Intertemporal Preferences during the Covid-19 Pandemic. Analysis of Preference Shocks

Bachelor Thesis from the year 2020 in the subject Business economics - Miscellaneous, grade: 1, Vienna University of Economics and Business , language: English, abstract: This thesis analyses time preferences in times of the Covid-19 pandemic. In accordance with literature analysing preference shocks such as natural disasters, the hypothesis that a greater impact of Covid-19 and associated lockdown and after effects on an agent leads to higher impatience is formed. Data from an incentivized online survey with a sample consisting mostly of students (n = 379) is used. In order to measure the impact of Covid-19 on respondents' lives, several potential avenues of impact are assessed (including loss of earning opportunities, affective states during severe lockdown restrictions etc.). Respondents indicated whether they had tested positive for Covid-19, whether somebody close to them had to be admitted to hospital due to Covid-19 and indicated their agreement with statements concerning their fear of contracting Covid-19 when they left their homes as well as their uncertainty regarding the future due to a second wave of the virus. Time preferences are assessed using a common incentivized method, called the Monetary-Choice Questionnaire. Additionally, a measure of risk aversion was also collected. Using regression analysis, a significant positive correlation between the affectedness by the virus and discount rates was found. People whose lives are more impacted by Covid-19 displayed higher discount rates. Results for a classification framework that segregates different levels of affectedness as well as a self-reported measure of affectedness point in the same direction.