Thiemo Fetzer, Lukas Hensel, Johannes Hermle, Christopher Roth

Coronavirus Perceptions And Economic Anxiety

We provide the first analysis of how the global spread of the novel coronavirus affects contemporaneous economic sentiment. First, we collect a global dataset on internet searches indicative of economic anxieties. We find that the arrival of coronavirus in a country led to a substantial increase in such internet searches of up to 58 percent. Second, leveraging two US representative survey experiments conducted in early and mid-March 2020, we document a rapid surge in economic anxieties after the arrival of the coronavirus in the US. Third, to understand how information about the coronavirus affects these anxieties, we measure perceptions about the coronavirus. We find substantial heterogeneity in participants’ beliefs about the mortality from and contagiousness of the virus. Fourth, experimentally providing participants with information about mortality and contagiousness causally affects participants’ worries regarding the aggregate economy and their personal economic situation. Finally, we document that participants’ subjective mental models understate the non-linear nature of disease spread, and that these mental models shape the extent of economic worries. These results underscore the importance of public education about the virus for successful containment as well as the need for timely measures that decrease economic hardship and anxiety during a major global pandemic.

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The University of Chicago