How Financial News Affects Prosocial Behavior

Kang, Polly and Daniels, David and Schweitzer, Maurice E., How Financial News Affects Prosocial Behavior (April 22, 2020). SSRN: https://ssrn.com/abstract=3583884

Abstract: A fundamental puzzle in the social and natural sciences is why humans, in contrast to other animals, routinely help strangers at substantial personal cost. Scholars assert that humans’ hyper-prosociality can be explained by the “warm glow” prosocial actors derive from helping others, and predict that people with greater resources will help more. We challenge these assertions. Many prosocial behaviors involving feedback, like volunteering, are actually warm glow gambles: first, prosocial actors invest affective resources trying to help others; then, positive feedback (e.g., feedback suggesting “success”) boosts affective resources but negative feedback (e.g., feedback suggesting “failure”) diminishes affective resources. We theorize that either negative affect shocks (by depleting affective resources) or positive affect shocks (by triggering risk aversion) can decrease people’s likelihood of taking warm glow gambles. We test this by studying the influence of a complex human institution, the stock market, which broadcasts negative affect shocks when the market falls (suggesting bad financial news) and positive affect shocks when it rises (suggesting good financial news). Analyzing a unique, massive five-year dataset of nearly 3 million text messages sent by volunteer crisis counselors, we show that significantly fewer people volunteer when stock returns are either extremely negative or extremely positive; prosocial behavior peaks on “normal” days when returns approach zero. Further supporting our theory, these effects are moderated by the level of positive affect in volunteers’ geographical areas. Our findings contradict existing theories and lay beliefs. Ironically, an institution designed for economic efficiency broadcasts signals that profoundly influence humans’ hyper-prosocial behavior.

Keywords: prosocial behavior; warm glow; prospect theory; financial markets

France: Ideological extremity is associated with a reduced adherence to public health recommendations; at the same time, compliance increases as one moves from Left to Right

Sociodemographic and Psychological Correlates of Compliance with the COVID-19 Public Health Measures in France. Sylvain Brouard, Pavlos Vasilopoulos & Michael Becher. Canadian Journal of Political Science, April 23 2020. : https://doi.org/10.1017/S0008423920000335

Extract: The COVID-19 disease was first identified in Wuhan, China, in December 2019, having since spread rapidly across the world. The infection and mortality rates of the disease have forced governments to implement a wave of public health measures. Depending on the context, these range from the implementation of simple hygienic rules to measures such as social distancing or lockdowns that cause major disruptions in citizens’ daily lives. The success of these crucial public health measures rests on the public's willingness to comply. However, individual differences in following the official public health recommendations for stopping the spread of COVID-19 have not yet to our knowledge been assessed. This study aims to fill this gap by assessing the sociodemographic and psychological correlates of implementing public health recommendations that aim to halt the COVID-19 pandemic. We investigate these associations in the context of France, one of the countries that has been most severely affected by the pandemic, and which ended up under a nationwide lockdown on March 17. In the next sections we describe our theoretical expectations over the associations between sociodemographics, personality, ideology, and emotions with abiding by the COVID-19 public health measures. We then test these hypotheses using data from the French Election Study.

COVID-19 paradoxical duality: there is a tendency to be optimistic about one’s own risk of infection (private optimism) & at the same time to be pessimistic about the risk to others (public pessimism)

Globig, Laura K., Bastien Blain, and Tali Sharot. 2020. “When Private Optimism Meets Public Despair: Dissociable Effects on Behavior and Well-being.” PsyArXiv. May 29. psyarxiv.com/gbdn8. Final version Perceptions of personal and public risk: Dissociable effects on behavior and well-being. Laura K. Globig, Bastien Blain & Tali Sharot. Journal of Risk and Uncertainty, Apr 2 2022. https://link.springer.com/article/10.1007/s11166-022-09373-0

Abstract: When faced with a threat, peoples’ estimate of risk guides their response. When danger is to the self as well as to others two estimates are generated: the risk to oneself and the risk to others. As these estimates likely differ, it is unclear how exactly they drive a response. To answer this question, we studied a large representative sample of Americans facing the COVID-19 pandemic at two time points (N1=1145, N2=683). We discover a paradoxical duality: a tendency to be optimistic about one’s own risk of infection (private optimism) while at the same time to be pessimistic about the risk to others (public pessimism). These two estimates were found to be differentially related to affect and choice. First, private optimism, but not public pessimism, was associated with people’s positive feelings. The association between private optimism and positive affect was mediated by people’s sense of agency over their future. However, negative affect was related to both private risk perception and public risk perception. Second, people predominantly engaged in protective behaviors based on their estimated risk to the population rather than to themselves. This suggests that people were predominantly engaging in protective behaviors for the benefit of others. The findings are important for understanding how people’s beliefs about their own future and that of others are related to protective behaviors and well-being.

