Liberty Street Economics, Federal Reserve Bank of New York
Are People Overconfident about Avoiding COVID-19?
Abstract. Using the Federal Reserve Bank of New York’s Survey of Consumer Expectations, we document that people expect significantly lower personal exposure to COVID-19 than they attribute to the general public — a gap of 17.5 percentage points at the three-month horizon. This overconfidence is stronger among higher-income and younger households and fades over longer horizons. Overconfidence is distinct from absolute confidence: high-income respondents still perceive greater personal risk than low-income respondents, even while perceiving themselves as less exposed than the public. These behavioral biases may have contributed to the difficulty of containing the virus.
Keywords: overconfidence, COVID-19, risk perception, Survey of Consumer Expectations, subjective beliefs.
In brief
People expect their own exposure to COVID-19 to be much lower than the exposure they attribute to the general public.
Using the New York Fed’s Survey of Consumer Expectations, the post documents a gap of 17.5 percentage points at a three-month horizon. The overconfidence is stronger among higher-income and younger households and fades over longer horizons.
Read and cite
- Read the post, Liberty Street Economics
Heimer, Rawley Z., Haoyang Liu, and Xiaohan Zhang. 2020. “Are People Overconfident about Avoiding COVID-19?” Liberty Street Economics, Federal Reserve Bank of New York.
@misc{heimer2020covid,
author = {Heimer, Rawley Z. and Liu, Haoyang and Zhang, Xiaohan},
title = {Are People Overconfident about Avoiding {COVID-19}?},
howpublished = {Liberty Street Economics, Federal Reserve Bank of New York},
year = {2020},
month = oct,
url = {https://libertystreeteconomics.newyorkfed.org/2020/10/are-people-overconfident-about-avoiding-covid-19/}
}
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