The effect of perceived morbidity and mortality risk on risk-taking and patience

Abstract

Beyond immediate health consequences, the COVID-19 pandemic has profoundly affected people's environment. People had to adapt to new circumstances and take into account the risks related to COVID-19 in their everyday decisions. Given the unprecedented circumstances associated with the first wave of the COVID-19 pandemic, we might ask how people adapt to their new environment. In particular, we ask how people form their morbidity and mortality risk perception associated with the virus and whether increased perceived risk affects psychological traits, such as risk-taking and patience. To address these questions, we analyzed data from a large survey conducted during the first wave in France on 5,000 nationally-representative people. We find that people use the public information on COVID-19 deaths in the area where they live to form their perceived morbidity and mortality risk. Using a structural model approach to lift endogeneity concerns, we found that higher perceived morbidity and mortality risk increases risk aversion. We also found that higher perceived morbidity and mortality risk leads to less patience, although this was only observed for high levels of perceived risk.