Coping with Economic Hardship: A Broader Look on the Role of Dispositional Optimism
Economic recession is often associated with economic stress, it significantly influences one’s mental health and decision making about one’s finances. The aim of the study was to investigate the role of dispositional optimism as a psychological resource in coping with economic hardship. In addition, we were interested in how this disposition affects one’s financial behavior. Participants of the research (n=204) completed self-report measures about dispositional optimism (LOPS–Levy, 1985), their economic hardship (EHQ-Lempers, Clark-Lempers & Simons, 1989) and how their economic situation affects their feelings (FTS–Marjanovic, Greenglass, Fiksenbaum & Bell, 2013). Subsequently, they evaluated the risk level of five different stocks, predicted their price development in the next time period and chose three most preferred stocks in which they would like to invest. The results show a strong significant positive relationship between economic hardship and the feelings of threat in the pessimist population (r=.57; p<.01). Although the average score of economic hardship was similar to pessimists, in the group of optimists the relationship was not demonstrated. Optimists were significantly less threatened by their economic situation than pessimists. In addition, optimists more often predicted more favorable price development for stocks and preferred more risky stocks providing higher yield compared to pessimists. Although the results of the study support the idea that dispositional optimism could be the psychological resource in the times of economic hardship, it may also lead to biased reasoning and more risky decision making about one’s investments.
Dispositional Optimism, Economic Hardship, Financial Decision-Making
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