The Impact of Government Interventions on COVID-19 Spread and Consumer Spending

37 Pages Posted: 9 Nov 2020 Last revised: 12 Jul 2022

See all articles by Nan Zhao

Nan Zhao

Georgia Institute of Technology

Song Yao

Washington University in St. Louis - John M. Olin Business School

Raphael Thomadsen

Olin School - Washington University in St. Louis

Chong Bo Wang

Washington University in Saint Louis, John M. Olin Business School, Students

Date Written: July 11, 2022

Abstract

We examine the impact of government interventions on the spread of COVID-19 and consumer spending. We do this by first estimating models of COVID-19 spread, consumer spending, and social distancing in the United States during the early stages of the COVID-19 pandemic. Social distancing has a large effect on reducing COVID-19 spread, and is responsive to national and local case numbers. Non-mask government interventions reduce COVID-19 spread, while the effectiveness of mask mandates is much smaller and statistically insignificant. Mask mandates tend to increase social distancing, as do non-mask governmental restrictions as a whole. Social distancing hurts spending in the absence of a mask mandate, but has a negligible effect on spending if there is a mask mandate. Mask mandates have a direct effect of increasing spending in counties with high levels of social distancing, while reducing spending in counties with low levels of social distancing. We use these three estimated models to calculate the effect of mask mandates and other governmental interventions on COVID-19 cases, deaths and consumer spending. Implemented mask mandates decreased COVID-19 cases by a statistically insignificant 774,000 cases, saving 28,000 lives, over a 4-month period, but led to $76B – $155B of additional consumer spending. Other non-mask governmental interventions that were implemented reduced the number of COVID-19 cases by 34M, saving 1,230,000 lives, while reducing consumer spending by approximately $470B – $703B over our 4-month period of the study. Thus, these restrictions were cost effective as long as one values each saved life at $387,000 – $608,000 or more.

Keywords: COVID-19, Social Distancing, Facial Mask, Non-pharmaceutical Interventions, Consumer Spending

Suggested Citation

Zhao, Nan and Yao, Song and Thomadsen, Raphael and Wang, Chong Bo, The Impact of Government Interventions on COVID-19 Spread and Consumer Spending (July 11, 2022). Available at SSRN: https://ssrn.com/abstract=3725711 or http://dx.doi.org/10.2139/ssrn.3725711

Nan Zhao

Georgia Institute of Technology ( email )

Atlanta, GA 30332
United States

Song Yao

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

HOME PAGE: http://www.songyao.org

Raphael Thomadsen (Contact Author)

Olin School - Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Chong Bo Wang

Washington University in Saint Louis, John M. Olin Business School, Students ( email )

St. Louis, MO
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
317
Abstract Views
2,135
Rank
190,848
PlumX Metrics