Summary:
Epidemics pose important challenges to modern society, and can rapidly lead to information uncertainty and panic throughout the world. Economic and financial scholars mainly discuss the impacts of epidemics on macroeconomics, such as by conducting cost-benefit analyses of various management measures taken during epidemics.Few studies, however, focus on the distinction between epidemics and other types of rare disasters,or investigate the effects on individual behavior and indirect losses. Thus, after examining the research into rare disasters and the characteristics of epidemics, we attempt to assess the impact of epidemics on individuals from the perspective of behavioral finance. The paper is organized as follows. First, we review the literature on rare disasters and identify how epidemics are distinct, and then investigate the development of the epidemic using a medical infectious disease model. We then use the Bayesian model of incomplete information to analyze the errors in the human cognitive mechanism that occurred during previous epidemics. We apply saliency theory in our analysis of the main emotional errors during previous epidemics and discuss the impact of regional culture on the epidemic. We also distinguish the direct impact of the epidemic on economic and financial activities from the indirect effects through channels such as panic, social trust, risk attitude, and individual beliefs. We then make suggestions for future academic research and policy management, based on the understanding of epidemic infectious diseases and their impacts on the literature. We suggest that future academic research addresses the following issues. Big data and other emerging technologies provide opportunities for in-depth research on the macro and micro phenomena caused by the epidemic, and using medical-specific models in epidemic-related research can improve reliability. By focusing on social welfare, comprehensively assessing the direct and indirect results of control measures, discussing the effects of geographical characteristics on the epidemic process, and exploring the effects of individualism, family relations, religious beliefs, and other factors, future studies could provide important insights. Based on the literature, our policy recommendations are as follows. First, the government should consider the accuracy of early conclusions, be aware of the impact of behavioral errors on early judgment, promptly and accurately publish disaster information, and guide individuals to form correct beliefs. Second, in terms of intentional behaviors triggered by information processing, the effects of cognitive errors on individual beliefs and decision-making could be reduced by enhancing information transparency and early information accuracy. Third, in terms of unintentional behaviors caused by emotional factors, reviewing the historical epidemic processes and publicizing the progress of various countries in terms of prevention and control would help people adjust their reference points and distract attention, thereby reducing the impact of emotional bias. Fourth, the government could further consider the impact of emotions or emotional experiences on risk appetite, and thus prevent unreasonable changes in corporate cash flow and residents' financial market participation. Our study makes three main contributions to the literature. First, we review in detail the irrational factors that characterize an epidemic situation and individuals' behavior mechanisms, and further discuss the indirect economic and financial impacts of the situation in terms of individual rational and irrational reactions. Second, by drawing on the research methods of narrative economics, we build a basic framework for analyzing panic emotions using the SEIR model based on the characteristics of rumors. Third, we analyze the assumption that individual behavior in an epidemic can have a systematic impact on the market.
刘玉珍, 王陈豪. 行为视角下的疫情分析:成因、影响与对策综述[J]. 金融研究, 2020, 480(6): 1-19.
LIU Yu-Jane, WANG Chenhao. Analysis of Epidemics from the Behavioral Perspective:A Review of Causes, Effects, and Countermeasures. Journal of Financial Research, 2020, 480(6): 1-19.
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