Working Paper: CEPR ID: DP15416
Authors: Thiemo Fetzer
Abstract: This paper documents that a large-scale government subsidy aimed at encouraging people to eat out in restaurants in the wake of the first 2020 COVID19 wave in the United Kingdom has had a large causal impact in accelerating the subsequent second COVID19 wave. The scheme subsidized 50% off the cost of food and non-alcoholic drinks for an unlimited number of visits in participating restaurants on Mondays-Wednesdays from August 3 to August 31, 2020. Areas with higher take-up saw both, a notable increase in new COVID19 infection clusters within a week of the scheme starting, and again, a deceleration in infections within two weeks of the program ending. Areas that exhibit notable rainfall during the prime lunch and dinner hours on days the scheme was active record lower infection incidence – a pattern that is also measurable in mobility data – and non-detectable on days during which the discount was not available or for rainfall outside the core lunch and dinner hours. A back of the envelope calculation suggests that the program is accountable for between 8 to 17 percent of all new local infection clusters during that time period.
Keywords: health externalities; coronavirus; subsidies; consumer spending
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| EOHO scheme (R28) | restaurant visits (Z31) |
| EOHO scheme (R28) | new COVID-19 infection clusters (R23) |
| restaurant visits (Z31) | new COVID-19 infection clusters (R23) |
| higher EOHO participation (I14) | new COVID-19 infection clusters (R23) |
| higher EOHO participation (I14) | decline in new COVID-19 infection clusters (F44) |
| rainfall during lunch and dinner hours on EOHO days (R11) | lower infection rates (I14) |