Changes in subjective mortality expectations and saving during COVID-19
pandemic: Empirical analysis using questionnaire data in Japan
Tomoko KINUGASA, Kohei MASUMOTO, Koji YASUDA,Kazufumi YUGAMI and Shigeyuki HAMORI
Background
This research investigated how COVID-19 has influenced subjective mortality and saving
behavior. COVID-19 has spread dramatically throughout the world since 2020, and many
people are afraid of being infected. We hypothesized that people feel they are more likelyto die in the near future, and so come to save less money for the future. We tested thishypothesis based on questionnaire data from Japan. The propensity for consumption orsaving can have path dependence due to habits. Changes in the propensity for saving
might persist even after COVID-19. Saving in order to prepare for life after retirement isquite important, especially in an aging society like Japan. If people tend to save less dueto the COVID-19 pandemic, the government will need to enact countermeasures to avoid
this.
Theoretical Focus
One predominant theory for saving is the life cycle hypothesis, which suggests thatindividuals decide on consumption and saving in consideration of their lifetime income.
The main purpose of savings is to be consumed after retirement. If the lifecycle hypothesis
holds and there is no bequest motive, longer life expectancy will increase saving; that is,a higher probability of dying may decrease saving. COVID-19 can increase people’s
subjective mortality expectations. If people think that they are likely to die in the near
future, they will save less for life after retirement.
Although most people had not experienced a shock as large as the COVID-19
pandemic, many people had experienced shocks such as disasters, accidents, and otherdiseases. This type of shock might have changed their subjective mortality. Filipski et al.
(2019) insist that a “no tomorrow” tendency can occur after a disaster. According to theauthors, after experiencing a large disaster, people come to think they may die soon andtend to consume more. The authors found evidence of this after an earthquake in Sichuan
Province, China. In addition, previous studies have stressed that epidemics such as
malaria and AIDS decreased saving. For example, Baranov and Kohlera (2018) foundthat treatment for AIDS increased saving in Malawi. We suggest that the COVID-19
pandemic has increased subjective mortality and decreased saving.
Previous studies have shown that longer life expectancy has increased saving indeveloped countries (Lee et al., 2001; Kinugasa and Mason, 2007). They insist that adult
longevity is important for saving. People have been able to survive for longer. However,this kind of mortality is related to the far future. For example, people in 40 years old maynot tell the difference so much about their probability of survival until age 80 or 81.
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Therefore, the effect of longer life expectancy could be gradual. On the other hand,
COVID-19 has increased the probability of dying in the near future. This change may
have a larger effect on saving than the gradual increase in life expectancy before thepandemic.
DataIn January 2021, we administered a questionnaire survey through the Internet toindividuals in Japan from 20 to 79 years old who were working or whose spouses wereworking. We asked several questions regarding subjective changes in their mortality
expectations due to the COVID-19 pandemic and the share of savings in their income in2020, plus basic information such as their education, occupation, family structure, andtime preferences. We also asked about experiences that can influence subjective mortality,
such as accidents and disasters. We corrected the answers from 2,500 people.
Research Methods
Using the questionnaire response data, we empirically analyzed the effects of subjective
changes in mortality due to the COVID-19 pandemic and other experiences that canchange subjective mortality. We estimated the following equation:
𝑆𝑆𝑖𝑖 = 𝛽𝛽0 + 𝛽𝛽1 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑖𝑖 + 𝛽𝛽2 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 + 𝛽𝛽3 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑖𝑖 + ∑𝑘𝑘 𝛽𝛽𝑘𝑘 𝑥𝑥𝑘𝑘,𝑖𝑖 + 𝜀𝜀𝑖𝑖,(1)where the subscript i denotes the ith individual, 𝑆𝑆𝑖𝑖 is the share of household savings inhousehold income in 2020, and 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑖𝑖 is the variable for the change in subjective
mortality due to the COVID-19 pandemic. We considered three indices of subjective
mortality. All variables for the change in mortality were the answers to statements. The
first statement was “You feel that the probability of dying in a few years increased after
the COVID-19 pandemic.” The second statement was “You feel that your life expectancy
has decreased due to the COVID-19 pandemic.” The values for the first and second
indices were on a four-point Likert scale ranging from 1 = strongly disagree to 4 =strongly agree. The third statement was “You do not think you will die due to COVID19.” The third index was also a Likert scale with four points, but with reverse scores: 1 =strongly agree to 4 = strongly disagree.
We hypothesized that the variables would have a negative effect on savings.
𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝑖𝑖 was the variable for the experience of a major disaster in which their house
was damaged and/or they needed to take refuge. 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝑖𝑖 was the variable for theexperience of a major accident. Experiences of disasters or large accidents can makeindividuals feel that their mortality has increased, and we expected that such experiences
would decrease saving.
In equation (1), 𝑥𝑥𝑘𝑘,𝑖𝑖 are the other control variables. We considered age and its
squared value, household income, number of family members, subjective lifespan,variables for time preferences in saving for retirement, managing money, saving toprepare for retirement, disliking restrictions caused by the COVID-19 pandemic, anddummy variables for occupations. We suspected that subjective mortality could also be2

