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Changes in Time Preference Caused by the COVID-19 Pandemic

Author

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  • Shin, Inyong

    (Asia University)

Abstract

This paper investigates the relationship between the spread of COVID-19 and time preference. In contrast to previous studies that compared time preferences before and during the pandemic, this study estimates time preferences during the COVID-19 period using eight surveys conducted over two years. Additionally, a regression analysis was conducted on the number of new COVID-19 cases and the time elapsed since the outbreak, with estimated time preference as the dependent variable. Despite a small sample size, statistically significant results were obtained, showing that as the number of new cases increased, time preference also increased. However, this effect diminished over time and disappeared by the end of 2021 in Japan. This may be due to the public’s growing familiarity with the risks of COVID-19 and the availability of vaccines and treatments. Despite a significant increase in new cases in 2022, time preference was lower than immediately after the outbreak, and this was reflected in private investments. Immediately after the outbreak of COVID-19, private investments decreased by 12% compared to the previous year, but the investments are returning in 2022 despite the surge in the number of cases. The trend of time preference explains the trend of Japanese private investments very well.

Suggested Citation

  • Shin, Inyong, 2023. "Changes in Time Preference Caused by the COVID-19 Pandemic," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 27(3), pages 179-211, September.
    • Handle: RePEc:ris:eaerev:0422
    DOI: 10.11644/KIEP.EAER.2023.27.3.422
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    More about this item

    Keywords

    COVID-19 Pandemic; Time Preference; Time Discounting Factor; Marginal Effect; Bayesian Hierarchical Model;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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