How Optimistic and Pessimistic Narratives about COVID-19 Impact Economic Behavior

Sören Harrs (), Lara Marie Müller () and Bettina Rockenbach ()
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Sören Harrs: Department of Economics, University of Cologne
Lara Marie Müller: Department of Economics, University of Cologne
Bettina Rockenbach: Department of Economics, University of Cologne and Max Planck Institute for Research on Collective Goods

No 91, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Politicians, scientists and journalists have aired vastly different assessments of the COVID-19 pandemic, ranging from rather optimistic to very pessimistic ones. In this paper we investigate how narratives conveying different assessments of the pandemic impact economic behavior. In a controlled experiment with incentivized economic games we find that subjects behave more risk averse and less patiently when confronted with a pessimistic compared to an optimistic or balanced narrative. Further we find that narratives change subjects’ expectations about the pandemic and the stock market. Hence our experiment provides causal evidence for an impact of narratives on fundamental determinants of household behavior.

Keywords: Narrative Economics; Risk Aversion; Patience; Expectations (search for similar items in EconPapers)
JEL-codes: D80 D91 E71 G41 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2021-05
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Citations: View citations in EconPapers (6)

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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_091_2021.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:091

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