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Devastating cost of failure to coordinate economic reopenings

Christian Fernsby ▼ | May 22, 2020
A new study released this week by the Social Analytics Lab at the MIT Initiative on the Digital Economy shows the devastating cost of the current chaotic and uncoordinated reopening of states and cities across the U.S. and the globe.
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The study, which used data from mobile phones, network connections through social media and census data, estimates that total welfare is reduced dramatically when reopening is not coordinated among states and regions.

The study showed, for example, that the contact patterns of people in a given region are significantly influenced by the policies and behaviors of people in other, sometimes distant regions.

In one finding, it showed that when just one third of a state's social and geographic peer states adopt shelter in place policies, it creates a reduction in mobility equal to the state's own policy decisions.

When states fail to coordinate in the presence of spillovers as large as those detected in the analyses, total welfare is reduced by almost 70 percent.

As federal, state and local governments begin opening businesses and relaxing shelter-in-place orders worldwide, policymakers are doing so without quantitative evidence on how policies in one region affect mobility and social distancing in other regions.

And while some states are coordinating on coronavirus policy at the level of "mega regions," most, unfortunately are not.

This lack of coordination will have devastating effects on efforts to control coronavirus, according to the study.

The research not only assesses the impact of an uncoordinated reopening, but also gives governors a map with which to coordinate in the absence of national guidance.

The research shows for all fifty states, which states affect each other the most and thus maps the states that should be coordinating.

These maps are sometimes surprising because, as a result of digital social media, each state's success with social distancing is impacted by the policy decisions not just of geographically proximate states, but also of socially connected, but geographically distant states.

For instance, Florida's social distancing was most affected by New York implementing a shelter-in-place policy due to social media influence and travel between the states, despite their physical distance.

New Hampshire had a strong influence on adjacent Massachusetts, despite being a small state.