Exploiting staggered adoption of contact-tracing apps in 322 Chinese cities, the author finds that cities that adopt contact-tracing apps experience a significant increase in economic activities without suffering from higher infection rates.

Pandemics such as COVID-19 present an impossible choice to policymakers between saving lives and saving livelihoods. On the one hand, population movement restrictions such as social distancing and lockdown are deemed necessary to contain the rapid spread of the disease. On the other hand, such restrictions inflict steep economic costs as normal activities are disrupted.Analyzing economic indicators and daily COVID-19 cases in China– the first country that successfully contained the outbreak – this paper suggests that big data technology may be the solution.

This study explores the staggered implementation of contact-tracing apps called “health code” in 322 Chinese cities during the COVID-19 pandemic. Using high-frequency variations in population movements and greenhouse emission across cities, the study finds that cities that adopt health code experience a significant increase in economic activities without suffering from higher infection rates. In fact, big data technology created an economic value of 0.5%-0.75% of China’s GDP during this period. The economic benefits of big data technology seem to outweigh the potential costs on privacy.

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