Optimism and Economic Crisis

21 Pages Posted: 2 Apr 2010 Last revised: 22 Jul 2010

See all articles by Ron Kaniel

Ron Kaniel

University of Rochester - Simon Business School; CEPR

Cade Massey

University of Pennsylvania - The Wharton School

David T. Robinson

Fuqua School of Business, Duke University; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Date Written: July 21, 2010

Abstract

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

Kaniel, Ron and Massey, Cade and Robinson, David T., Optimism and Economic Crisis (July 21, 2010). Available at SSRN: https://ssrn.com/abstract=1579050 or http://dx.doi.org/10.2139/ssrn.1579050

Ron Kaniel

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

HOME PAGE: http://rkaniel.simon.rochester.edu

CEPR ( email )

London
United Kingdom

Cade Massey (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

David T. Robinson

Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0120
United States
919-660-8023 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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