q-fin updates on arXiv.org
Tue, 10 Mar 2020 06:01:49 GMT language
We provide the first analysis on how fear of the novel coronavirus affects
current economic sentiment. First, we collect a global dataset on internet
searches indicative of economic anxieties, which serve as a leading indicator
of subsequent aggregate demand contractions. We find that the arrival of
coronavirus in a country leads to a substantial increase in such internet
searches of up to 58 percent. Second, to understand how information about the
coronavirus drives economic anxieties, we conduct a survey experiment in a
representative sample of the US population. We find that participants vastly
overestimate mortality from and contagiousness of the virus. Providing
participants with information regarding these statistics substantially lowers
participants' expectations about the severity of the crisis and participants'
worries regarding the aggregate economy and their personal economic situation.
These results suggest that factual public education about the virus will help
to contain spreading economic anxiety and improve economic sentiment.