Containing the Virus or Reviving the Economy? Evidence from Individual Expectations during the COVID-19 Epidemic

103 Pages Posted: 31 Mar 2020 Last revised: 3 Apr 2020

See all articles by Keyang Li

Keyang Li

Tsinghua University - Hang Lung Center for Real Estate; Tsinghua University - Department of Construction Management

Yu Qin

National University of Singapore (NUS) - Department of Real Estate

Jing Wu

Tsinghua University - Hang Lung Center for Real Estate; Tsinghua University - Department of Construction Management

Jubo Yan

Nanyang Technological University - School of Social Sciences

Date Written: March 29, 2020

Abstract

How does an epidemic affect individuals’ expectations on economic prospects? Do people care more about containing the disease or sustaining normal economic activities during the epidemic? We implement an incentivized longitudinal online survey on economic expectations with randomized controlled trials during the COVID-19 epidemic in China to answer these questions. Conditioning on individual fixed effects, we find that lower number of confirmed COVID-19 cases in a city significantly increases individual’s expectation on GDP growth rate. However, individuals’ perception on the level of economic recovery is not correlated with their expectations on GDP growth. Moreover, individuals do not update their expectations when information on work resumption rate is provided in a randomized controlled trial. Our finding conveys the message to policy makers that, during an epidemic, containing the spread of the disease should be prioritized than resuming economic activities, at least from the perspective of maintaining positive economic expectations among individuals.

Keywords: COVID-19, Expectation, Longitudinal Survey, RCT

JEL Classification: I18, I15, D84, C81, C93

Suggested Citation

Li, Keyang and Qin, Yu and Wu, Jing and Yan, Jubo, Containing the Virus or Reviving the Economy? Evidence from Individual Expectations during the COVID-19 Epidemic (March 29, 2020). Available at SSRN: https://ssrn.com/abstract=3563597 or http://dx.doi.org/10.2139/ssrn.3563597

Keyang Li (Contact Author)

Tsinghua University - Hang Lung Center for Real Estate ( email )

HeShanHeng Building
Beijing, 100084
China

Tsinghua University - Department of Construction Management ( email )

Heshanheng Building
Tsinghua University
Beijing, 100084
China

Yu Qin

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Jing Wu

Tsinghua University - Hang Lung Center for Real Estate ( email )

HeShanHeng Building
Beijing, 100084
China

HOME PAGE: http://thuwujing.net

Tsinghua University - Department of Construction Management ( email )

Heshanheng Building
Tsinghua University
Beijing, 100084
China

HOME PAGE: http://thuwujing.net

Jubo Yan

Nanyang Technological University - School of Social Sciences ( email )

HSS 04-68, 14 Nanyang Drive
Singapore, 639798
Singapore

HOME PAGE: http://juboyan.weebly.com

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