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Corona and the stability of personal traits and preferences: Evidence from Germany

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  • Frondel, Manuel
  • Osberghaus, Daniel
  • Sommer, Stephan

Abstract

Based on panel data on around 5,500 German household heads originating from four years, this paper analyzes whether the experience of financial losses due to the Corona pandemic has affected three kinds of personal traits and preferences: the willingness to take risks, patience, and the locus of control. Our empirical results indicate that patience and the locus of control remain unchanged by the experience of pandemic-related financial losses, whereas we find a significantly negative effect of severe financial losses on risk taking, contrasting with the traditional assumption that such preferences are constant. In this respect, our heterogeneity analysis indicates that financial losses due to Corona particularly affect the most vulnerable households, notably low-income households and those with little income diversification.

Suggested Citation

  • Frondel, Manuel & Osberghaus, Daniel & Sommer, Stephan, 2021. "Corona and the stability of personal traits and preferences: Evidence from Germany," ZEW Discussion Papers 21-029, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:21029
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    Cited by:

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    2. Björn Bos & Moritz A. Drupp & Jasper N. Meya & Martin F. Quaas, 2023. "Financial Risk-Taking under Health Risk," CESifo Working Paper Series 10387, CESifo.
    3. Adema, Joop & Nikolka, Till & Poutvaara, Panu & Sunde, Uwe, 2022. "On the stability of risk preferences: Measurement matters," Economics Letters, Elsevier, vol. 210(C).
    4. Amann, Erwin & Rzepka, Sylvi, 2023. "The effect of goal-setting prompts in a blended learning environment—evidence from a field experiment," Economics of Education Review, Elsevier, vol. 92(C).
    5. Fang, Ximeng & Freyer, Timo & Ho, Chui-Yee & Chen, Zihua & Goette, Lorenz, 2022. "Prosociality predicts individual behavior and collective outcomes in the COVID-19 pandemic," Social Science & Medicine, Elsevier, vol. 308(C).
    6. Hamza Umer, 2023. "A selected literature review of the effect of Covid-19 on preferences," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 9(1), pages 147-156, June.
    7. Julia Bock-Schappelwein & Ulrike Famira-Mühlberger & Ulrike Huemer & Walter Hyll, 2021. "The Austrian Labour Market in the Wake of the COVID-19 Pandemic," WIFO Reports on Austria, WIFO, issue 7, June.

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    More about this item

    Keywords

    Patience; risk aversion; locus of control;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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