How Covid-19 affected risk taking

Higher degree of risk-taking in the severely-affected-by-COVID group than in the less severely affected group was seen. And both groups exhibited higher risk taking propensity than the pre-pandemic group. Image: Shutterstock

Between March 2020 and December 2021, the media reported a wide variety of perplexing behaviours. Day after day there was footage of people attending large indoor activities or going for dangerous high-speed joyrides on highways. Why, in the midst of a global emergency, would this happen?

Despite extensive research on decision-making under risk, we know very little about how an extreme shock such as COVID-19 might influence people’s attitude toward risk in their daily lives. In a recent paper with Rotman PhD candidate Ying Zeng, we examined how the pandemic impacted people’s risk tolerance.

We wondered: How might the general risk attitude differ between people who were severely impacted by the pandemic versus those less severely impacted? This topic is particularly relevant because looking ahead, misunderstanding or neglecting changes in public risk-taking could lead to ineffective or even counterproductive policies and communications.

Risky choices: A backgrounder

Traditional risk-return decision-making models treat ‘perceived riskiness’ as a variable that differs between individuals and as a function of the context. Put simply, these models describe risk-taking as involving a trade-off between perceived benefits and perceived risks, where the most desirable combination is ‘low perceived risk and high perceived benefits.’ Within this mindset, risk perception should decrease risk-taking and would be influenced by factors including the individual’s emotional state, their framing of the decision and individual differences, including cultural background, gender and age.

One prominent effect of COVID-19 on daily life was behavioural restrictions. Lockdowns affected everything from family reunions and weddings to concerts and travel. Restrictions also caused individuals to be less likely to engage in common low-risk activities such as dining out at a restaurant, not to mention high-risk activities like skydiving. We felt that these heightened restrictions might have altered people’s affective (i.e., emotional) state and their attitude toward risky behaviour due to a pervasive pandemic emotion: boredom.

Boredom can be defined as "the aversive experience of wanting, but being unable, to engage in satisfying activity." Recent research has demonstrated that a state of boredom increases risk-taking across domains. In one study, participants who felt more bored were more likely to choose a risky gamble. And other studies imply that taking risks is one strategy that people use to regulate boredom. We hypothesized that the effect of pandemic-related restrictions on boredom would have been particularly pronounced among those who were severely affected by the pandemic, because they faced even stricter restrictions than the general population.

Prior research shows that when feeling bored, people are drawn to and seek out stimulating activities — in one study, even painful ones, like a mild electric shock. It also indicates that boredom increases people’s sensitivity toward rewards and therefore makes risky activities more tempting, such as drinking alcohol and smoking marijuana. In short, when feeling extremely bored by the monotony of daily life during the pandemic, people might have sought out risky behaviour simply to deliver them from their repetitive daily routines.

In addition, prior research on "perceived scarcity" shows that the unavailability of an object or experience leads to higher valuation and desire for that object. For example, one study found that university students craved home-cooked meals even more when they were away at school than when they were at home. This increased preference can have a spillover effect on items, concepts or events similar to or associated with the unavailable target. Therefore, it was conceivable that the perceived benefits of engaging in a risky activity would loom larger in a highly restrictive environment and lead to greater risk-taking.

During the pandemic, restricting social gatherings might have inadvertently increased the allure of those gatherings as well as associated activities such as heavy drinking. Likewise, shutting down entertainment venues like casinos might have had a spillover effect that rendered other forms of financial risks attractive, such as betting a day’s income on a high-stakes poker game.

Taken together, we expected risk-taking to increase among individuals who were severely affected by the pandemic and thereby saw greater possible benefits from engaging in risky activity, compared with people who were less severely affected by COVID-19. We also posited that greater risk-taking among those severely affected by the pandemic was linked with higher levels of boredom and hence, greater perceived benefits from engaging in a risky activity.

Also listen: Why are India's earning women so risk averse?

Our Research

We defined the degree of pandemic influence via self-reported answers. An individual was categorized as ‘severely affected’ if they or any member of their household encountered at least one of the following: substantially reduced income due to unemployment or substantially reduced work hours; having been infected or hospitalized due to the virus; experiencing a mandatory quarantine due to travelling or close contact with confirmed cases; and other similar situations.

Across all four of our studies, 46.8 per cent of participants reported being severely affected. Among these people, 63.7 per cent experienced substantially reduced income; 51.1 per cent were affected by health-related factors; and 4.5 per cent chose other applicable situations, including the passing of a close friend or relative due to COVID-19, inability to find rental accommodation, etc. While the reasons for being classified in the "severe" category varied, they all led to heightened restrictions, which would have increased boredom levels and the perceived benefits of risky activities.

For this project we referred to participants’ self-reported likelihood of engaging in risky behaviours as "risk-taking propensity." We chose two ways to measure risk taking. First, we used the Domain-Specific Risk-Taking Scale (DOSPERT), a widely used instrument that measures risk-taking, risk perception and perceived benefits by asking participants to indicate their attitudes toward everyday activities in social, financial, recreational, ethical and health/safety domains.

Our first study was conducted in July 2020 on Amazon Mechanical Turk (MTurk) at a time when the number of confirmed cases per million people in the U.S. was above 9,000. Each participant was asked to rate five risky activities, with one randomly selected from each of the five domains in the DOSPERT scale. Participants first read about a risky activity, then described two to three thoughts that came to mind when thinking about doing it. Lastly, they chose all the feelings they had experienced during the simulation. They repeated this process until they finished responding to all five risky activities.

