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Optimism and economic choice

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  • Puri, Manju
  • Robinson, David T.

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.
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Suggested Citation

  • Puri, Manju & Robinson, David T., 2007. "Optimism and economic choice," Journal of Financial Economics, Elsevier, vol. 86(1), pages 71-99, October.
    • Handle: RePEc:eee:jfinec:v:86:y:2007:i:1:p:71-99
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    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • D1 - Microeconomics - - Household Behavior

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