Behavioral Finance

Social Science and the Coronavirus

How research can inform public and policy makers during the pandemic

Since early 2020, we have been facing a prolonged and substantial global health crisis due to COVID-19. On the positive side, we have also witnessed unprecedented international collaborations and coordinations among individuals, communities, and governments. The scientific community is a notable example – scientists in many disciplines have been working together and made tremendous progress in various areas.

It is obvious how natural sciences, especially epidemiology and immunology, can help us to deal with the pandemic. It may not be as immediately clear as to how socialsciences can contribute to our knowledge of the pandemic. To illustrate how social science research can inform the general public and policy makers during COVID-19, this article summarizes three studies.

Before describing these studies, we would like to mention that there now exist many excellent databases on COVID-19, collected by scientists and corporations, many of which are freely available. The studies summarized in this article have integrated several such data sources, including mobilitydata from Apple and Google Maps respectively, as well as large-scale worldwide online survey data, and self-selected survey data from Germany and China.

1. Simple but relevant: to what extent do people comply to regulations that are intended to contain the disease? 

This study by Wang and Rieger focused on four countries – France, Germany, the UK, and the US – during the months of March and April 2020 when the governments in these countries implemented various social distancing and lockdown measures to reduce the further spread of the pandemic.

The key observation is that after an initial sharp decrease of activity due to lockdown policies, people began to be moreactive again, even though the regulations had not been relaxed. In other words, there was a kind of “secret erosion” of the lockdown. This suggests: if we hope to improve forecasts of the pandemic, it is vital to keep track of actual activities, and not to assume that behavior will be constant over time.

2. How proactive and stringent were governments in their reactions to the pandemic?

Large variations exist around the world, with countries transitioning from complete reluctance to compulsory lockdowns (Sweden), or resorting to extended draconian measures (China). Wang and her coauthors investigated the predictors of government proactivity and stringency. Both culture and institutions appear to play a role in how governments react. In countries with a more “collectivistic” culture, governments tend to be more proactive and react faster, whereas in more “individualistic” cultures, governments are slower in their responses, often basing them on public opinion.

The cultural differences are, however, less visible in countries with a higher level of trust in their government. In other words, if the residents of any given country have higher levels of trust in their government, said government tends to be more decisive and react quicker in coping with the pandemic.

3. How satisfied was the public with their government’s response to the pandemic?

As one might expect, people’s opinion of their respective governments run the veritable gambit, even when facing the same regulation in the same country, and there exist  significant variations from country to country. What makes people think positively or negatively about their government’s regulations? And when do they consider them to be too strict or too lax? Wang and Rieger find higher numbers of COVID-19 deaths as a main predictor of the perception that the government did “too little”, whereas people who are more susceptible to various conspiracy theories are more inclined to think the regulations are “too strict”. In other words: the former judgment tends to be more fact-driven, and the latter more driven by beliefs or ideologies.

What is somehow worrisome is that at the country level, press freedom reduces the public’s trust in the ability of the government. Together with the results regarding conspiracy theories, it is a challenging task to improve the quality of press and social media and cultivate critical thinking while maintaining a free media environment.

Tips for practitioners

  • Mobility and survey data are valuable in predicting the trend of a pandemic because people may react flexibly to social distancing regulation, and these reactions might change over time.
  • Political trust allows the government to take faster reactions to prevent the further spread of diseases. Lack of trust is costly to a society, particularly in crisis situations.
  • Conspiracy theories induce opposition to regulations. It is crucial to have effective scientific communication through credible sources with the public.
Literature references and methodolgy

The three studies that are presented here in summary were conducted by Professor Mei Wang, holder of the chair of behavioral finance at WHU – Otto Beisheim School of Management, and her coauthors Professor Marc Oliver Rieger from the University of Trier, Diqiang Chen and Prof. Diefeng Peng from Central South University in Changsha, China.

Rieger, M./Wang, M. (2020): Secret erosion of the “lockdown”? Patterns in daily activities during the SARS-Cov2 pandemics around the world, in: Review of Behavioral Economics, Vol. 7, pp. 223–235.

Chen, D./ Rieger, M./Peng, D./Wang, M. (2020): Institutional and cultural determinants of proactivity and speed of government responses during the COVID-19 pandemic, Working paper.

Rieger, M./Wang, M. (2020): Trust in government actions during the COVID-19 crisis, working paper.




Professor Dr. Mei Wang

Professor Mei Wang is an expert on behavioral and cultural finance at WHU – Otto Beisheim School of Management. Her studies focus on the impacts of culture on individual preferences, decisions, and markets.

Learn more

Professor Dr. Marc Oliver Rieger

Professor Marc Oliver Rieger is an expert on banking and finance at the University of Trier. His main research fields cover decision theories, financial derivatives, behavioral and cultural finance.

Learn more

Professor Dr. Diefeng Peng

Professor Diefeng Peng is an expert on financial markets from the Business School of Central South University, Changsha, China. His research focuses on behavioral corporate finance, media attention, and market anomalies, especial Chinese capital markets.


Dieqiang Chen

Mr. Dieqiang Chen is a doctoral candidate from Business School of Central South University, Changsha, China. His research interests focus on culture, institutions, and financial market.