Financial well-being, COVID-19, and the financial better-than-average-effect

Kinga Barrafrem, Daniel Västfjäll and Gustav Tinghög

Journal of Behavioral and Experimental Finance, 2020, vol. 28, issue C

Abstract: At the onset of the COVID-19 outbreak we conducted two surveys in the United Kingdom and Sweden (N=2021) regarding how people assess the near future economic situation within their household, nation, and the world. Together with psychological factors related to information processing we link these prospects to financial well-being. We find that, although generally very pessimistic, a substantial proportion of individuals believes that their households’ economy will be doing substantially better than the national and global economy, suggesting a “financial better-than-average” effect. Furthermore, we find that the pessimism regarding future household economic situation and being financially ignorant are associated with decreased financial well-being, while the (inter)national economic situation is not. This study shows how contextual factors and personal aspects shape financial well-being during turbulent and stressful times.

Keywords: Financial well-being; COVID-19 and finance; Financial ignorance; Better-than-average effect (search for similar items in EconPapers)
JEL-codes: D14 D84 G40 G50 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:28:y:2020:i:c:s2214635020303373

DOI: 10.1016/j.jbef.2020.100410

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