This thesis analyses time preferences in times of the Covid-19 pandemic. In accordance with literature analysing preference shocks such as natural disasters, the hypothesis that a greater impact of Covid-19 and associated lockdown and after effects on an agent leads to higher impatience is formed. Data from an incentivized online survey with a sample consisting mostly of students (n = 379) is used.
In order to measure the impact of Covid-19 on respondents’ lives, several potential avenues of impact are assessed (including loss of earning opportunities, affective states during severe lockdown restrictions etc.). Respondents indicated whether they had tested positive for Covid-19, whether somebody close to them had to be admitted to hospital due to Covid-19 and indicated their agreement with statements concerning their fear of contracting Covid-19 when they left their homes as well as their uncertainty regarding the future due to a second wave of the virus.
Time preferences are assessed using a common incentivized method, called the Monetary-Choice Questionnaire. Additionally, a measure of risk aversion was also collected. Using regression analysis, a significant positive correlation between the affectedness by the virus and discount rates was found. People whose lives are more impacted by Covid-19 displayed higher discount rates. Results for a classification framework that segregates different levels of affectedness as well as a self-reported measure of affectedness point in the same direction.
Table of Contents
1. Introduction
2. Theoretical Background and Hypotheses
3. Time Preference - Literature Review
4. Method
4.1. Survey design
4.2. Time preference measure
4.3. Risk preference measure
4.4. Measuring affectedness
4.4.1. Level of Affectedness
4.4.2. PANAS
4.5. Participants
5. Results
5.1. Sample Description
5.2. Time preference
5.3. Risk preference
5.4. Level of Affectedness
5.5. PANAS
5.6. Regression Analysis
6. Discussion and Conclusion
7. References
8. Appendix
Research Objectives and Key Topics
This thesis examines the impact of the Covid-19 pandemic on individual time preferences, specifically investigating whether individuals more heavily affected by the pandemic and its consequences display higher levels of impatience (higher discount rates) than those less affected.
- Analysis of time preferences and intertemporal decision-making during the global pandemic.
- Evaluation of "preference shocks" caused by exogenous factors like the Covid-19 lockdown.
- Methodological assessment of affectedness using a multi-level classification framework.
- Measurement of individual risk aversion and emotional states (PANAS) as control variables.
- Regression analysis to test the correlation between pandemic-related stress and impatience.
Excerpt from the Book
1. INTRODUCTION
The Covid-19 pandemic has shaped the year 2020 unlike any other major event before. The number of reported Covid-19 cases increased exponentially leading to containment measures from countries all over the world. In Austria, the government imposed a lockdown from 16 March 2020 until step-wise relaxing these measures after Easter and opening up commercial activities and outdoor and indoor meeting places (e.g. restaurants, pubs, parks etc.). Since then, daily routines have started to slowly get back to normal. However, the pandemic is not over yet, and it is possible that a second wave of the virus will arrive before vaccinations are distributed on a large scale. In these unstable times, it is interesting to look at how the behaviour of people changes depending on the extent to which they have been affected by the pandemic.
When people are confronted with intertemporal decisions, they may be patient enough to wait for a possible higher reward in the future or prefer to choose a smaller reward that arrives sooner. Due to increased uncertainty about the future caused by the current pandemic, (see. Ahir, Bloom & Furceri, 2020 and Jain, 2020) agents may rationally choose to receive a smaller certain reward now rather than wait for a larger uncertain reward in the future. In the current situation, the general uncertainty about the future as induced by the pandemic might carry over into decisions even when the future reward is assured, resulting in greater observed impatience.
In order to measure time preferences as well as assess the impact of Covid-19 on the lives of subjects, an online survey was conducted. The idea is to understand whether individuals’ time preferences are correlated with the extent to which they were affected by the lockdown and the pandemic in general.
Summary of Chapters
1. Introduction: Presents the motivation for the study, highlighting the impact of the Covid-19 pandemic on uncertainty and decision-making, and outlines the research objective.
2. Theoretical Background and Hypotheses: Reviews economic and behavioural theory regarding how external shocks influence individual preferences and develops the core hypothesis (H1).
3. Time Preference - Literature Review: Discusses the fundamentals of intertemporal choices, the discounted utility model, and various factors influencing patience, such as foresight and visceral factors.
4. Method: Describes the design of the incentivized online survey, including the Monetary-Choice Questionnaire, risk preference tasks, and the development of the "Level of Affectedness" framework.
5. Results: Details the demographic makeup of the sample and presents the statistical findings from the survey, including histograms and the regression analysis results.
6. Discussion and Conclusion: Interprets the findings regarding the correlation between pandemic affectedness and discount rates, acknowledges limitations, and suggests future research directions.
7. References: Lists all academic literature and sources cited throughout the thesis.
8. Appendix: Provides supplementary data, including anxiety scores, regression assumptions, and additional analysis on education and financial specialization.
Keywords
pandemic, time preference, preference shocks, covid-19, impatience, discount rate, economic uncertainty, behavioral economics, lockdown, risk aversion, survey, intertemporal choice, affectedness, social consequences, regression analysis
Frequently Asked Questions
What is the core objective of this bachelor thesis?
The thesis aims to determine if there is a correlation between the degree to which individuals were affected by the Covid-19 pandemic and their individual time preferences, specifically testing if higher affectedness leads to higher impatience.
What are the primary thematic areas covered?
The research covers behavioral economics, specifically time discounting and intertemporal choice, the impact of exogenous shocks (like natural disasters or pandemics) on preferences, and the measurement of psychological effects during the 2020 lockdown.
What is the main research question or hypothesis?
The central hypothesis (H1) states that people who are more affected by the Covid-19 pandemic display higher individual discount rates compared to those who are less affected.
Which scientific methods were employed?
The author conducted an incentivized online survey using the Monetary-Choice Questionnaire (Kirby et al., 1999) to measure time preferences and the Holt & Laury (2002) method for risk preferences, followed by OLS regression analysis.
What does the main body of the work focus on?
The main body integrates theoretical foundations with empirical methods. It reviews literature on preference changes, details the survey construction and incentivization, and performs a systematic analysis of the data collected from 379 participants.
Which keywords best characterize this work?
Key terms include pandemic, time preference, preference shocks, covid-19, discount rate, and behavioral economics.
How was the "Level of Affectedness" defined and measured?
The author constructed a 5-point scale based on specific criteria such as testing positive, having close contacts in the hospital, loss of income, quarantine requirements, and self-reported fear of the virus.
Did the study find a significant impact of education or finance specialization?
No, the additional analyses regarding hypotheses H2 (education) and H3 (finance specialization) found no statistically significant difference in discount rates between the groups, failing to support those specific hypotheses.
What were the main findings regarding the relationship between Covid-19 and risk aversion?
The study found only a weak correlation between the Level of Affectedness and risk aversion (RA), suggesting that pandemic affectedness may primarily influence time preferences rather than risk preferences in this sample.
- Arbeit zitieren
- Felix Stockhammer (Autor:in), 2020, Intertemporal Preferences during the Covid-19 Pandemic. Analysis of Preference Shocks, München, GRIN Verlag, https://www.grin.com/document/1012278