Discussion

Surveying a representative sample of Americans over two time points during the pandemic of 2020 we found that many people believed COVID-19 posed a significant health danger to humans and perceived the risk of an average person to get COVID-19 as high. However, the majority did not consider their own risk to be high in absolute terms, nor higher relative to others their age and gender (see also Kuper-Smith et al., 2020; Wise et al., 2020). The question we posed was how these different perceptions of risk were related to psychological well-being and behavior. We found that individuals who believed they were less at risk of being infected by COVID-19 than others were happier. However, believing COVID-19 posed a great danger to humanity was unrelated to people’s happiness. This suggest that one’s perceived risk relative to others is especially important for people’s positive affect, while perceived risk to humanity is not. At the same time, both risk perceptions were related to anxiety. People who believed COVID-19 was a risk to themselves and/or to the human race tended to be more anxious. This suggests that while perceived relative personal risk relates to both positive and negative affect, perceived public risk relates only to negative affect.

Surprisingly, the likelihood that individuals complied with behavioral recommendations to mitigate the risk of COVID-19 was related to their views regarding the danger the virus poses to people in general, but not significantly related to whether they believed they themselves were at high risk. That is, people who believed the virus posed a great danger to humanity reported putting greater effort in social distancing, handwashing and avoiding touching their faces. Believing that the virus posed an especially high risk to the self was, however, unrelated to these behaviors. This effect remained even when accounting for anxiety and replicated across both time points. We thus speculate that the main motive for behavioral compliance was reducing the risk to the population as a whole, rather than the risk to the self. This in accordance with recent findings suggesting that public health messaging which focus on the concern for the greater good and responsibilities towards others may help induce behavioral compliance (Everett et al., 2020). Indeed, this may explain the success of the British Government’s message during the pandemic—"Stay Home. Protect the NHS. Save Lives” -which focused not on saving oneself but on saving “lives” and saving the national health service.

We tested the same subjects across two times—at the beginning of the crisis when states were moving into lockdown (time 1) and a month later when states were under lockdown (time 2). Interestingly, we observed a positive change in subjects’ well-being. A month into lockdown anxiety was lower than it was when states were just entering lockdown, happiness was greater and participants’ perception of the danger of COVID-19 to humanity was lower. These results align with past studies showing that humans adapt well to adversities and environmental change (Bonanno et al., 2002, 2004; Brickman et al., 1978; Dijkers, 1997; Frederick & Loewenstein, 1999).

In general people exhibited significant resilience during the pandmic with half of the population indicating they were as, or more happy as other times in their lives. The strongest predictor of happiness was a sense of control. Those who believed they had agency over their own life were happier, less anxious and perceived the danger COVID poses to themsleves and others as lower. In fact, the positive relationship between perceived personal risk and happiness was partially related to people’s sense of control. These results align with the suggestions that a sense of control is related to both optimism (Harris, 1996; Helweg-Larsen & Shepperd, 2001; Klein & Helweg-Larsen, 2002; Zakay, 1984) and overall well-being (Lachman & Weaver, 1998; Larson, 1989).

Here we examined people’s attitudes regarding a specific threat—COVID-19. There is some evidence, however, that the results generalize to other threats. For example, following the financial collapse of 2008 polls showed that people were pessimistic about the financial future of their country, less so about their own financial prospects (Ipsos MORI, 2008). Moreover, people perceive their fatality risk from natural disasters as below average (Viscusi & Zeckhauser, 2006), and with regards to climate change, people express little concern about the likely effects of climate change in their own region, but are more pessimistic with regards to the effects on their nation and the planet as a whole (Dunlap and Gallup, 1993). Such markedly different estimates of risk to oneself and others may arise because when estimating their own risk individuals assign more weight to their direct experience than to the experience of others (Viscusi & Zeckhauser, 2015). In other words, as most individuals were not infected by COVID themselves nor experienced a natural disaster, they estimate their own future risks in these domains as lower than the known risk in the population. Another factor contributing to this dissociation is people’s tendency to be overly optimistic about their own prospects relative to others (Sharot, 2011; Weinstein, 1980), which arises as people update their beliefs about their own vulnerability to a larger extent when receiving good news than when receiving bad news (Sharot et al., 2011). Moreover, past studies have shown that different moderators influence people’s perception of risk to oneself and to others, with factors associated with negative affect and sense of control primarily influencing personal risk estimates (for review see Helweg-Larsen & Shepperd, 2001).

Future studies are needed to examine whether the effects on well-being and behavior reported in this study generalize to other threats such as war, financial collapse and climate change. The results of such studies would be important for predicting the impact of such threats on people’s well-being and for understanding when and why people are likely to change their behavior to mitigate risk. For example, similar to the findings reported here, it is possible that the likelihood that people make “green choices” is related to their belief that climate change poses a threat to humanity, regardless of whether they believe it poses a perceived relative personal risk. Such knowledge can be useful for advocates and policy makers in framing information to nudge individuals to select actions that protect themselves and others from natural and man-made threats.