HEALTH CONCERNS AND CONSUMPTION EXPECTATIONS DURING COVID-19: EVIDENCE FROM A FUZZY REGRESSION DISCONTINUITY DESIGN

Giuseppe Rose and Desiré De Luca ()
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Desiré De Luca: Department of Statistical Sciences “Paolo Fortunati”, University of Bologna, Italy

No 202401, Working Papers from Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF

Abstract: Using novel microdata from the Bank of Italy’s Special Survey of Italian Households, we study the determinants of consumption expectations during the Covid-19 pandemic. The dataset spans the period of August-September 2020 and contains quarterly observations of about 2,000 households. We apply a fuzzy regression discontinuity design to study the causal effects of fear of Covid-19 on consumption expectations exploiting the discontinuous relationship between age and the level of perceived fear to contract the virus. Results highlight that the impact of the pandemic outbreak on consumption expectations operates through health concerns related to households’ fear of contagion. This evidence provides a powerful tool to public policy in order to find functional strategies to stimulate aggregate demand during recessions generated by a pandemic. Appropriate policy instruments should be aimed at restoring consumer confidence and reducing the fear of contagion, strengthening the National Health Care System in order to provide effective and timely health services to enhance people’s mental health and well-being.

Keywords: Consumption Expectations; Fear of Contagion; Covid-19 Pandemic; Case Fatality Rate; Fuzzy Regression Discontinuity Design; In¬strumental Variables (search for similar items in EconPapers)
JEL-codes: D10 D84 D91 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2024-02
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