Subsidizing the spread of COVID-19 evidence from the UK’s eat-out-to-help-out scheme

Waiter serving wearing a mask

Non-Technical Summary

The government initiative, which cost around £500 million, caused a significant rise in new infections in August and early September accelerating the pandemic into its current second wave. The economic benefits of the scheme, meanwhile, were short-lived.

In a new paper, ‘Subsidizing the spread of COVID-19: Evidence from the UK’s Eat Out to Help Out scheme’, Dr Thiemo Fetzer of the CAGE Research Centre in the Economics Department at the University of Warwick analyses the causal impact of ‘Eat Out to Help Out’ on COVID-19 infections. Key findings are:

In a new paper, ‘Subsidizing the spread of COVID-19: Evidence from the UK’s Eat Out to Help Out scheme’, Dr Thiemo Fetzer of the CAGE Research Centre in the Economics Department at the University of Warwick analyses the causal impact of ‘Eat Out to Help Out’ on COVID-19 infections. Key findings are:

  • Participating restaurants saw an increase in visits of between 10 and 200% compared to 2019.
  • Areas with a higher rate of uptake (both from restaurants and consumers) experienced a sharp increase in the emergence of new COVID-19 infection clusters a week after the scheme began.
  • Between 8 and 17% of the newly detected COVID-19 infection clusters can be attributed to the scheme.
  • Areas with high uptake saw a decline in new infections a week after the scheme ended.
  • As the ‘Eat Out to Help Out’ scheme ended, visits to restaurants started to decline – indicating that its positive economic impact was short-lived.

The research leverages data from HMRC’s own restaurant finder app which was the go-to platform for people searching for participating restaurants in their neighbourhood, together with weekly data on new COVID-19 infections measured at the level of Middle Layer Super Output Areas. To demonstrate the causal connection between ‘Eat Out to Help Out’ and increased infections in areas of high uptake, Dr Fetzer analyses rainfall data and granular mobility data from Google’s Community Mobility Reports. He finds that higher rainfall around lunch and dinner time during the scheme’s period of operation (Monday to Wednesday throughout August) saw both a drop in visits to restaurants and subsequently lower new infection rates compared to areas that enjoyed good weather. Rainfall during lunch and dinner hours did not drastically affect time spent in other locations.

Dr Fetzer said ‘This strongly suggests that the link between ‘Eat Out to Help Out’ and new COVID-19 infections is causal: when people were not dining out as part of the scheme there were fewer new cases of the virus. ‘Eat Out to Help Out’ may in the end have been a false economy: one that subsidised the spread of the pandemic into Autumn and contributed to the start of the second wave. Alternative policy measures, such as extending the furlough scheme, increasing statutory sick pay and supporting low income households through expanding free school meals may well prove to be far more cost effective than demand-stimulating measures that encourage economic activities which actively cause COVID-19 to spread.’

Subsidizing the spread of COVID-19: Evidence from the UK’s Eat Out to Help Out Scheme, The Economic Journal, Volume 132, Issue 643, April 2022, Pages 1200-1217.

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💾 Presentation slides

Abstract

This paper documents that a large-scale government subsidy aimed at encouraging people to eat out in restaurants in the wake of the first 2020 COVID-19 wave in the United Kingdom has had a significant causal impact on new cases, accelerating the subsequent second COVID-19 wave. The scheme subsidised 50% off the cost of food and non-alcoholic drinks for an unlimited number of visits in participating restaurants on Mondays–Wednesdays from 3–31 August 2020. Areas with higher take-up saw both a notable increase in new COVID-19 infection clusters within a week of the scheme starting and a deceleration in infections within two weeks of the program ending. Similarly, areas that exhibited notable rainfall during the prime lunch and dinner hours on the days the scheme was active record lower infection incidence—a pattern that is also measurable in mobility data—and non-detectable on days during which the discount was not available or for rainfall outside the core lunch and dinner hours.

Press Coverage & Non-Technical Summaries

2020

ABC News (US) 🇺🇸, AlKaleej (United Arab Emirates) 🇦🇪, Bisnis (Indonesian 🇮🇩), Bloomberg (US) 🇺🇸, Byline Times (UK) 🇬🇧, CGTN (1) (China) 🇨🇳, CGTN (2) China 🇨🇳, Der Spiegel (German) 🇩🇪, El Periodico Catalunya (Spain) 🇪🇸, FD (Dutch) 🇳🇱, Fox NewsForsal (Polish) 🇵🇱, Globo (Brazil) 🇧🇷, HKET (Chinese 🇨🇳), Huffington Post (US) 🇺🇸, Il Fatto Quotidiano (Italy) 🇮🇹, La Repubblica Italy (🇮🇹), MarketWatch (US) 🇺🇸, Mas Reino Unido (Spain) 🇪🇸, Nature (UK) 🇬🇧, News 24 (South Africa) 🇿🇦, Press and Journal (UK) 🇬🇧, Reuters (UK) 🇬🇧, Sky News (1) (UK) 🇬🇧, Sky News (2) (UK) 🇬🇧, Tagesspiegel (Germany) 🇩🇪, The News International (Pakistan) 🇵🇰, The Northern Echo (UK) 🇬🇧, The Guardian (1) (UK) 🇬🇧, The Guardian (2) (UK) 🇬🇧, The Guardian (3) (UK) 🇬🇧, The Guardian (4) (UK) 🇬🇧, The Independent (1) (UK) 🇬🇧, The Independent (2) (UK) 🇬🇧, The Independent (3) (UK) 🇬🇧, The Telegraph (UK) 🇬🇧, The Times (UK) 🇬🇧,  The Times (1) (UK) 🇬🇧, The Times (2) (UK) 🇬🇧, Wales Online (UK) 🇬🇧, Weekendavisen (Danish 🇩🇰), Wired (US) 🇺🇸.

2021

iNews (UK) 🇬🇧, New Zealand Herald (New Zealand) 🇳🇿, The Liverpool Echo (UK) 🇬🇧, The Guardian (5) (UK) 🇬🇧, The Scotsman (UK) 🇬🇧.

2022

The British Medical Journal (BMJ) (UK) 🇬🇧, The Daily Express (UK) 🇬🇧, The Times (3) (UK) 🇬🇧.

2023

The paper returned to the headlines in 2023 thanks to a major leak of the then Secretary of State’s WhatsApp messages.

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