Purpose This study investigates how individuals’ spending responds to local health risk exposure. Using the unexpected shock of COVID-19 as a quasi-natural experiment, it examines whether and how proximity to health risk influences individuals’ consumption and investment decisions and explores the underlying behavioral mechanisms from the perspective of time preference. Design/methodology/approach This study employs a comprehensive bank-account dataset combined with geolocation information to identify individuals’ proximity to residential compounds with confirmed COVID-19 cases. Exploiting spatial variation in exposure to local health risk, we conduct an empirical analysis of changes in consumption and investment behavior before and after the pandemic shock. The empirical strategy leverages within-individual variation and distance-based measures to isolate the effect of health risk exposure on financial decision-making. Findings Following the pandemic shock, individuals residing in compounds with confirmed cases significantly increase expenditures on entertainment and jewelry, while reducing allocations to insurance and mutual funds. These behavioral adjustments exhibit a clear spatial gradient, attenuating as the distance from infected residences increases. The results suggest that closer exposure to health risk is associated with a shift toward more present-oriented financial behavior. Originality/value This study contributes to the literature by providing micro-level evidence on how localized health risk exposure shapes financial behavior. By precisely identifying affected individuals using granular spatial data, it advances existing research that often relies on aggregate measures of risk. Furthermore, it offers a novel behavioral interpretation by linking proximity to health risk with time preference, thereby enriching the understanding of how exogenous shocks influence individual financial decision-making.
R et al. (Tue,) studied this question.