For Better or Worse? Subjective Expectations and Cost-Benefit Trade-Offs in Health Behavior: An Application to...

We study the determinants of voluntary compliance in the early phase of the COVID-19 pandemic. Using rich data on subjective expectations we collected during the spring 2020 lockdown in the UK, we estimate a simple model of compliance choice with uncertain costs and benefits whose estimates quantify the utility trade-offs underlying compliance. Using these estimates, we decompose group differences in compliance into components due to preferences vis-à-vis expectations and compute the monetary compensation required for different groups to comply. We find citizens face intuitive trade-offs between costs and benefits of noncompliance, with the largest costs being the disutility of passing away from COVID-19 and the psychological cost of being caught transgressing, and the largest benefit being preserving own mental health. Significant heterogeneity exists across groups, with women's higher compliance being explained by gender differences in both preferences and expectations, while vulnerables' higher compliance being mainly driven by differences in preferences. The response of individual behavior to others' behavior, too, varies across personal characteristics and circumstances. Our findings underscore the importance for public health policies to take into account behavior-relevant heterogeneity in citizens' preferences, expectations, and responses to others.