This study provided initial evidence for the pandemic’s influence on risk: We found a higher degree of risk-taking in the severely-affected-by-COVID group than in the less severely affected group. And both groups exhibited higher risk taking propensity than the pre-pandemic group. Interestingly, the previous research showed risk-taking tends to decrease when risk perception increases; yet we did not observe this in the severely affected group.

Study two was conducted in a large public university in Ontario from the end of September to early October of 2020, when the number of confirmed cases per million people in the province was around 3,700. Compared to the group in study one (a sample of the working population in the U.S.), full-time college students were less likely to experience unemployment during the pandemic, and more likely to experience mandatory quarantines because many had to travel from their hometown to return to school. In addition, because the number of confirmed cases per million people was much lower in Canada than in the U.S., we also expected to have a smaller proportion of Canadian participants confirmed as having been infected by COVID or hospitalized due to it. These variations in the sources of pandemic influence enabled us to examine the robustness of the effects observed in study one.

Participants first indicated their likelihood to take the risk for each of the 30 activities on the DOSPERT scale. They then indicated their risk perception for these same activities. Next, we measured participants’ pandemic boredom levels using an adapted version of the Short Boredom Proneness Scale. The severely affected group reported that they experienced a higher level of boredom than the less severely affected group. Boredom level was also positively correlated with the risk-taking score, but not with risk-perception score.

Despite using a different demographic group with different compositions of pandemic influences, this study replicated Study one in that the severely-affected participants were more likely to engage in risky activities than the less severely affected. Meanwhile, risk perception did not vary by the degree of pandemic influence.

Study two also ruled out an explanation that the effect was merely driven by lower income levels and unemployment during the pandemic. According to Daniel Kahneman and Amos Tversky’s Prospect Theory, risk-taking tends to increase after decision-makers experience substantial financial losses. However, this alternative account cannot explain the increase in risk-taking among university students who did not have full-time jobs. Travel-related quarantine was the major source of pandemic influence for these university students. More important through measuring participants’ state boredom levels and their positive/negative affect (emotion), we obtained evidence that boredom may indeed be the factor connecting the pandemic influence with heightened risk-taking.

Study three was piloted on MTurk in September and completed in October 2020, when the average confirmed cases per million people in the U.S. was around 21,000. As in study two, participants indicated their risk taking propensity and perceived risk for each of the 30 items on the DOSPERT scale. Next, for each activity, they indicated the degree of benefits they expected to obtain from doing it, the severity of potential negative outcomes and the chance that a potential negative outcome would occur. Participants also answered the subjective pandemic influence item, “To what extent do you perceive that your life has been influenced by COVID-19?” and a series of demographic questions.

Once again, study three showed greater risk-taking under severe pandemic influence. The effect occurred across demographic groups and operated independently from people’s perception of outcome severity and the chance for negative outcomes to happen. This effect also operated above and beyond the subjective feeling of how much their lives had been impacted by the pandemic.

Study four was conducted at the end of October 2020 among a similar participant pool to study three, when the average confirmed cases per million people in the U.S. was around 25,000. Participants first reported their willingness to take risks in general. Then, as in study three, they indicated their risk-taking likelihood, risk perception and conception of perceived benefits using the DOSPERT scale.

Next, we measured participants’ boredom levels using the same scale from study two and administered the subjective pandemic influence and demographic questions from study three. Participants also reported all the safety actions they had been taking during the pandemic and indicated how careful they had been to avoid the risks of COVID-19. These items captured participants’ actual risk-management behaviours and their risk attitudes toward COVID-19. This study replicated the findings from the previous ones, showing greater risk-taking among people who were severely affected by the pandemic. It also provided additional evidence for the role of boredom and the perceived benefits of risk in explaining the effect of the pandemic’s influence on risk-taking.

Key Takeaways

Across four studies, we found that Americans and Canadians whose daily lives were severely affected by the pandemic were prone to greater risk-taking across a diverse set of activities than those who were less severely affected. We also found that this paradox could be explained by something everyone experienced during the pandemic: increased boredom, which corresponds with increased perceived benefits from taking risks.

Our findings have several implications for policymakers and leaders. First, people sometimes take risks even when they are well informed of the danger of doing so — and this can be because they are bored and are seeking stimulation. Thus, traditional wisdom on regulating risky behaviour by advertising its perils may be ineffective, especially in the highly restricted situations such as a global pandemic.

Instead, approaches that target boredom and the perceived benefits of risk-taking might be more effective. Examples of could include stimulating virtual entertainment and virtual community building. Finally, the relationship between having been negatively influenced by risks (e.g. severely affected by pandemic) and subsequent risk attitudes are nuanced. Policymakers may target the wrong segment if they assume that the less severely affected are more likely to take risks. In fact, the severely affected may well be more prone to risky behaviour, and thus they should receive more resources and psychological aids to reduce risky activity.

Claire Tsai is a Professor of Marketing and Director of Faculty Recruiting at the Rotman School of Management. She is also the Chief Behavioral Scientist at Tevah Advisory LTD. Ying Zeng is a PhD Candidate in Behavioural Marketing at the Rotman School. Their equally contributed paper, “Risky But Alluring: Severe COVID-19 Pandemic Influence Increases Risk Taking”, was published in the Journal of Experimental Psychology: Applied.

[This article has been reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management]