Cluster-Seminar Public Finances and Living Conditions

Unexpected crises, such as armed conflicts, natural disasters and pandemics require immediate government decisions on how to act to protect the population. The COVID-19 pandemic was the worst sudden onset global crisis since the Second World War, and highlighted tension between civil liberties and public health objectives. How did attitudes towards democracy respond to restrictive policy interventions in the wake of the pandemic? We aim at quantifying the effect of mobility restrictions on citizens' trust in political institutions in Germany. We exploit variation in those restrictions across German Laender to estimate a difference-in-differences (DID) model and a DID-event study analysis. Our results show that stay-at-home orders increased individuals' satisfaction with democracy by approximately 18% of a standard deviation. A heterogeneity analysis provides suggestive evidence that the effect is more pronounced for older individuals, individuals with a high body mass index, and individuals with low levels of vitality. Moreover, the effect seems to be larger for individuals who lived in the German Democratic Republic, a former socialist state. Our study also relates to the economic literature on the change of attitudes and preferences in times of crises.