Optimism and Economic Choice

Manju Puri and David Robinson

No 11361, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D1 G1 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-ent and nep-fin
Note: AP CF
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Citations: View citations in EconPapers (20)

Published as Puri, Manju & Robinson, David T., 2007. "Optimism and economic choice," Journal of Financial Economics, Elsevier, vol. 86(1), pages 71-99, October.

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Journal Article: Optimism and economic choice (2007)
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