Intertemporal Preferences during the Covid-19 Pandemic. Analysis of Preference Shocks

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

Objectives and Key Themes

This thesis investigates the relationship between the impact of the COVID-19 pandemic on individuals and their time preferences. The central hypothesis is that individuals more severely affected by the pandemic will exhibit higher discount rates (i.e., greater impatience). This is explored using data from an incentivized online survey.

• Impact of COVID-19 on time preferences
• Correlation between pandemic-related hardship and impatience
• Analysis of time preference measurement methods
• Examination of potential mediating factors (e.g., risk aversion, emotional state)
• Application of behavioral economics principles to understand pandemic-induced changes in decision-making.

Chapter Summaries

1. Introduction: This chapter introduces the context of the study, highlighting the unprecedented impact of the COVID-19 pandemic and its associated lockdowns. It poses the central research question: do individuals more affected by the pandemic display higher discount rates? The chapter outlines the study's approach, previewing the theoretical background, literature review, methodology, results, and discussion to follow. It emphasizes the connection between increased uncertainty due to the pandemic and potential shifts in intertemporal decision-making. The chapter also notes the study's use of an online survey to measure both the impact of COVID-19 and individual time preferences.

2. Theoretical Background and Hypotheses: This chapter challenges the traditional economic assumption of static time preferences. It contrasts the concept of *homo economicus* with *homo sapiens*, highlighting the role of emotions and bounded rationality in influencing preferences. It reviews existing research on how major events (natural disasters, financial crises) affect individual preferences and behavior, suggesting that such events can increase impatience and risk aversion due to factors like loss of income, heightened fear, and changes in perceived life expectancy. The chapter concludes by formulating the central hypothesis: that greater COVID-19 impact correlates with higher discount rates.

3. Time Preference - Literature Review: This chapter provides a detailed overview of existing literature on time preferences, setting the stage for the empirical analysis in subsequent chapters. It explores different theoretical models and empirical methods used to measure time preferences, establishing a strong foundation for the methodology used in this thesis. The review likely discusses various factors influencing time preferences, setting the context for understanding how the pandemic might affect them. This review is crucial for contextualizing the study's findings within the broader field of time preference research.

4. Method: This chapter details the methodology employed in the study. It describes the design of the incentivized online survey, explaining how time preferences were measured (likely using the Monetary-Choice Questionnaire), risk preferences (possibly the Holt & Laury method), and the impact of COVID-19 on participants' lives. The chapter also provides a detailed description of the survey instrument, including the questions used to assess affectedness, potential confounding variables and the rationale for the selected methods. It concludes by providing information about the sample characteristics and participant demographics.

5. Results: This chapter presents the findings of the empirical analysis. It includes descriptive statistics on the sample, analysis of time preferences, risk preferences, and the measures of COVID-19 affectedness. A central part of this chapter will focus on the regression analysis, examining the statistical relationship between affectedness and discount rates. It likely presents results supporting or refuting the central hypothesis and discusses any significant findings in detail. This chapter is where the numerical outcomes of the data analysis are revealed and interpreted.

Keywords

Pandemic, time preference, preference shocks, COVID-19, discount rate, risk aversion, behavioral economics, intertemporal choice, online survey.

Frequently Asked Questions: Analysis of the Impact of the COVID-19 Pandemic on Time Preferences

What is the main research question of this thesis?

The central research question explores whether individuals more severely affected by the COVID-19 pandemic exhibit higher discount rates (meaning greater impatience) compared to those less affected.

What is the central hypothesis of the study?

The main hypothesis proposes a positive correlation between the severity of the impact of COVID-19 on individuals and their discount rates. In other words, those more severely affected are hypothesized to show greater impatience in their decision-making.

What methods were used to measure time preferences and risk preferences?

The study employed an incentivized online survey. While the specific methods aren't explicitly named, it mentions using established methods for measuring time preferences (likely the Monetary-Choice Questionnaire) and risk preferences (possibly the Holt & Laury method).

How was the impact of COVID-19 on participants measured?

The survey included questions designed to assess the level of affectedness due to the pandemic. It also incorporated the PANAS (Positive and Negative Affect Schedule) to measure participants' emotional state, as a potential mediating factor.

What are the key themes explored in this thesis?

Key themes include the impact of the COVID-19 pandemic on time preferences, the correlation between pandemic-related hardship and impatience, the analysis of time preference measurement methods, the examination of mediating factors like risk aversion and emotional state, and the application of behavioral economics principles to understand pandemic-induced changes in decision-making.

What theoretical framework underpins the study?

The study challenges the traditional economic assumption of static time preferences and contrasts the concept of *homo economicus* with *homo sapiens*, acknowledging the role of emotions and bounded rationality in influencing preferences. It draws upon existing research on how major events affect individual preferences and behavior.

What is included in the literature review?

The literature review provides a detailed overview of existing research on time preferences, exploring different theoretical models and empirical methods used to measure them. It sets the context for understanding how the pandemic might influence time preferences.

What kind of data analysis is presented in the results section?

The results section presents descriptive statistics on the sample, analyzes time preferences, risk preferences, and measures of COVID-19 affectedness. A key part focuses on regression analysis examining the statistical relationship between affectedness and discount rates to test the central hypothesis.

What are the key findings of the study (generally)?

The specific findings are detailed in the "Results" chapter, but the overall goal is to determine if a statistically significant relationship exists between the severity of COVID-19's impact and the individuals' degree of impatience (higher discount rates).

What are the keywords associated with this research?

Keywords include: Pandemic, time preference, preference shocks, COVID-19, discount rate, risk aversion, behavioral economics, intertemporal choice, online survey.