Behavioral Biases and the Spread of COVID - 19

The global outbreak of COVID-19 (coronavirus) has had a crippling effect on the global economy and healthcare system. While steps are being taken to produce a vaccine for this specific virus, additional steps have been introduced to limit the amount of social interaction to minimize the human-to-human spread of the virus (social distancing). While the initial results of social distancing appear to be working in some countries, there is growing concern that the efforts of social distancing will not ultimately stop the spread of the virus in a pre-vaccine world. It is speculated that the root cause of failure of containment is due to behavioral biases in the general population. Specifically, cognitive dissonance, confirmation bias, anchoring, and recency bias all contributing to a herd mentality that will hinder containment efforts. This essay will discuss how the various behavioral biases may stymie virus containment efforts set forth through social distancing.

Containment Progress Through Social Distancing

We are measuring containment policies by country. Governments in many cases have instituted mandatory social distancing policies. The two countries that appear to be having initial success is China and South Korea. We measure containment success by using 5-day slope of new cases per million people (population) per country. In these two countries we are seeing the rate of new cases leveling off.

Graphic 1: Containment Statistics – China and South Korea

We are watching for progress in the US and Italy. As seen from the figure below, Italy has been hit especially hard.

Graphic 2: Containment Statistics – US and Italy

The information from China and South Korea shows containment and social distancing are producing positive results approximately 60 days from the start of the outbreak. The containment results have yet to be confirmed through aggressive containment efforts in the US (in focused areas). Italy has had an aggressive outbreak compared to other countries.

Many medical professionals have referenced flattening the curve. This refers to the initial spread, containment and ultimate eradication of the virus through suppression efforts discussed.

The assumption by many is that the curve will look like a traditional bell-shaped curve. The object is to decrease the kutosis of the curve as shown in the figure below.

It took China and South Korea approximately 60 days to approach the peak of the curve. As of the time of this writing, neither country has seen an actual decline in total cases but the rate of deceleration appears to be forming a top.

Graphic 3: Containment Curve

Therefore, one can assume, under a normally distributed series of data points that the virus will be well on its way towards full containment within the next 60 to 70 days in China and South Korea.

Abnormalities in the Curve

There are many skeptics regarding the “flattening the curve” movement. Recent studies indicate the actual curve may be influenced by human behavior.

“The major challenge of suppression is that this type of intensive intervention package – or something equivalently effective at reducing transmission – will need to be maintained until a vaccine becomes available (potentially 18 months or more) – given that we predict that transmission will quickly rebound if interventions are relaxed. We show that intermittent social distancing – triggered by trends in disease surveillance – may allow interventions to be relaxed temporarily in relative short time windows, but measures will need to be reintroduced if or when case numbers rebound. (Impact of non-pharmaceutical interventions, 2020)”

A temporary reduction in social distancing may have a distorting effect on the containment curve. This author believes the curve may skew to the left with a fat tail on the right. This would signify a rapid spread of the virus with a prolonged path to containment.

Graphic 4: Normal and Skewed Distribution Curves

Others believe the shape of the containment cycle may move in waves as containment efforts thwart further spread, only to start again as people relax their social distancing.

Graphic 5: Recurring Containment Curves

Behavioral Biases Triggering Lapses in Social Distancing

As proof of containment is exhibited, it is possible that people will not adhere to social distancing as vigilantly as during peak infection periods. It is my belief that this phenomenon, a societal herd mentality of disregard can be induced by several behavioral biases. These distinct biases may account for the illogical and irresponsible course of action, of knowingly and willingly violating social distancing during a global pandemic. The biases that I have targeted for analysis include:

• Cognitive Dissonance • Confirmation Bias • Anchoring • Recency

Cognitive Dissonance

Cognitive Dissonance occurs when different situations require different actions and understandings beyond normal and familiar comprehension. This causes emotional discomfort in many. Pompian (2011) describes it as, “Cognitions, in psychology, represent attitudes, emotions, beliefs, or values; cognitive dissonance is a state of imbalance that occurs when contradictory cognitions intersect.

The term cognitive dissonance encompasses the response that arises as people struggle to harmonize cognitions and thereby relieve their mental discomfort.” The thought of succumbing to a global pandemic is highly stressful and the actions that are needed to stem the spread of the virus can be overwhelming. If conditions were to start to improve and evidence of containment were to appear, it would be easy to understand how people would prematurely assume their daily routines thereby abandoning the disruptive nature of the preventative process that conflicted with preexisting notions of normality.

Confirmation Bias

Confirmation bias occurs when individuals place a greater weighting on news and information that supports their existing beliefs. This could prove disadvantageous for most of us that want this event to pass. Our innate impulse will therefore be to overweight any good news regarding the containment process, however negligible it may be, and underweight negative developments.

Thus, initial successes in containment and a decreasing containment curve indicating a deceleration in the spread of the virus may be interpreted, incorrectly as a sign that the danger has passed. This too may induce an individual to knowingly and willingly violate social distancing prematurely.

Anchoring

In New York, there is a growing campaign for social distancing and self-containment. As part of the campaign, there are slogans designed to inform and remind the public of the need for containment. These campaigns have largely relied on the containment curve, specifically calling for the general public to “flatten the curve”. Along the highways there are amber signs flashing, “do your part…#flattenthecurve”. While the messaging is of best intentions it can play a detrimental role in the spread of the virus.

By anchoring to the notion that the bell-curve for the path of the virus is equally distributed, the general public may perceive a flattening and declining curve as a mission accomplished. Without regard for kurtosis, skewness or sine wave, the general public may anchor to the notion that the path to a healthy containment lies directly on the equally distributed bell-curve. Signs of progress and a slowdown of the spread with the pandemic residing on the right side of the curve may alter one’s behavior in a way that induces premature violations of the social distancing and self-containment efforts.

Recency Bias

Recency bias occurs when an individual places greater weight on the most recent trends and information in place of older trends and information. The media has played a big part of informing us of the many dangers, new cases and deaths related to the coronavirus.

This information is front and center in the minds of many in our communities. Should there be progress made on containment and the rate of new cases and deaths start to decline, the media will also report these events with great fanfare. This new data may influence an individual’s decision-making regarding containment. Pompian (2011) states, “The technical description of recency bias refers to the errors people make when the recency effect prejudices their recollections. Recency bias privileges information recently retained and neglects events and observations not as fresh in the mind.”

Conclusion

The spread of COVID-19 has shaken our global community. There are aggressive efforts currently being implemented to contain the spread of the virus. While the efforts may have initial success there is a risk of the pandemic resurging in the future largely due to a relaxing of the containment efforts. The relaxing of these efforts can be explained by various behavioral biases, in my opinion. Only by overcoming these emotional and cognitive biases will the containment have a lasting effect.

Joseph S. Kalinowski, CFA

Impact of non-pharmaceutical interventions (NPIs) to ... (n.d.). Retrieved from https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf

Kahneman, D. (2003). A perspective on judgment and choice: Mapping bounded rationality. American Psychologist 58(9), 697-720.

Pompian, M. M. (2011). Behavioral finance and wealth management: how to build optimal portfolios that account for investor biases. Hoboken, NJ: Wiley.

Roberts, S. (2020, March 11). Flattening the Coronavirus Curve. Retrieved from https://www.nytimes.com/2020/03/11/science/coronavirus-curve-mitigation-infection.html

Thaler, R., & Sunstein, C. (2009). Nudge: Improving Decisions about Health, Wealth, and Happiness. New York NY: Penguin Group USA