Posted by on March 2, 2021 9:25 am
Categories: Society

Targeted COVID-19 relief programs improve compliance with confinement measures”

Courtesy of IZA


Until a vaccine becomes available for the entire population, social distancing is doomed to remain a matter of life or death. Compliance with social distancing measures requires civic-mindedness, law enforcement, and the capacity to satisfy basic needs from home. In particular, stay-at-home orders can be unbearably unfair to people who can neither work from home nor afford food delivery.


Enlightenment thinkers like Locke and Rousseau taught that inadequate or unfair policies weaken the social contract between citizens and the state, encouraging agents to withdraw their cooperation. In a pandemic crisis, the belief that the policy response is unsustainable or unfair may discourage compliance with emergency rules, resulting in the worsening of the epidemiological situation.


In a new IZA Discussion PaperClaudio DeianaAndrea GeraciGianluca Mazzarella and Fabio Sabatini study how to improve social distancing in the wake of the pandemic recession. The authors assess the impact of a food relief program on compliance with social distancing mandates in Italy, the early European epicenter of the pandemic.


Food stamps for the economically disadvantaged


At the end of March 2020, the Italian government launched emergency measures aimed at providing food stamps to economically disadvantaged groups. The authors combine information on the allocation of the program’s resources across Italian municipalities with data tracking citizens’ movements through mobile devices and vehicles’ navigation systems, anonymized and aggregated at the municipality level. As social distancing requires staying at home and renouncing unnecessary activities, the empirical analysis employs human mobility as a proxy for compliance.


To assess the causal impact of the aid program, Deiana and colleagues exploit nonlinearity in the allocation of funds. A quota of resources was distributed to municipalities depending on the deviation of their per capita income from the national level in 2017, more than two years before the pandemic. This design generated a random treatment assignment in a neighborhood of a threshold point. A -1000€ per capita deviation from the cut-off determines an increase in municipality transfers of 0.58€ per capita (i.e., 0.58€ multiplied by the population size), to be distributed to the limited group of beneficiaries. The remaining resources were allocated proportionally to municipalities’ population.


Mobility decreased with the amount of transfers received


The authors find robust evidence that, after the introduction of the program, mobility decreased with the transfers received by each municipality. The effect is statistically significant and economically sizable. In the week of the policy announcement, the transfers cause a drop in mobility of 3 percentage points from the baseline level observed before the pandemic crisis (between January 13 and February 16, 2020). Two weeks later, the impact is still negative, statistically significant, and sizable. Given an average drop of 60 percentage points in the neighborhood of the threshold point in the same week, the increase in transfers determined by a -1000€ per capita deviation from the threshold point causes a decrease in mobility by 5%. The decline in mobility persisted for approximately two more weeks.


The size of the effect suggests that more than one mechanism may have been at work in channeling the impact of the emergency measures. The program probably reduced mobility needs and the marginal utility of contravening stay-at-home orders for the targeted group. However, behavioral spillovers may also have occurred, affecting a larger population than the limited pool of the program’s beneficiaries. Improving the fairness of the COVID-19 policy response may have strengthened lower-income agents’ motives for staying at home by reinforcing the social contract between citizens and the institutions.


Targeted relief measures vs. general fiscal stimuli


The authors’ results put forward actionable insights for policymakers. Relief programs must be designed also in light of their potential impact on social distancing. For example, a recent study finds that support to the hospitality sector led to a multiplication of new infection clusters in the UK, probably due to lesser social distancing. Instead, alleviating the essential needs of economically disadvantaged groups can significantly encourage compliance with social distancing measures.


Compensation measures targeting economically disadvantaged groups can be more effective than indiscriminate fiscal stimuli to mitigate pandemic economic disruption and encourage compliance simultaneously.