MIT Study shows 'devastating' cost of states reopening without coordination amid COVID-19

As more states continue to reopen, people are questioning how the government will prevent a new spike in COVID-19 cases. Sinan Aral, David Austin Professor of Management at MIT and Author of “The Hype Machine” joins Yahoo Finance’s On The Move to discuss why states need to coordinate reopening amongst each other.

Video Transcript

ADAM SHAPIRO: I want to turn our attention to opening up the states and the US economy. And to help us understand what that looks like, we invite into the program Sinan Aral. He is the David Austin Professor of Management and Marketing, IT and Data Science at MIT. He's also the author of "The Hype Machine."

Sinan, you've been here before. And it's good to see you again. Thank you for joining us.

SINAN ARAL: Thanks for having me.

ADAM SHAPIRO: So you crunched some numbers. You have a new paper out in which you're looking at the impact of one locality's opening on localities around it. Why is that perhaps a good indicator of what to expect as the country starts to reopen?

SINAN ARAL: Well, we were interested to know whether an ad hoc approach to reopening is a good idea or not. And so we analyzed mobility data from over 27 million mobile devices, social network data from 220 million Facebook connections. And what we found was that when one state's or county's policy significantly affect the mobility in other states and counties. And not just geographically proximate states, but often at great distance through behavioral social influence over social media.

So what that means is that yes, when one state opens and another state remains closed, you see travel spillovers across the border for people who want to patronize bars, restaurants, get their hair cut. But you also see a tremendous amount of influence over Zoom and Facebook. When I see my friend having a barbecue on Instagram in another state, it makes me wonder, should it be safe to be going outside and being with other people?

And so the point of the paper is to point out that this is an interdependent phenomenon, and we need to approach our policy as such.

- Sinan, that spillover effect you talked about certainly raises concerns about rising infection levels as well. And I'm wondering, as we look at the lack of a federal sort of cohesive response, you're looking at fragmented state responses. And then you've got sort of the answer that people have said, which is the contact tracing element, which Facebook, or Google has been leading on as well. But then you don't have the buy-in yet, because there's concerns about privacy.

I mean, how do these tech companies convince people to get on board? And is that ultimately really the solution, given that things have already started to open up, and you can't pull that back in?

SINAN ARAL: Well, what we're finding is that people's buy in is significantly tied to their perceptions of what other people are thinking and what other people are doing. And so we're sort of all in this together. When one state that may have a policy to reopen more quickly, in order to get its economy going, opens up, it has an effect on the rest of the country.

Because when COVID happened and we all got sheltered in place, we went online in record numbers. I remember Mark Zuckerberg saying we're just trying to keep the lights on over here, because Facebook was breaking records. Zoom was breaking records. Everybody was breaking records.

And so we are being influenced by what we see our friends and family doing in other parts of the country. And so we have to be a little bit more coordinated. And, in fact, we provide in the paper coordination maps for all 50 states, so that in the absence of national coordination, the governors can coordinate independent of a national effort. They can call the right people.

And what these maps show is the top 20 states influencing every state. And these maps are sometimes surprising. Georgia, when it reopened, created a lot of geographic spillover. So the University of Maryland estimated that half a million people came into Georgia to patronize restaurants, bars, get their hair cut, from South Carolina, North Carolina, and Alabama. 13% increase-- 62,000 new people a day coming over the border into Georgia.

But if you look at Florida, the state that influences Florida the most is New York, which is kind of surprising. But it happens because there's a lot of social connections between New York and Florida.

DAN ROBERTS: And Sinan, Dan Roberts here. Thanks for joining us. You know, speaking of Florida reopening, and as these states begin to reopen, whenever we have you, we love to talk tech.

And even with states reopening, it seems like there's been a contest among the big tech-- the big tech companies to say, oh, we're going to extend stay-at-home the longest. We'll say employees don't have to come back till 2021. And other companies come out and say we say employees can stay and work at home permanently if they wish.

I'm just curious your take quickly on tech writ large amid COVID, and how some of these companies-- especially the stocks. I mean Amazon, Facebook have continued to fly during this time-- and what you think is going to happen with big tech in the next year or so because of this time?

SINAN ARAL: Well, Dan, I think it's a really, really good question. I think these changes are actually going to be permanent. They're going to have permanent changes on the skills that are going to be relevant in the new post-COVID digital economy. It's going to dramatically impact labor markets. It's going to dramatically impact the acceleration of digitization in all industries.

Yes, there there's this really interesting one-upmanship about staying at home, when Jack Dorsey came out and said, you know what? You guys never have to come back to work. I thought that was pretty interesting. And I also think that-- but there will be fundamental changes in the economy as a result of this.