Learning during a crisis

When SARS struck Taiwan in the spring of 2003, many people feared that the disease would spread through the health care system. As a result, outpatient medical visits fell by over 30 percent in the course of a few weeks. This paper examines how both public information (SARS incidence reports) and private information (the behavior and opinions of peers) contributed to this public reaction. We identify social learning through a difference-in-difference strategy that compares longtime community residents to recent arrivals, who are less socially connected. We find that people learned from both public and private sources during SARS. A dynamic simulation based on the regressions shows that social learning magnified and lengthened the response to SARS.