Optimism and Economic Crisis
21 Pages Posted: 2 Apr 2010 Last revised: 22 Jul 2010
Date Written: July 21, 2010
How are expectations for the future affected by economic crisis? This is a question of interest to both economists and psychologists, especially as we increasingly consider the interplay between the two disciplines. Using a longitudinal design, we evaluate the impact of the financial crisis of 2008 on MBA students’ dispositional optimism, a widely used measure of generalized expectations for the future. Following three cohorts of students, graduating in 2007, 2008 and 2009, we find that dispositional optimism is a stable individual trait, robust to personal events such as class grades and recruiting success. However, we find that the economic crisis in the fall of 2008 corresponded with a reliable drop in dispositional optimism. Moreover, this drop was largely concentrated among US citizens, for whom the crisis has more global future consequences. This pattern sheds light on the nature of optimism and the role of personality traits in management.
Keywords: optimism, crisis, trait
JEL Classification: D84, E20
Suggested Citation: Suggested Citation