Are Attitudes to Financial Risk Reflected in Precautional Measures During the COVID-19 Pandemic? A European Study of Individuals Aged 50+

The COVID-19 pandemic led governments to take action to ensure public health by introducing emergency Non-Pharmaceutical Interventions (NPIs), such as social distancing, movement restrictions, and lock downs. People were encouraged to adopt preventive behaviors (wear face mask, keep social distance) as steps to minimize personal risk but also to limit the spread of the virus. In this study, we investigate the relationship between individuals’ propensity to take precautional measures against COVID-19 pandemic and their risk attitude profile toward financial risk as ascertained by pre-pandemic survey information. We use cross-sectional data from the 8th wave of the Survey of Health, Ageing and Retirement in Europe (SHARE) to derive a measure for financial risk preference. The panel nature of the SHARE COVID-19 dataset allows us to relate these findings to precautionary behaviors against the pandemic, drawn from a telephone survey on the SHARE panel in July 2020. These include wearing a mask, limiting in-person contacts, keeping distance to others, washing hands, and using disinfectant. Risk attitude profiles were associated with precautionary behavior, with higher effect recorded in keeping social distance and wearing face mask. The study also probes the influence of important cofactors such as gender, age, and cognitive ability.