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Relaxed Covid-19 restrictions

Why they are made not to stick
Posted on July 21, 2020

In a world ruled by Covid-19, people continuously have to adopt new ways of living. Many of us have had to change our behaviour not just once when lock down was initially imposed, but many more times, as since restrictions are lifted in stages. With summer having arrived adjustments to the strict constraints are a very welcomed change for many Europeans. Shops are opening again, gathering in small groups is accepted and travel across countries is allowed. The changes demand people to adapt to a new set of rules and although governments try to keep them simple, people seem to find it difficult to stick to them.

Why do people find it so difficult to stick to looser constraints? Common behavioural patterns explain why and will show that the challenges of Covid-19 are similar to other challenges that people face in financial planning.

“Restrictions have been relaxed, which makes the need to act feel less urgent, disrupts habit formation and can give us a sense that we can license ourselves to not live up to all regulations.”

1. Low urgency

With a steep drop in infections and death rates, the Covid-19 situation has become less alarming in the eye of citizens. Without a concrete threat there is no external trigger or urgency that motivates people to adopt new behaviour and stick to new rules. Nonetheless, the health risks once you have Covid-19 are unchanged.

This is a very common challenge to long-term financial planning as well. People do not save (enough) money to live a carefree life in old age or for other distant future goals (e.g. buying a house or car) because they do not feel the urgency and can’t anticipate the future consequences of their behaviour. They prefer direct gratification instead.

2. Disrupted habit formation

The coronavirus outbreak forced governments to take very strict measures, but they also came under pressure to make this time bearable. People not only suffered of health issues but also of job loss and loneliness. As a consequence, many governments changed the restrictions when there was room to do so. This continuous change of rules probably hampered the formation of habits. It not only makes it difficult to stick to rules, but also creates a lack of clarity.

For people to create new behavioural patterns that are in line with the Covid-19 regulations, they will need to break former habits and repeat the new behaviour for some time. Repetition leads to automated responses and makes them stick.

Similarly, adopting new habits to save some extra money can be extremely difficult. Even when customers are motivated to start saving more, it is difficult for them to stick to a weekly or monthly routine.

3. Self-licensing

Many people had to change or cancel their holiday plans due to the coronavirus outbreak and it feels like a big sacrifice to many people. As a consequence, people might permit themselves to be a bit more flexible with other requirements. This is called self-licensing. People license themselves to engage in undesirable behaviour after a period of good behaviour. After cancelling this year’s summer holidays, people feel psychologically permitted to take liberties in other ways, for example, by not always adhering to social distance guidelines when meeting with others.

Again parallels can be found in money management. People who are not habitual savers probably will permit spending after having set aside some money for long-term financial goals.

Read the full article here.

This article is a contribution to the Think Forward Initiative by Laura Straeter, Behavioural Scientist at ING.