Optimism and Economic Choice

41 Pages Posted: 1 Aug 2005

See all articles by Manju Puri

Manju Puri

Duke University - Fuqua School of Business; NBER; FDIC

David T. Robinson

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

Date Written: May 2005

Abstract

This paper presents some of the first large-scale survey evidence linking optimism to major economic choices. We create a novel measure of optimism using the Survey of Consumer Finance by comparing a person's self-reported life expectancy to that implied by statistical tables. Optimists are more likely to believe that future economic conditions will improve. Self-employed respondents are more optimistic than regular wage earners. In general, more optimistic people work harder and anticipate longer age-adjusted work careers. They are more likely to remarry, conditional on divorce. In addition, they tilt their investment portfolios more toward individual stocks.

Keywords: Optimism

JEL Classification: D1, G1, M54

Suggested Citation

Puri, Manju and Robinson, David T., Optimism and Economic Choice (May 2005). AFA 2006 Boston Meetings Paper. Available at SSRN: https://ssrn.com/abstract=686240 or http://dx.doi.org/10.2139/ssrn.686240

Manju Puri (Contact Author)

Duke University - Fuqua School of Business ( email )

100 Fuqua Drive
Box 90120
Durham, NC 27708-0120
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919-660-7657 (Phone)

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
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FDIC ( email )

550 17th Street NW
Washington, DC 20429
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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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