Social distancing may be GOOD for the economy as it makes people more ...

Social distancing measures to control the spread of coronavirus 'make people feel safer spending money and working' which actually helps the economy, a study has found. 

Researchers from the University of Copenhagen compared drops in economic activity due to Covid-19 reduction measures in Sweden and Denmark. 

The two Scandinavian countries were similarly exposed to the deadly virus but only Denmark imposed significant restrictions on social and economic activities. 

They found that spending dropped by about 25 per cent in Sweden and by about 29 per cent in Denmark, suggesting lockdown measures weren't to blame.

Measures to restrict social contact, particularly among the young, allowed the elderly to feel more confident going out and spending money, they found.

The team said the virus caused economic activity to reduce and it happens regardless of whether governments mandate social distancing or not. 

Researchers say efforts to slow the spread of coronavirus through lockdown measures can help to improve the economy by making older people feel safe going out

Researchers say efforts to slow the spread of coronavirus through lockdown measures can help to improve the economy by making older people feel safe going out 

Study authors found that social distancing reinforces the virus-induced drop in spending for low-health-risk individuals.

However, they found that these measures increase the spending from high-risk individuals by lowering the overall prevalence of the virus in the society. 

Social distancing laws that restrict the activities of private businesses are often seen as sacrificing the economy to save lives from Covid-19.

Many countries have experienced massive reductions in consumer spending around the time they began to shut down. 

The researchers say data from Sweden and Denmark suggest that these restrictions are responsible for only a small portion of the drop in spending. 

'This suggests that most of the economic contraction is caused by the virus itself and occurs regardless of social distancing laws,' the authors explained. 

One of the key policy choices facing governments in the coronavirus pandemic is whether to shut down economic activity to slow the spread of the disease. 

A lot of economic activity happens in high density areas such as restaurants and trains or where close contact is required such as hairdressers and dentists. 

Study authors found spending in Sweden dropped by 25 per cent and 29 per cent in Denmark despite Denmark having significant lockdown measures

Study authors found spending in Sweden dropped by 25 per cent and 29 per cent in Denmark despite Denmark having significant lockdown measures

The severity of restrictions to minimise contact and slow the virus spread varies considerably across countries.

Many governments are considering day by day whether to loosen, maintain, or tighten restrictions in response to new data on Covid-19 cases and mortality.

UK Prime Minister Boris Johnson opted to reintroduce some lockdown measures in the North of England and pause planned relaxing of other measures due to new data on increases in the spread of the virus.

The team behind the study say the choice facing governments is often portrayed as a trade-off between 'saving lives and saving the economy'.

'By this logic, more severe restrictions help to contain the virus and reduce the ultimate death toll, but they cause more economic pain,' the team wrote. 

However, the team say this doesn't consider the possibility that the virus itself inflicts significant harm to the economy even without lockdown measures.

They say this comes as the result of people cutting back on consumption and work due to perceived personal health risks or efforts people take to cut their own economic activities for the health of others.

'Furthermore, this points to an indirect mechanism by which government-mandated shutdowns can actually improve economic outcome,' the team explained. 

RESEARCHERS USED BANK ACCOUNT DATA TO TRACK SPENDING 

Researchers examined bank account transaction information for Sweden and Denmark.

The anonymous information allowed them to track spending

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