IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_12976.html

Risk Perceptions as a Multivariate System: Crowding Out, Affect Generalization, and Heterogeneous Belief Updating

Author

Listed:
  • Armin A. Bolouri
  • Tim Lohse
  • Salmai Qari

Abstract

Crises rarely arrive alone: pandemics overlap with wars, financial shocks with climate risks, personal hardship with collective upheaval. When one risk becomes salient, does worry about the others recede or spread? We provide a multi-domain, multi-shock field test using the German Socio-Economic Panel (SOEP), which elicits worries across eight domains from 1999 to 2022, and exploit quasi-random survey timing around major societal crises and within-person variation around idiosyncratic personal life events. Risk perceptions are not separable: a shock in one domain moves worries in others, even when the underlying risks are unrelated. The direction depends on the shock's proximity to the individual. Distant societal crises crowd out competing worries (Finite Pool of Worry); proximal personal events amplify worry across domains (Affect Generalization). Combining imputation-based difference-in-differences with latent profile analysis, we find the population splits into qualitatively distinct types: 27% generalize worry, 62% reallocate it, 11% suppress it. Profile membership is organized above all by neuroticism, revealing that personality shapes not only the level of worry, but the structure of belief updating itself. Interdependent worries imply that crises generate externalities in the mental economy of risk perception: displacing concern from persistent risks for some individuals, diffusing pessimism for others.

Suggested Citation

  • Armin A. Bolouri & Tim Lohse & Salmai Qari, 2026. "Risk Perceptions as a Multivariate System: Crowding Out, Affect Generalization, and Heterogeneous Belief Updating," CESifo Working Paper Series 12976, CESifo.
  • Handle: RePEc:ces:ceswps:_12976
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/cesifo1_wp12976.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Victor Chernozhukov & Mert Demirer & Esther Duflo & Iván Fernández‐Val, 2025. "Fisher–Schultz Lecture: Generic Machine Learning Inference on Heterogeneous Treatment Effects in Randomized Experiments, With an Application to Immunization in India," Econometrica, Econometric Society, vol. 93(4), pages 1121-1164, July.
    2. Victor Chernozhukov & Mert Demirer & Esther Duflo & Iván Fernández‐Val, 2025. "Reply to: Comments on “Fisher–Schultz Lecture: Generic Machine Learning Inference on Heterogeneous Treatment Effects in Randomized Experiments, With an Application to Immunization in India”," Econometrica, Econometric Society, vol. 93(4), pages 1177-1181, July.
    3. Arindrajit Dube & Daniele Girardi & Òscar Jordà & Alan M. Taylor, 2025. "A Local Projections Approach to Difference‐in‐Differences," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(7), pages 741-758, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Clochard, Gwen-Jirō & Hollard, Guillaume & Sene, Omar, 2026. "Bringing contact interventions to the lab: Effects of brief bilateral discussions on interethnic trust in Senegal," World Development, Elsevier, vol. 199(C).
    2. Angelucci, Manuela & Fabregas, Raissa & Vazquez, Antonia, 2026. "The Well-Being Effects of Digital Mental Health Care," IZA Discussion Papers 18538, IZA Network @ LISER.
    3. Anna Baiardi & Paul S. Clarke & Andrea A. Naghi & Annalivia Polselli, 2026. "Double Machine Learning for Static Panel Data with Instrumental Variables: New Method and Applications," Papers 2603.20464, arXiv.org.
    4. Bruno Fava, 2026. "Cross-Fitting Under Nonregularity: Normality and Inference via Locality," Papers 2610.02944, arXiv.org.
    5. Bruno Cr'epon & Aur'elien Frot & Christophe Gaillac, 2026. "Biases-Informed Job Search Guidance: Characterization, Implications, and Targeting Support," Papers 2608.16827, arXiv.org.
    6. Raphael Langevin, 2026. "Policy Learning with Observational Data: The Case of Hepatitis C Treatment for HIV/HCV Co-Infected Patients," Papers 2605.16593, arXiv.org, revised Oct 2026.
    7. Bruno Cr'epon & Aur'elien Frot & Christophe Gaillac, 2026. "Targeting Support Using Job Seekers' Biases: A Randomized Experiment," Papers 2608.16849, arXiv.org.
    8. Alexandre Belloni & Victor Chernozhukov & Denis Chetverikov & Christian Hansen & Kengo Kato, 2018. "High-dimensional econometrics and regularized GMM," CeMMAP working papers CWP35/18, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    9. Alfred Michel Nandnaba, 2026. "From Capabilities to Peace: Can Mobile Money Reduce Conflicts in Developing Countries?," Post-Print hal-04566893, HAL.
    10. Todd Morris & Benoit Dostie, 2023. "Graying and staying on the job: The welfare implications of employment protection for older workers," Cahiers de recherche / Working Papers 15, Institut sur la retraite et l'épargne / Retirement and Savings Institute.
    11. Yechan Park & Yuya Sasaki, 2024. "Matching $\leq$ Hybrid $\leq$ Difference in Differences," Papers 2411.07952, arXiv.org, revised Feb 2025.
    12. Kaleb Abreha & Raymond Robertson, 2025. "Revisiting the Effects of Regional Trade Agreements Using Staggered Adoption Design," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 53(3), pages 113-124, September.
    13. Jingyi Tian & Jun Nagayasu, 2023. "Financial Systemic Risk behind Artificial Intelligence:Evidence from China," TUPD Discussion Papers 44, Graduate School of Economics and Management, Tohoku University.
    14. Tang, Lianzhou & Xu, Wenli, 2025. "Patronage and pollution," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    15. repec:ags:aaea22:343660 is not listed on IDEAS
    16. Yan, Wenying & Chen, Yusheng & Wang, Yanmei, 2025. "Efficiency improvement effect of clean energy transformation —A quasi-natural experiment based on China's clean heating policy," Energy, Elsevier, vol. 334(C).
    17. Adrien Bussy & Annalisa Tassi, 2025. "Cross-border value-added tax fraud in the European Union," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 161(1), pages 1-23, December.
    18. repec:fip:fedrwp:98029 is not listed on IDEAS
    19. Mark Kattenberg & Bas Scheer & Jurre Thiel, 2023. "Causal forests with fixed effects for treatment effect heterogeneity in difference-in-differences," CPB Discussion Paper 452, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Deng, Liuchun & Müller, Steffen & Plümpe, Verena & Stegmaier, Jens, 2024. "Robots, occupations, and worker age: A production-unit analysis of employment," European Economic Review, Elsevier, vol. 170(C).
    21. Masahiro Tanaka, 2025. "Quasi-Bayesian Local Projections: Simultaneous Inference and Extension to the Instrumental Variable Method," Papers 2503.20249, arXiv.org, revised May 2026.
    22. Christoph Boehm & Changseok Ma, 2026. "How Responsive are Durables Expenditures to Transitory Income Shocks?," NBER Working Papers 35026, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_12976. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.