Optimism and Economic Choice
29 Pages Posted: 3 Sep 2007
Abstract
We create a novel measure of optimism using the Survey of Consumer Finance by comparing self-reported life expectancy to that implied by statistical tables. This measure of optimism correlates with positive beliefs about future economic conditions and with psychometric tests of optimism. Optimism is related to numerous work/life choices: more optimistic people work harder, expect to retire later, are more likely to remarry, invest more in individual stocks, and save more. Interestingly, however, moderate optimists display reasonable financial behavior, whereas extreme optimists display financial habits and behavior that are generally not considered prudent
Keywords: Dispositional optimism, Psychology and economics, Household finance, Savings behavior, Self control
JEL Classification: G11, D12, D14
Suggested Citation: Suggested Citation
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