Understanding COVID-19 virus pandemic in terms of behavioral economics in terms of how people think and learn

Abstract

The COVID-19 pandemic is an active extreme acute respiratory virus syndrome (SARS‐CoV‐2). It has many effects on many areas ranging from education to culture to economics. However, it can be said that the most important effect is on economics. The outbreak has become the world economy's most destabilizing threat so far. For example, Tourism is among the worst affected industries impacted by travel restrictions, public area closures. Hundreds of millions of jobs could be lost globally. In this context, it is important to examine its economic effects in terms of different perspectives. One way of looking at COVID-19 pandemic can be based on behavioral economics. Although in traditional economics, while the individual is defined as being purely self-interested and at the same time callous, acting for maximum benefit, behavioral economics theory aims to highlight the human factors such as anxiety, fear, risk aversion, motivation, and happiness in the economic decisions. Rather than examining the COVID-19 pandemic based on purely monetary terms, it is important to investigate it in terms of psychological and economical effects to attain a more realistic picture. This study is of great significance for the literature since the application of behavioral economics principles to guiding human behavior is discussed. In this regard, the paper aims to examine the COVID-19 pandemic in the context of behavioral economics. The data analysis is based on a literature review. The sample of the study consists of documents containing the concepts of COVID-19 virus and "behavioral economics". To sum up, we have long known that the cause for change is learning. Hence, if we learn how learning occurs, we can propose some models to increase public awareness regarding the pandemic. In this respect, behavioral economics can give some insights into this issue. According to our results, nudging people towards positive health choices is a successful method of encouraging not only cost-efficient intervention but also healthier behavior. Additionally, biases such as status quo bias, optimism bias, loss aversion, affect heuristic, social contracts can be used to guide to enable people to take more preventive measures. Information is also an important factor for acknowledging the public sick leave is an important issue that will affect the current social contract.

Keywords

• COVID-19
• behavioural economics
• literature rewiev

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