Understanding the Impact of Travel on Wellbeing: Evidence for Great Britain During the Pandemic

Document summary

The paper investigates whether the wellbeing in Great Britain, measured by life satisfaction and happiness, is affected by the dramatic decline in travelling during the pandemic. I employ a Bayesian vector autoregression (VAR) that includes wellbeing, travel, and Covid-19 as endogenous variables while it controls for exogenous variables. I include in the VAR various modes of travel, like flying, car, rail, and cycling and also various Covid-19 related variables like confirmed infections, confirmed deaths and hospitalisations. The empirical findings of impulse response functions provide detailed responses of wellbeing and traveling in Great Britain to shocks in Covid-19 while testing for the direction of causality. Travel is negatively affected by shocks in Covid-19 and in turn, shocks in travel would reduce wellbeing. Interestingly, results show little to no evidence of responses of Covid-19 to shocks in various modes of travel. So, while the decline in travel reduces wellbeing, it does little to combat Covid-19. The forecast error variance decomposition analysis confirms the importance of travel for wellbeing and shows that while the pandemic has caused an unprecedented decline in traveling, this is not going to persist beyond the medium term. However, the decline in traveling in Great Britain would have a negative effect on life satisfaction and a positive effect on anxiety and such effects could persist. Lastly, the paper provides forecasting of the main endogenous variables.