Projects per year
Abstract
We study how people react to small probability events with large negative consequences using the outbreak of the COVID-19 epidemic as a natural experiment. Our analysis is based on a unique administrative data set with anonymized monthly expenditures at the individual level. We find that older consumers reduced their spending by more than younger consumers in a way that mirrors the age dependency in COVID-19 case-fatality rates. This differential expenditure reduction is much more prominent for high-contact goods than for low-contact goods and more pronounced in periods with high COVID-19 cases. Our results are consistent with the hypothesis that people react to the risk of contracting COVID-19 in a way that is consistent with a canonical model of risk taking.
Original language | English |
---|---|
Publisher | National Bureau of Economic Research (NBER) |
DOIs | |
Publication status | Published - Oct 2020 |
Publication series
Name | |
---|---|
No. | 27988 |
Fingerprint
Dive into the research topics of 'How do people respond to small probability events with large, negative consequences?'. Together they form a unique fingerprint.Projects
- 1 Active
-
CUBE: Católica Lisbon Research Unit in Business and Economics
Fundação para a Ciência e a Tecnologia
1/01/20 → 31/12/23
Project: Research