered Adoption of Health Policies: Evidence from COVID-19 Stay at Home Orders

Abstract

Local policies can have substantial spillovers both across geographies and markets. Despite the developed literature documenting spillovers from local tax policies, little is known about the impact of public health regulations across borders. The COVID-19 pandemic has demonstrated the need to better understand the effects and mechanisms through which public health policies operate across time and space. We estimate the direct and spillover effects of Stay-at-Home-Orders (SHO) on mobility measures of social distancing measures and interaction to contain the spread of COVID-19 at the U.S. county level. Adopting counties should experience a decline in mobility due to the direct effect, while neighbors may experience a spillover, the sign of which is ambiguous from a theoretical perspective. We propose a modified difference-in-difference contiguous-county triplets regression design, comparing both a county that adopted the SHO and its neighbor that did not to a neighbor's neighbor (``hinterland'') county. We find that mobility in neighboring counties declined by a third to a half as much as in the directly treated county. These spillovers are concentrated in triplets sharing the same media sources of news and information. Using directional mobility data, we decompose the neighboring counties' decline in mobility into a reduction in external visits from the treated county and a comparably larger voluntary reduction in the neighboring county's own traffic. Together, our results provide strong evidence that SHOs operate through information-sharing and illustrate the quantitative importance of voluntary social distancing. The finding that the estimated spillovers are in the same direction as the direct effects casts doubt on the prevailing narrative that a more nationally coordinated policy response would have accomplished a greater reduction in mobility and contacts.

Note: Funding: Hopkins Business of Health Initiative.

Declaration of Interest: None to declare

Keywords: COVID-19, Smart-phone-based Mobility Data, Media Markets, Non Pharmaceutical Interventions, Place-based Policies, Spillovers, Stay Home Orders, Voluntary Social Distancing

JEL Classification: H73, I18, R12