A nudge to resume economic activity
Experiment finds people will respond to cues from neighbors about
activities and risk preferences

Date:
January 27, 2022
Source:
Massachusetts Institute of Technology
Summary:
Researchers have found that people are more likely to partake
in economic activity during the COVID-19 pandemic when they know
their neighbors are engaged in the same activities.



FULL STORY ==========================================================================
In these pandemic-affected times, concern about Covid-19 can make it hard
to know when to take part in "normal," prepandemic activities. That may
be especially true this winter, with the Omicron virus variant spreading
and its severity still being studied.


==========================================================================
But even at times during the pandemic when cases have been falling,
there is often uncertainty about which activities are most ready for resumption. To some extent, people may form judgments about this based
on social cues. If a lot of your neighbors start going to restaurants
again, does it make you more likely to avoid restaurants, knowing they
might be more crowded? Or might it signal that dining out is becoming
safer? A field experiment of citizens in the city of Zhengzhou, China, conducted by an MIT research team in the spring of 2020, shows that people
tend to have the latter reaction. When study respondents were informed
that their neighbors were going out to restaurants, the proportion of participants also doing so increased by 12 percentage points, or 37
percent. The primary factor inducing this change appears to be evolving
risk preferences: Perhaps paradoxically, people considered the activity
to be safer knowing their neighbors were partaking in it.

Given improving conditions, knowing what other people in a social network
are doing could thus be a useful signal. At any rate, the study suggests
that many people do have the tendency to increase activity, not decrease
it, when informed that others are themselves increasing activity.

"When we implemented our experiment, [Zhengzhou] had zero Covid cases,"
says MIT Professor Siqi Zheng, part of the research team and co-author
a new paper detailing the study's results. "The city government had
loosened the lockdown measures and dining out services were allowed to
reopen. However, most people were reluctant to resume economic activities, perhaps because they were not sure whether it was really safe or not."
Zheng adds, "We felt that in [some] uncertain times, such information
might be particularly valuable: If others think it's safe to go out,
then maybe I should feel safe. To be sure, we were also prepared for the opposite reaction, that people would hunker down and try to avoid crowds." Instead, "The intervention motivated individuals to resume patronizing restaurants," says Juan Palacios, a postdoc at the Center for Real Estate
and the Sustainable Urbanization Lab (SUL), and another co-author of
the paper.

"When individuals learned that their neighbors were planning to go out,
they followed suit."


==========================================================================
As such, the researchers regard the experiment as a possible low-cost intervention governments could pursue, to help ramp up consumer activity
when merited by improving conditions during the pandemic.

The paper, "Encouraging the resumption of economic activity after
COVID-19: Evidence from a large scale filed experiment in China," was
published online today in Proceedings of the National Academy of Sciences.

The paper's authors are Yuchen Chai, a researcher at SUL; Yichun Fan,
a PhD candidate in MIT's Department of Urban Studies and Planning (DUSP)
and researcher at SUL; Palacios; David Rand, the Erwin H. Schell Professor
and Professor of Management Science and Brain and Cognitive Sciences at
MIT; Weizeng Sun of the Central University of Finance and Economics,
in Beijing; Jianghao Wang, an associate professor at the Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of
Science, in Beijing; Erez Yoeli, a research scientist at the MIT Sloan
School of Management; and Zheng, who is the Samuel Tak Lee Champion
Professor of Urban and Real Estate Sustainability at MIT and faculty
director of the MIT Center for Real Estate and SUL.

To conduct the study, the researchers worked with 622 participants from Zhengzhou for several weeks in the spring of 2020, soon after China's
initial Covid-19 lockdown was lifted. All participants were asked to
state their belief, on a weekly basis, about the percentage of their
neighbors who were planning to go to restaurants that weekend. They also downloaded an app, designed for the study, that tracked their whereabouts
using GPS data.

One half of the group received an additional piece of information:
The actual percentage of their neighbors who were planning to dine
out on any given weekend, the kind of fact social scientists call a "descriptive norm." This percentage was derived from a separate survey conducted in the same location.



==========================================================================
By comparing the weekend activities of the two groups, the researchers
found people in the group that learned the real percentage of neighbors
dining out would, in turn, go to restaurants considerably more often.

"We use a descriptive norm experimental design, a well-established method
in psychology," Rand says. "Given that the nudge is relatively simple
to implement and practically free, we think it might come in handy for
others trying to promote reopening." In another facet of the study,
the researchers were also able to determine that the decision-making of participants was heavily based around risk perceptions.

The scholars conducted the same experiment to see if participants would
also be more willing to go to public parks -- but found the intervention
made virtually no difference in behavior, in that case, because people
already regarded public park visits as a safe activity.

Other scholars say the findings are a useful contribution to the growing literature on public behavior and risk perception during the shifting
cycles of the Covid-19 pandemic.

As the researchers acknowledge in the paper, the study was "run in just
one setting at a very particular moment in time," so caution "needs
to be taken when generalizing our results to other cultures and time
periods." It is also possible that the varying availability of vaccines,
which first reached the public several months after the spring of 2020,
may alter risk perceptions as well.

"We do recognize that it won't always work as well as it did for us,"
Yoeli says. "It's probably best to try it in settings where people are
really unsure about the safe course of action." Still, he adds, "The
simplicity and generic aspect of this intervention allows policymakers to
use our design and implement it in their communities, across the world."
The research received support from the MIT China Future City Zhengzhou
City Living Lab Program.

special promotion Explore the latest scientific research on sleep and
dreams in this free online course from New Scientist -- Sign_up_now_>>> ========================================================================== Story Source: Materials provided by
Massachusetts_Institute_of_Technology. Original written by Peter
Dizikes. Note: Content may be edited for style and length.


========================================================================== Journal Reference:
1. Juan Palacios, Yichun Fan, Erez Yoeli, Jianghao Wang, Yuchen Chai,
Weizeng Sun, David G. Rand, Siqi Zheng. Encouraging the resumption
of economic activity after COVID-19: Evidence from a large
scale-field experiment in China. Proceedings of the National Academy
of Sciences, 2022; 119 (5): e2100719119 DOI: 10.1073/pnas.2100719119 ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2022/01/220127114309.htm

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