Abstract
In this study we exploit not only regional but also age and gender variation in exposure to COVID-19 to investigate its impact on risk tolerance. This study is the first to use age and gender variation in exposure to COVID-19, whereas the identification in previous studies relied on regional variation or simple differencing before and after the pandemic. Using a nationally representative household panel survey in Japan, we find that individuals who were exposed to higher risk of COVID-19, measured by the mortality rate, became more risk-tolerant. The result is in line with findings whereby the experience of standout adverse events and the large resulting losses increase individuals’ risk tolerance. However, the effect appears diminished after the vaccine rollout. An analysis using detailed vaccine records indicates that the vaccination offset the increase in risk tolerance due to the mortality risk, especially for individuals with a higher mortality rate for COVID-19. While the literature on this topic has been inconclusive with a few studies reporting insignificant changes in risk tolerance after the pandemic, our result suggests that granular information on exposure to COVID-19 helps identify its impact.
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All data supporting the findings of this paper are available upon request.
Notes
Tsutsui and Tsutsui-Kimura (2022) provide the only study that uses Japanese data to examine changes “during” the pandemic using the sample period from March to June 2020.
The mean reservation price is somewhat lower after 2016. As we will discuss shortly, respondents to the JHPS-CPS varied over time, with a notable decline in the number of respondents in 2016, and thus changes in the sample may affect the sample mean.
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Acknowledgements
We would like to thank So Kubota for constructive comments. This research uses micro data obtained from the Preference Parameters Study of Osaka University’s 21st Century COE Program, “Behavioral Macro-Dynamics Based on Surveys and Experiments,” and its Global COE project, “Human Behavior and Socioeconomic Dynamics.” The views expressed in this paper are those of the authors and do not necessarily represent the views of the Ministry of Finance Japan, the IMF, its Executive Board, or IMF management.
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Appendix A. Descriptive statistics
Appendix A. Descriptive statistics
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Mineyama, T., Tokuoka, K. Does the COVID-19 pandemic change individuals’ risk preference?. J Risk Uncertain 68, 163–182 (2024). https://doi.org/10.1007/s11166-024-09427-5
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DOI: https://doi.org/10.1007/s11166-024-09427-5