Why non-distanced social and commercial interactions have resumed so quickly

People have solved for the equilibrium.

First, the socially-distanced goods, such as food delivery, are starting to rise in price.  The non-distanced goods have been falling in relative price, and so now people are moving along their demand curves and engaging in less distancing.

Second, the longer the pandemic will run, the harder it is to use intertemporal substitution as a “make up.”  “I won’t go to a bar for two months, but then I’ll go a lot to make up for it” is a plausible story to tell oneself.  “I won’t go to a bar for a year and then I’ll go a lot…” is harder to swallow and act upon.  It starts to become a habit, and at some point you can’t drink enough to make up for what you have lost.  And so people are more inclined to go to the bar right now.

Most importantly, peer effects are remarkably strong.  Most people are not willing to accept a small additional risk of death to say eat in a particular restaurant.  But they are willing to accept a small additional risk of death to live life as other people are living life.

So once enough people are not respecting social distancing, most of the others will follow.

Some wag on Twitter said we can no longer use the expression “to avoid like the plague,” because apparently people do not take so much care to avoid the plague.