Abstract

The Chilean health authorities have implemented a sanitary strategy known as dynamic quarantine or strategic quarantine to cope with the COVID-19 pandemic. Under this system, lockdowns were established, lifted, or prolonged according to the weekly health authorities' assessment of municipalities' epidemiological situation. The public announcements about the confinement situation of municipalities country-wide are made typically on Tuesdays or Wednesdays before noon, have received extensive media coverage, and generated sharp stock market fluctuations. Municipalities are the smallest administrative division in Chile, with each city broken down typically into several municipalities. We analyze social media behavior in response to the confinement situation of the population at the municipal level. The dynamic quarantine scheme offers a unique opportunity for our analysis, given that municipalities display a high degree of heterogeneity, both in size and in the socioeconomic status of their population. We exploit the variability over time in municipalities' confinement situations, resulting from the dynamic quarantine strategy, and the cross-sectional variability in their socioeconomic characteristics to evaluate the impact of these characteristics on social sentiment. Using event study and panel data methods, we find that proxies for social sentiment based on Twitter queries are negatively related (more pessimistic) to increases in the number of confined people, but with a statistically significant effect concentrated on people from the wealthiest cohorts of the population. For indicators of social sentiment based on Google Trends, we found that search intensity during the periods surrounding government announcements is positively related to increases in the total number of confined people. Still, this effect does not seem to be dependent on the segments of the population affected by the quarantine. Furthermore, we show that the observed heterogeneity in sentiment mirrors heterogeneity in stock market reactions to government announcements. We provide evidence that the observed stock market behavior around quarantine announcements can be explained by the number of people from the wealthiest segments of the population entering or exiting lockdown.