A new study shows that a government project encouraging people to eat out during the pandemic led to more cases, while not offering much economic benefit.
In the summer of 2020, the UK seemed to have the pandemic under control. Although a devastating wave would start hitting the country by autumn, things looked okay in August — so much so that authorities seemed to focus more efforts on supporting businesses rather than reducing the number of COVID-19 cases. But one project in particular seemed to have seriously backfired.
The “Eat Out to Help Out” scheme was carried out from August 3 to August 31. The idea was simple: the government-subsidized 50% off the cost of food and non-alcoholic drinks. This was capped to a limit of £10 (approximately $14), but you could get the discount any number of times. However, it only worked for eating in — not for takeaway or deliveries. Overall, the scheme cost taxpayers £850 million (almost $1.2 billion).
At first, it seemed to work, writes Thiemo Fetzer, a Professor in Economics at the University of Warwick, in a new study. Restaurant visits increased substantially in days when the scheme was applied. Suddenly, Monday-Wednesday became a good time to go out.
However, the data shows that the growth was temporary, and after the scheme was dropped, things returned to a more normal baseline. In addition, data suggest that this increase mostly came from shifting restaurant visits from weekend to weekdays when the discount was available. When the scheme stopped, restaurant visits swiftly dropped as well.
But the worst part is that the scheme actively contributed to raising the number of COVID-19 cases in the UK. The scheme alone can account for around 11% of all new detected COVID-19 clusters emerging during August and into early September in the United Kingdom during the period in which it was active.
Furthermore, data from Public Health England shows that during the weeks that the scheme was available, the share of infections traced to restaurants and food outlets increased from 5% to nearly 20%, the author writes.
“A total of GBP 850 million was spent to subsidize the cost of eating out by up to 50% in the month of August. This came at a time when epidemiological studies suggested that restaurant dining may be a particularly risky setting. This paper shows that the eat-out-to-help-out scheme, hailed as a boon for the ailing sector, causally increased COVID-19 community transmission,” the study reads.
Areas with higher participation in the scheme tended to see a larger increase in infection clusters. At the same time, areas with notable rainfall during the prime lunch and dinner hours (which made customers less likely to visit restaurants) had a lower infection rate.
All in all, the government’s idea seemed to have been short-sighted and counterproductive. Not only were the economic benefits only short-term, but even these small benefits were countered by the negative externality of having more people contract the disease. Even just the average daily cost of a patient in the ICU in the UK (which is £4847 or $6,700) is enough to outweigh hundreds of subsidized meals
“By subsidizing an economic activity associated with negative health externalities, the estimates suggest that the eat-out-to-help-out scheme may have been responsible for between 8%–17% of all newly detected COVID-19 infections (and likely many more non-detected asymptomatic infections) in late summer. This highlights the fact that fiscal responses aimed to cushion the economic fallout from COVID-19 have to pay particular attention to epidemiological risks as, otherwise, they may significantly worsen the pandemic progression and undermine any short-term economic benefits,” the study concludes.
The study was published in The Economic Journal.