Stimulus designed to help restaurant workers lead to more COVID cases
A new paper in The economic review says a large-scale government grant to encourage people to eat out in the wake of the UK’s first COVID-19 wave of 2020 accelerated a second COVID19 wave.
The COVID19 pandemic caused by the novel coronavirus has hurt economies around the world. The hospitality sector has been particularly vulnerable due to the forced decline in tourism and leisure activities. This has trickled down to all economies as hospitality workers cut back on spending and find it difficult to meet basic expenses. Some governments have used fiscal policy to help the hotel sector by stimulating demand. This article explored the extent to which an intervention in the UK, the Eat-Out-To-Help-Out program, has had the unintended effect of promoting COVID19 infections.
The program was designed to encourage demand for hospitality and catering businesses. It directly subsidized the cost of meals and non-alcoholic beverages up to 50% at participating restaurants across the UK for meals served Monday through Wednesday from August 3 to 31, 2020. The discount was capped at GBP 10 maximum. per person, but there was no limit to how often people could benefit from it. Aggregate data suggests the government subsidized 160 million meals were subsidized, costing the taxpayer Â£ 849 million. Restaurant visits have increased significantly from Monday to Wednesday, which typically see less traffic. Official government statistics released at the end of January 202 suggest that at least 59,981 businesses have signed up for the program.
The researchers here found that the program had a noticeable temporary impact on restaurant visits when comparing year-over-year changes in the OpenTable reservation service. During the days when the program was available, restaurant visits increased by 10-200%. Yet the data also suggests that the program may have moved restaurant visits from weekends to weekdays when the discount was available and that the increase in restaurant visits was temporary.
Areas with higher participation in the Eat-Out-To-Help-Out program saw both a noticeable increase in new clusters of COVID19 infection in the week after the start of the program and a deceleration in infections within two weeks following the end of the program. Areas that experienced noticeable rainfall during peak lunch and dinner hours on days when the program was active, making customers less likely to visit restaurants and take advantage of subsidized meals, had a lower infection rate .
Empirical estimates suggest that the subsidized restaurant meal program may be responsible for around 11% of all new COVID19 clusters detected emerging in August and early September in the UK.
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Thiemo Fetzer, Subsidizing the Spread of COVID-19: Evidence from Britain’s Eat-Out-to-Help-Out * Program, The economic review (2021). DOI: 10.1093 / ej / ueab074
Provided by Oxford University Press
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