Business

Behavioral economist Loewenstein: the epidemic has changed the way people spend

In the US, a behavioral economist studied the impact of the Covid-19 outbreak on people’s spending. Teacher. Loewenstein said the savings rate increased with the corona virus. Loewenstein also claimed that offering people money to get vaccinated would be negatively perceived.

Related Articles

George Loewenstein, Professor of Economics and Psychology at Carnegie Mellon University, stated that the new type of coronavirus epidemic (Covid-19) had an impact on the behavior of people and companies, and that savings increased during the epidemic period and caused a change in the distribution of household expenditures by sector.

Loewenstein, who is also co-director of the Behavioral Decision Research Center, conducted assessments on the impact of the epidemic process and the level of anxiety on socioeconomic decision-making behavior in behavioral economics.

Loewenstein noted that human behavior plays an important role in the course of the epidemic and behavioral economics; He stressed that it focuses on human behavior and has a much more realistic understanding of what drives people or how they perceive risks than traditional economics.

“Behavioral economics can be associated with any dimension of a potential epidemic related to human behavior,” Loewenstein said. saying.

Emphasizing that the idea that people are “narrow-minded” is one of the themes of behavioral economics, Loewenstein gave the example that “people often fight fires but are not good at preventing them.”

“Behavioral economics can be used to make governments anticipate an epidemic and take action to prevent future outbreaks. Even if an outbreak occurs, we will be better prepared,” Loewenstein said. saying.

“SAVINGS INCREASED IN THE OUTBREAK”

Stating that behavioral economics can be used on issues such as wearing masks, overcoming reluctance to vaccinate, and promoting vaccination, Loewenstein said paying people who are against vaccination to be Getting vaccinated will not be perceived as a good thing, and that the money given to do something will make people think that it will not be in their own interests.

Instead, implicit incentives like ‘If you get vaccinated, you can go to the theater or go to work’ make more sense. This is a logical intervention because people put themselves and other people at risk if they don’t get vaccinated. So it also creates incentives to get vaccinated, get vaccinated. Because if you are not vaccinated, you cannot go to work or participate in activities that you enjoy. ”

Referring to the effect of the epidemic on human behavior and choices, Loewenstein continued as follows:

“The biggest surprise in the US has been the increase in the savings rate. I don’t think any economist would have guessed that. Many expensive leisure activities, such as traveling or dining at restaurants, have become unavailable. People you spend, but not enough to make up for the reduction in travel and restaurant spending. So the rate of savings has risen dramatically, in the US at least, though it is mostly done by wealthy spenders. a lot of money on things like travel. People spend more on consumer goods. Outside the home, entertainment such as concerts, theaters, travel, and restaurants has decreased. The pandemic is redistributing spending across different sectors. It has created a tremendous shift across industries. It is difficult for any economy to adapt suddenly. People don’t spend money in some big categories, they spend a little more in other categories. So economies need time to get used to these things. as “.

Loewenstein said some restaurants will close when the epidemic is over and airlines cut travel services. This will bring other “painful” regulations.

“THERE WILL BE A LOT OF FEAR”

George Loewenstein stated that many politicians are reluctant to implement actions such as quickly stopping economic activity to overcome the epidemic, “I think people can adapt well to the new conditions. People could cope with a 2-month shutdown. I think the politicians were very cautious, how adaptable people can be. They take it lightly. ” saying.

Loewenstein said that due to swift and radical measures taken by the government in China, where the virus appeared, the country supplies goods to economies that are currently experiencing disruption.

Loewenstein said he hopes governments will learn from this: “Perhaps in the next epidemic, politicians will take into account people’s ability to adapt. They will be ready to take faster and more decisive action instead of halting life in half. and taking lax measures that are not effective in combating the epidemic. ” saying.

Stating that the risk will decrease with everyone’s vaccination, Loewenstein said:

“People should change their behavior, but there will probably be a lot of fear residues. People who are vaccinated behave in the same way as before they were vaccinated. It makes sense to change their behavior after vaccination, your risks are significantly reduced. You He should be more willing to meet friends or visit his family. I think the thing is that it will take some time for the situation to return to its original state. “

“WE WILL RETURN TO A LIFE THAT WAS NO DIFFERENT FROM THE PREVIOUS”

Loewenstein, a professor of economics and psychology at Carnegie Mellon University, assesses what the new normal will look like: “If vaccine-resistant mutations don’t emerge, I think we will eventually return to a life that is not so different from before.” used the expression.

Loewenstein stated that he saw that working remotely would increase and that the employees of many companies in the epidemic could also be quite efficient working remotely, “I’m sure what happened during the epidemic forced companies and people to act. in new ways and to learn in these new ways. ” saying.

Calling attention to the rise in unemployment during the epidemic period, Loewenstein noted that research shows that being unemployed for a period of time, even if caused by an economic downturn or epidemic disease, is not good for people’s expectations. people throughout life.

Loewenstein said the gap between rich and poor is already unbearable and that this has worsened during the epidemic. Stating that high-level professions are more convenient for working remotely, Loewenstein claimed that wealthy people increased their savings in the epidemic, while low-income people experienced losses in the epidemic that could cause long-term damage.

“THE BEHAVIORAL ECONOMY WILL BEGIN TO PARTICIPATE IN THE HIGHER LEVEL POLICY PROCESS”

As George Loewenstein comments on the future of behavioral economics, “I think behavioral economics will begin to be involved in high-level policy processes and move beyond push. When people think about behavioral economics and politics The economy can contribute to a much higher level. ” He spoke in the form.

Loewenstein noted that another important issue in behavioral economics is the limitation of human attention: “We generally think of time and money as the greatest constraint we face. But I think behavioral economics will introduce the idea that there is a third important restriction for people. thinking and behavior, and that’s attention. This is very important in the Internet age. ” saying.

Leave a Reply

Your email address will not be published. Required fields are marked *