Learning from Deregulation: The Asymmetric Impact of Lockdown and Reopening on Risky Behavior During COVID-19

Edward L. Glaeser, Ginger Zhe Jin, Benjamin T. Leyden, Michael Luca

NBER Working Paper No. 27650
Issued in August 2020
NBER Program(s):Health Economics, Law and Economics, Public Economics, Political Economy, Productivity, Innovation, and Entrepreneurship

During the COVID-19 pandemic, states issued and then rescinded stay-at-home orders that restricted mobility. We develop a model of learning by deregulation, which predicts that lifting stay-at-home orders can signal that going out has become safer. Using restaurant activity data, we find that the implementation of stay-at-home orders initially had a limited impact, but that activity rose quickly after states’ reopenings. The results suggest that consumers inferred from reopening that it was safer to eat out. The rational, but mistaken inference that occurs in our model may explain why a sharp rise of COVID-19 cases followed reopening in some states.

Acknowledgments and Disclosures

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Document Object Identifier (DOI): 10.3386/w27650