influenced by savings and other factors. Considering the endogeneity of subjective
mortality, we estimated the equation based on the instrumental variable method. As forinstruments, we collected information on medical history, variables regarding
teleworking, preventing COVID-19 infection, living in an urban area, and experience andexpectation of COVID-19 infection.
Findings
Our questionnaire survey showed that 33% of the respondents agreed that the possibility
that they will die in the near future increased due to the prevalence of COVID-19. Further,
24% of the respondents felt that their life expectancy decreased due to the COVID-19
pandemic. More than half of the respondents could not confidently state that they would
not die due to COVID-19. That is, not everyone, but a certain number of people, felt that
their own mortality had changed since the spread of COVID-19.
Table 1 shows the estimated results of Equation (1). Changes in subjective mortality
due to COVID-19 were negatively correlated with savings. The result was significant for
the first and second indices and marginally significant for the third index. Therefore,
people who feel that their mortality has increased due to the COVID-19 pandemic tended
to save less. Experiencing a disaster did not have a significant effect, but experiencing anaccident has a significantly negative effect on saving.
In summary, the COVID-19 pandemic has increased individuals’ subjective mortality
to a certain extent, which has decreased their motivation to save. In Japan, the saving rateincreased after the outbreak of COVID-19 because people lost the chance to consume due
to various restraints put in place to prevent infections. However, the motivation for saving
for retirement could be questionable. If many people do not feel like saving for retirement,
they may face a serious lack of funds in old age.
References
Baranov, V. and Kohlera, H. (2018) “The impact of AIDS treatment on savings and humancapital investment in Malawi” American Economic Journal: Applied Economics Vol.
10, pp.266–306
Flispki, M., Ling, J., Zhang, X. and Chen, K. (2019) “Living like there’s no tomorrow:the psychological effects of an earthquake on savings and spending behavior”,
European Economic Review, Vol. 116, pp. 107-128.
Kinugasa, T. and Mason, A. (2007) “Why countries become wealthy: the effects of adult
longevity on saving.” World Development, Vol.35, pp.1-23.
Lee, R., Mason, A. and Miller, T. (2001) “Saving, wealth, and the demographic transitionin east asia.” A. Mason, ed, Population change and economic development in East
Asia: challenges met, opportunities seized. Stanford: Stanford University Press,2001.

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Table 1 Estimated results for the determinants of saving
Model 1
Mortality:1
Mortality:2

Model 2

-3.494***(1.196)-4.070**(1.755)Mortality:3
Disaster
Accident
AgeAge2
Household Income(10,000 JPY)
Family members
Subjecive Life SpanTime Preference
Saving for Retirement
Managing Money
Disliking Restraint
Education
Constant
Observations
Adjusted R-squared-0.123(0.492)-1.256**(0.526)-0.837***(0.185)0.00686***(0.00181)
0.00525***(0.00140)-0.544*(0.281)
0.0417(0.0322)0.00299**(0.00121)
6.772***(0.503)2.382***(0.529)-1.283**(0.511)
0.0625(0.290)16.12**(6.678)
2,220
0.218

0.176
(0.507)-1.141**(0.562)-0.875***(0.187)0.00730***(0.00184)
0.00537***(0.00132)-0.475*(0.286)
0.0560*(0.0315)
0.00274**(0.00126)
6.926***(0.510)2.412***(0.529)-0.893(0.641)
0.0467(0.292)14.06**(6.521)
2,220
0.201

Model 3-2.417(1.551)-0.152(0.500)-1.545***(0.513)-0.840***(0.187)0.00688***(0.00182)
0.00547***(0.00140)-0.584**(0.280)0.0477(0.0354)0.00303**(0.00130)6.792***(0.512)2.450***(0.526)-1.797***(0.470)0.0183(0.293)16.47**(7.814)
2,220
0.210

Note: The dependent variable is the percentage of household savings in the household income of the
respondent’s household. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.
The equations were estimated using the instrumental variable method. Robust standard errors are reported
in parentheses. Dummy variables for occupation were included in the estimation, but are not reported. A
detailed explanation of the variables is provided in the manuscript.

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