Household Consequences of the Coronavirus and Its Aftermath: Microeconomic Outcomes
Tuesday, Jan. 5, 2021 12:15 PM - 2:15 PM (EST)
- Chair: Olivia S. Mitchell, University of Pennsylvania
Longevity Perceptions and Saving Decisions during the Covid-19 Outbreak: An Experimental Investigation
AbstractWe experimentally study individuals’ perceptions about and advice to others regarding retirement savings and annuitization during the pandemic. Many people recommend that others save more for retirement, but those most affected by the pandemic tell others to save and annuitize less. We investigate two possible channels for this result and show that the pandemic does not substantially alter optimism regarding survival probabilities. Hence, we conclude that economic factors are driving our results. Consequently, some financial ramifications of the COVID-19 outbreak are yet to be revealed, as the pandemic is having longer-term effects on peoples’ willingness to save and annuitize.
The Impact of an Epidemic: Experimental Evidence on Preference Stability from Wuhan
AbstractHigh levels of pro-social behaviour among community members effectively bolster responses to emerging public health crises. We examine how the outbreak of the Covid-19 virus in the Hubei province of China and the ramifications of associated key events impacted pro-social behavior and attitudes towards risk and uncertainty. The study repeatedly applies a panel of financially incentivized individual and strategic decisions tasks via mobile phones and the WeChat social media platform to a population of 9000 preregistered Wuhan University students. The initial sample was collected in 2019. Thus the early 2020 outbreak of the Covid-19 virus is an exogenous shock to the populations’ behaviour and preferences. We collected a series of repeated sampling over the period spanning late January to early March 2020, and we also conducted two waves of paired repeated sampling from the first set of participants. We find that the initial outbreak, coupled with the lockdown of Wuhan City, leads to a sharp uptick in altruism, trust and ambiguity aversion. The news of a high profile whistleblower doctor’s death from the virus, caused a significantly diminishing levels of altruism and trust. Over the remaining sample collections we observe measurements return to baseline levels, except for ambiguity aversion. The measured effects are robust as the responses of those who are resampled from the baseline closely follow those responses of new participants. The results suggest that perturbations in behavior and attitudes from a public health crisis are sharp but not long lived.
The Impact of the COVID-19 Pandemic on Consumption: Learning from High Frequency Transaction Data
AbstractWe use daily transaction data in 214 cities to study the impact of COVID-19 on consumption after China’s outbreak in late January 2020. Based on difference-in-differences estimation, daily offline consumption—via UnionPay card and QR scanner transactions—fell by 42%, or 21.6 million RMB per city, during the eight-week period. Spending on goods and services were both significantly affected, with a decline of 44% and 43%, respectively; within finer categories, dining & entertainment and travel saw the greatest dip of 72% and 64%. All 214 cities experienced significant consumption decreases, with magnitudes ranging from 14% to 69%. Consumption responded negatively to the day-to-day changes in epidemic severity with distancing measures remaining stable. By late March 2020, the consumption response shrank to -31%, a 36% improvement over the lowest point. We infer that China’s offline consumption decreased by over 1 trillion RMB in the two-month post-outbreak period, or 1% of China’s 2019 GDP. Our estimates also imply reducing the time to reach the new cases’ apex by 10 days lessens the negative consumption impact by 6%.
University of Virginia
University of Southern California
Federal Reserve Bank of Minneapolis
- G5 - Household Finance
- I3 - Welfare, Well-Being, and Poverty