Social distancing laws cause only small losses of economic activity during the COVID-19 pandemic in Scandinavia.

Sheridan A, Andersen AL, Hansen ET, Johannesen N

Proc Natl Acad Sci U S A 117 (34) 20468-20473 [2020-08-25; online 2020-08-03]

This paper uses real-time transaction data from a large bank in Scandinavia to estimate the effect of social distancing laws on consumer spending in the coronavirus 2019 (COVID-19) pandemic. The analysis exploits a natural experiment to disentangle the effects of the virus and the laws aiming to contain it: Denmark and Sweden were similarly exposed to the pandemic but only Denmark imposed significant restrictions on social and economic activities. We estimate that aggregate spending dropped by around 25% (95% CI: 24 to 26%) in Sweden and, as a result of the shutdown, by 4 additional percentage points (95% CI: 3 to 5 percentage points [p.p.]) in Denmark. This suggests that most of the economic contraction is caused by the virus itself and occurs regardless of social distancing laws. The age gradient in the estimates suggests that social distancing reinforces the virus-induced drop in spending for low-health-risk individuals but attenuates it for high-risk individuals by lowering the overall prevalence of the virus in the society.

Type: Journal article

PubMed 32747573

DOI 10.1073/pnas.2010068117

Crossref 10.1073/pnas.2010068117

pii: 2010068117
pmc: PMC7456178


Publications 7.1.2