Does the COVID-19 Pandemic Affect People’s Social and Economic Preferences? Evidence from China

Abstract

This study investigates the effect of the COVID-19 pandemic on people’s preferences including social preference in terms of trust and trustworthiness, risk attitude, and time preference. We compare the preferences of subjects in two sets of online experiments with samples drawn from provinces across mainland China before and after the COVID-19 pandemic. We test two competing hypotheses regarding social preference. First, we examine whether the outbreak as a collective threat induces more pro-social behavior by enhancing ingroup cohesion and cooperation. Second, we test whether the pandemic leads to a reduction in pro-social behavior due to the expectation that the related economic downturn will have a negative impact on income. We find that after the outbreak, the subjects overall are less trusting (8% lower) and more trustworthy (6% higher). We also find that the subjects are more risk averse and less patient after the outbreak, which is consistent with the idea that the fear generated by the pandemic induces risk aversion and impatience. Finally, using two large mobility datasets derived from anonymized mobile phone records, we show that people’s preferences are not affected by social distancing.