Subjective beliefs and economic preferences during the COVID-19 pandemic

Glenn W Harrison; Andre Hofmeyr; Harold Kincaid; Brian Monroe; Don Ross; Mark Schneider; J Todd Swarthout

doi:10.1007/s10683-021-09738-3

Subjective beliefs and economic preferences during the COVID-19 pandemic

Exp Econ. 2022;25(3):795-823. doi: 10.1007/s10683-021-09738-3. Epub 2022 Jan 7.

Authors

Glenn W Harrison^{1

2

3}, Andre Hofmeyr^{3

4}, Harold Kincaid^{3

4}, Brian Monroe⁵, Don Ross^{2

3

4

6}, Mark Schneider², J Todd Swarthout^{2

7}

Affiliations

¹ Department of Risk Management and Insurance, Robinson College of Business, Georgia State University, Atlanta, USA.
² Center for the Economic Analysis of Risk, Robinson College of Business, Georgia State University, Atlanta, USA.
³ School of Economics, University of Cape Town, Cape Town, South Africa.
⁴ Research Unit in Behavioural Economics and Neuroeconomics, University of Cape Town, Cape Town, South Africa.
⁵ School of Philosophy and School of Economics, University College Dublin, Dublin, Ireland.
⁶ School of Society, Politics and Ethics, University College Cork, Cork, Ireland.
⁷ Department of Economics and Experimental Economics Center (ExCEN), Andrew Young School of Policy Studies, Georgia State University, Atlanta, USA.

Abstract

The COVID-19 pandemic presents a remarkable opportunity to put to work all of the research that has been undertaken in past decades on the elicitation and structural estimation of subjective belief distributions as well as preferences over atemporal risk, patience, and intertemporal risk. As contributors to elements of that research in laboratories and the field, we drew together those methods and applied them to an online, incentivized experiment in the United States. We have two major findings. First, the atemporal risk premium during the COVID-19 pandemic appeared to change significantly compared to before the pandemic, consistent with theoretical results of the effect of increased background risk on foreground risk attitudes. Second, subjective beliefs about the cumulative level of deaths evolved dramatically over the period between May and November 2020, a volatile one in terms of the background evolution of the pandemic.

Supplementary information: The online version contains supplementary material available at 10.1007/s10683-021-09738-3.

Keywords: COVID-19; Risk preferences; Subjective beliefs; Time preferences.