Never Waste a 'Good' Crisis! Priming the Economic Aspect of Crises Fosters Social Capital Build-Up and Prosociality

Abstract

Do crises make people more prosocial? And what role does communication play in promoting such attitudes and behavior? These answers matter for post-crisis economic recovery as social capital has been linked to growth. We leverage the incidence of COVID-19 --a multifaceted global crisis-- and using a representative panel of US residents, surveyed in April and October 2020, we explore how a) pandemic-induced economic and health anxiety map to prosocial inclinations and behavior, and b) whether communication (and what types) can foster social capital formation. We find that individual exposure to the economic and health consequences of the pandemic had no effect on prosocial inclinations and social capital; but perceived economic vulnerability reduced trust in government and respect for authority and increased preferences for redistribution. Yet information about the aggregate economic consequences of Covid-19 fosters social capital build-up (e.g., altruism, giving, patience) and prosocial preferences. In contrast, information about the health costs of the pandemic has the opposite effect; it greatly reduces interpersonal trust. These information effects also map into policy preferences beyond the COVID-19 crisis. Our findings are consistent with cultural accounts on the determinants of Americans' prosocial inclinations and preferences.

Keywords: crisis, information, altruism, trust, prosociality, social capital, economic vulnerability, risk preferences, patience, pandemic

JEL Classification: C90, D64, D83, D84, D91, P16, Z13