Optimism can boost saving, especially for lower-income individuals

(Press-News.org) WASHINGTON – Being optimistic about the future may help people save more money, and the effect appears strongest among those with lower incomes, according to research published by the American Psychological Association.

The study found that people who scored higher on measures of “dispositional optimism” -- the tendency to expect positive outcomes -- saved more money over time compared with their less optimistic peers.

The research was published in the Journal of Personality and Social Psychology.

"We often think of optimism as rose-colored glasses that might lead people to save less for the future," said lead author Joe Gladstone, PhD, of the University of Colorado Boulder. "But our research suggests optimism may actually be an important psychological resource that helps people save, especially when facing economic hardship."

Gladstone and his colleague Justin Pomerance, PhD, of the University of New Hampshire, analyzed data from eight large population surveys in the U.S., the U.K., and 14 European countries, with more than 140,000 total participants. All the surveys included some measure of participants’ optimism, asking participants to rate their agreement with statements such as “I'm always optimistic about my future,” “Overall, I expect more good things to happen to me than bad,” or “In uncertain times, I usually expect the best.” The surveys also asked participants to report their income, savings, and in some cases total assets.

Three of the surveys were cross-sectional, meaning that participants were surveyed at one point in time. Five were longitudinal, in which participants were surveyed more than once over a period of years.

Across all the surveys, the researchers found that participants who were more optimistic reported having more savings, on average. For example, a one-standard-deviation increase in optimism correlated with a $1,352 increase in savings for households with the median savings balance of $8,000. This held true even when the researchers controlled for demographic and other variables that could influence both savings and optimism, such as age, gender, relationship status, parental status, childhood socioeconomic status, health, employment status and the “Big Five” personality traits (conscientiousness, extraversion, agreeableness, neuroticism and openness to experience).

“After controlling for those variables, the effect size of optimism was similar to what previous research has found for conscientiousness, a personality trait that’s widely recognized for its positive influence on financial outcomes,” Gladstone said. “Optimism also appears to exert a slightly stronger influence on savings behavior than financial literacy and risk tolerance.”

The effect of optimism on saving behavior was strongest for people with lower incomes, the researchers found. That makes sense, said Gladstone, because at higher income levels, people often have more ways to save automatically, such as through mortgage payments (which contribute to home equity) and direct retirement contributions. Or they may simply be able to save because they don’t need to spend all the money they earn.

"For someone living paycheck to paycheck, saving can feel futile," Gladstone noted. "But an optimistic outlook may provide the motivation to set aside money despite present challenges."

The study has implications for financial education programs and policies aimed at boosting saving rates, particularly among economically vulnerable populations. Incorporating optimism-building techniques alongside traditional financial literacy training could prove a powerful combination, according to the researchers.

"Ultimately, a mindset of hope for the future, paired with the skills to manage money wisely, may be key to helping more people build financial security," said Gladstone.

Article: “A Glass Half Full of Money: Dispositional Optimism and Wealth Accumulation Across the Income Spectrum,” by Joe Gladstone, PhD, University of Colorado, Boulder, and Justin Pomerance, PhD, University of New Hampshire. Journal of Personality and Social Psychology, published online Jan. 30, 2025.

CONTACT: Gladstone can be reached at joe.gladstone@colorado.edu.

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