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The Stickiness of Pandemic-Driven Economic Behavior

The behavioral changes that persist after the pandemic will offer new business opportunities for firms that carefully assess consumer, industry, and regulatory trends. And policymakers can help the world to boost productivity by extending and improving digital infrastructure and ensuring universal access to it.

MUMBAI/SAN FRANCISCO –When COVID-19 arrived, firms, workers, and consumers had to adapt quickly in order to continue operating under the constraints that the pandemic imposed. As vaccines enable a resumption of more “normal” activities, at least in some countries, the extent to which these changes will stick is one of the most pressing questions businesses face.

Our research finds that the persistence of pandemic-induced behavioral changes will depend on a combination of corporate decisions and government policies, which in turn determine choices by consumers and employees. These factors don’t always conspire to make consumer preferences stick. For example, surveys indicate that 30-50% of consumers intend to buy sustainable products. But such products typically account for less than 5% of overall sales, in part because companies charge higher prices for them and governments offer no purchasing incentives.

In contrast, the global disruption triggered by COVID-19 created a perfect storm in which some shifts in consumer behavior were matched by changes in business operations and government regulations. Many such behaviors in fact accelerated practices that held promise before the pandemic but had failed to gain traction because of cost concerns or widespread skepticism. The virus, by creating an opportunity to experiment with them, made their value much more apparent.