Does the COVID-19 pandemic lockdown affect risk attitudes?—Evidence from rural Thailand

Abstract

Empirical research provides evidence on changes in individuals’ risk attitudes after experiencing exogenous shocks. The global outbreak of the COVID-19 pandemic has had various adverse impacts on economies and households. This study utilizes the COVID-19 pandemic and the accompanying lockdown to explore its impact on risk attitudes in rural Thailand using a difference-in-difference (DiD) approach. Overall, we do not find evidence on considerable changes in the willingness to take risks of rural household members after experiencing a lockdown during the pandemic. However, a significant heterogenous effect is found between individuals working inside and outside the agricultural sector. Individuals working outside the agricultural sector have a statistically significant reduction in their willingness to take risks after experiencing a lockdown. Our study provides additional empirical evidence to understand the impact of shocks on rural households’ risk attitudes. This sheds light on how policy designs can better help mitigate downward economic trends following exogenous shocks.