The pandemic has forced lockdown orders and business closures across the country, to varying degrees. The economic impact has been disastrous and many business owners and citizens have pushed back against closures as a result.
But new research suggests that closure orders are not the main driving factor behind declines in business.
Researchers used anonymized cell phone data to track traffic at similar types of businesses in the same metro area but across county lines, with different restrictions in place.
“The difference in traffic between those gives you a measure of how much of an impact the policies per say have,” explained Chad Syverson, Professor of Economics at the University of Chicago Booth School of Business and one of the researchers behind the project.
He says his team found that when cases and deaths rose in a particular area, businesses saw similar declines in foot traffic whether there were shelter in place orders or not.
“Even in counties where there was no shutdown order in place, those businesses saw almost as large a drop in traffic as did those where there was a shutdown order.”
That suggests that the main driver in foot traffic was not lockdown orders after all, but the state of the pandemic.
“The bottom line result is all these policies – shelter in place and closure orders and that sort of thing – actually have a pretty modest effect on people’s actual commercial behavior,” he said. “Most of what is going on is people being careful and trying to protect themselves and their families from catching the disease.”
They also found that businesses that were busy before the pandemic saw bigger drops in customers, with people choosing instead to patronize businesses that were out of the way and did not see large crowds.
Professor Syverson says the findings suggest that reopening on its own is not enough to drive economic recovery; people need to feel confident that activities are safe, whether they are allowed or not.
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