A central contention of those who rule is is that we must be told what to do. For we are not wise, nor omniscient, while they are. Or at least closer to such distinguished states than we are. This does rather grate with Hayek’s great point, that knowledge is local, not centralised. So, in times like these, times of grand management of society by those oh so knowledgeable rulers, we’d like the occasional empirical test of either side of the contention.
Which is just what we’ve got and the answer is that lockdowns - being told what to do with that firm thwack of central power - isn’t all that effective.
Our analysis indicates that older cohorts cut their expenditures on high-contact goods and services indeed by much more than younger cohorts in all epidemic months (see Figure 1). For example, when infections peaked in April, consumers in their seventies cut their expenditures on high-contact goods by 61.8% but only by 28.4% on low-contact goods. The corresponding cuts in expenditures for people younger than 49 are 26.0% and 19.2%, respectively. Older cohorts hence cut their expenditures on high-contact goods much more aggressively than younger cohorts in all of the epidemic months. These cuts are particularly pronounced in April.
The construction is that civil servants won’t have taken a hit to their incomes in the spring. Therefore changes in purchases will reflect changes in desires, not abilities, over consumption. We know, and knew then, that older age groups were much more at risk. We also know, and knew then, that infection - this being pretty obvious with an infectious disease - depended upon contact with others.
So, if older people - among those unconstrained by changes in income - reduced their exposure, measured by expenditures associated with social mixing, more than the younger we have evidence of behavioural change being driven by local knowledge, not central. If it was all about lockdowns (and one of us has been living through this Portuguese experience, directly) then the changes in expenditure would show no age difference.
Or, as we might put it - should perhaps - tell people there’s a danger they react to it. Rationally react to it too. More detailed management of activity is not, or perhaps less, needed.
There is a flip side to this too, which is that if economic behaviour changes because of the pandemic itself then the economic damage of the lockdown is less. For some to all of that change in economic activity is, as is the contention here itself, a result of reactions to the pandemic not to the lockdown.
Again as we might - or should - put it we’re all adults out here and advice to us is just great but we don’t need micro-management of our lives.