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Social distancing before government intervention

Micro-data on mobility in the US show that individuals substantially reduced their exposure to others long before the introduction of restrictions on movement in response to the Covid-19 pandemic.

Maryam Farboodi (MIT), Gregor Jarosch (Princeton University) and Robert Shimer (University of Chicago) show how to rationalize this behaviour within a SIRD (Susceptible-Infected-Recovered-Deceased) epidemiological model.

In the modified SIRD model, agents derive utility from social activity, but the transmission of the disease also depends on aggregate social activity. In an equilibrium without government's intervention, the transmission of the virus is slowed down by the internalization of the effect of social activity, but the individuals slow their social activity only when the spread is already substantial. Instead, a social planner considers the external costs of social activity and optimally induces social distancing since the beginning of the outbreak. An early and extensive social distancing policy avoids a lockdown. Without a cure, social distancing lasts much longer than in the case without government's intervention and herd immunity is reached slowly.  

The authors also examine Google mobility data for Sweden, which suggest that people did internalize parts of the risk associated with the disease and therefore reduced activity before the government's imposed restrictions.

Link to the paper here.

Paola Di Casola*

Sveriges Riksbank

*The opinions expressed in this post are the sole responsibility of the author and should not be interpreted as reflecting the views of Sveriges Riksbank.

Posted by: Maria Perrotta Berlin

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