Subjective Risk Valuation and Behavioral Change: Evidence from COVID-19 in the U.K. and Japan

Masayuki Sato, Shin Kinoshita and Takanori Ida

Discussion papers from Graduate School of Economics , Kyoto University

Abstract: This study analyzed people's behavioral changes in the early stages of COVID-19 expansion in relation to subjective probability, and clarified the effect of risk perception on behavioral changes, such as outbound restriction. We conducted a social survey using an Internet survey in the U.K. and Japan in the fall of 2020 and found that the percentage of those who evaluated risk optimistically was higher in the U.K. than in Japan. In addition, we applied seemingly unrelated regression (SUR) for the bivariate ordinal probit model to the association between desired and actual infection prevention behavior and found that a pessimistic bias is likely to lead to behavioral change, whereas an optimistic one is not. These results suggest that when pessimistic bias is strong, measures that respect people’s rights, such as freedom of action, while leaving people to be autonomous, can be effective to some extent. In contrast, when optimistic bias is strong, the use of a certain degree of coercive force may be unavoidable from the standpoint of public interest.

Keywords: COVID-19; Bayesian Inference; Subjective probability; Seemingly Unrelated Regression (search for similar items in EconPapers)
Pages: 43
Date: 2022-11
New Economics Papers: this item is included in nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-22-011

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