Working Paper: CEPR ID: DP18120
Authors: Rüdiger Bachmann; Christian Bayer; Martin Kornejew
Abstract: This paper examines how households adjusted their consumption behavior in response to the COVID-19 infection risk during the early phase of the pandemic and without consumption lockdowns. We use a monthly consumption survey specifically designed by the German Statistical Office, covering the second wave of COVID-19 infections from September to November 2020. Households reduced their consumption expenditures on durable goods and social activities by 24 percent and 36 percent, respectively, in response to one hundred additional infections per one hundred thousand inhabitants per week. The effect was concentrated among the elderly, whose mortality risk from COVID-19 infection was arguably the highest.
Keywords: COVID-19; consumption; health risk; pandemic; survey data
JEL Codes: D12; E21; E32; I12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased local infection risk (F65) | Decreased household spending on social and durable consumption (D12) |
| Increased local infection risk (F65) | Decreased likelihood of large purchases relative to income (D12) |
| Lockdown measures (F38) | Predicted decrease in leisure consumption (D12) |
| Increased local infection risk (F65) | Overall decline in consumption (D12) |