Negative shocks predict change in cognitive function and preferences: assessing the negative affect and stress hypothesis

Abstract In the context of current COVID-19 pandemic, households throughout world have to cope with negative shocks. Previous research has shown that shocks impair cognitive function and change risk, time social preferences. this study, we analyze results a longitudinal multi-country survey conducted in Italy (N = 1652), Spain 1660) United Kingdom 1578). We measure using Cognitive Reflection Test preferences traits (risk, preferences) an experimentally validated set questions assess differences between people exposed shock compared rest sample. four possible types shocks: labor market shock, health occurrence stressful events, mental shock. Additionally, randomly assign participants groups either recall events (more specifically, mild reinforcement stress or fear/anxiety), control group (to neutral joyful memories), order whether not emotions drive Results show affected by performed worse terms functioning, are more risk loving, prone punish others (negative reciprocity). Data do support hypotheses result is driven emotions.