“When considering the cost of social distancing, it might be assumed that voluntary measures have a lower economic cost,” says Professor Corsetti. “However, we investigated the economic costs of mandatory rules compared to optional social distance guidance, and found the economic cost is broadly similar. This is strikingly – and not what many people would assume.”

The new paper, Economic and Epidemiological Effects of Mandated and Spontaneous Social Distancing by Professor Giancarlo Corsetti at the University of Cambridge, and Martin Bodenstein & Luca Guerrieri, both at the Federal Reserve Board, examines the early stage of the lockdown in the US.

As expected, changes in how easily people could move around through the first quarters of 2020 had significant effects on both the spread of the coronavirus and the economy.

The modeling used mobility data from Google, and relate this to either stay-at-home orders issued by individual U.S. states, or spontaneous decisions, that differ depending on the political leanings of a state. The main results indicate that, in either case, changes in mobility through the first quarters of 2020 in the United States had significant effects on both reproduction rates and initial jobless claims.

When the impact of the virus reduced, economic activity rebounded as stay-at home orders were lifted. “Counterfactually, if the reproduction rate of the coronavirus had remained high or had matched the initially pessimistic scenario, the lifting of the health measures could only have been offset by a new hike in spontaneous social distancing,” he says. “Our results suggest that the rebound in economic activity when stay-at-home orders were lifted was primarily driven by the improvement in epidemiological parameters, not the lifting of the rules,” says Professor Corsetti.

In other words, without the reduction in the reproduction rate of the coronavirus, we could have expected a doubling down on spontaneous, voluntary social distancing. “That didn’t happen, and should give us an indication of the importance of policy measures and guideline on social distancing. In our findings, for the same economic impact, spontaneous social mobility actually leads to a smaller decline in the reproduction rate.”