The COVID-19 pandemic, lifetime consumption, and endogenous discounting under a Stone–Geary-type preference: given the passage of three years

Abstract

ABSTRACT In this paper, we consider the impact of the COVID-19 pandemic on medium- to long-term lifetime consumption profiles. Previous studies have focused on the attributes of health damage that are the primary determinant of people’s time preference rate. This approach has also been applied to research on the impacts of the COVID-19 pandemic on individual consumption profiles. However, such a framework has one drawback: consumption levels among the aged were estimated to be much lower than they actually were. We address this drawback and further brush up on the existing results by adopting a Stone–Geary-type utility function. Despite this, the key findings based on the analysis are maintained. This paper attempts to make new estimates that also consider the experience of the pandemic over 3 years. Taken together, the negative impact on economic welfare is large in scale and may cause long-term problems in terms of social policy that cannot be overlooked.