Unraveling changes of spending behavior in pandemic cities: A nationwide study of South Korea

Abstract

The COVID-19 pandemic, unprecedented in scale and impact, has significantly influenced consumer spending. This study leverages a longitudinal transaction dataset from South Korea to analyze how the pandemic, social distancing policies, and pandemic-related search interest have shaped spending within and across cities. We examine transaction volume and expenditure amount as city-level indicators of activity intensity and consumption demand across four stages of the early pandemic. The study finds that: (1) Social distancing caused reductions in both residents' and travelers' spending. The increase in search interest coincided with a rise in residents' spending but a decline in travelers' spending; (2) Resident transactions experienced a moderate and persistent decline across all stages, while expenditure rebounded after the 1st national outbreak. Traveler transactions and expenditure showed similar trends, with declines during outbreaks and recoveries during stable periods; (3) Disparities across cities were associated with proximity to outbreak centers and socioeconomic attributes. Cities with larger populations or those closer to epicenters experienced greater reductions in spending, while less densely populated cities saw increased traveler spending during the 2nd stable period; (4) Travelers' spending from distant cities significantly decreased during the 1st outbreak but gradually recovered as the pandemic continued, indicating evolving behavior and adaptation; (5) Changes across spending categories exhibited significant heterogeneity. Residents showed increased demand for essential goods and online shopping, while recreation-related industries struggled throughout. These findings highlight the characteristics and disparities among consumers, cities, and industries, providing information for policymakers to formulate tailored support programs for industries experiencing increased demand or significant impacts. This study emphasizes the need to develop robust strategies for crisis management and economic resilience to mitigate the impacts of future health crises.