Research from the American Psychological Association suggests that optimism about the future can significantly impact individuals' saving behaviors, especially among those with lower incomes. The study highlights that people with higher levels of "dispositional optimism," a tendency to expect positive outcomes, tend to save more money over time compared to less optimistic individuals.
Published in the Journal of Personality and Social Psychology, the research challenges common perceptions about optimism and financial habits. "We often think of optimism as rose-colored glasses that might lead people to save less for the future," said Joe Gladstone, PhD, from 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 Justin Pomerance, PhD, from the University of New Hampshire, analyzed data from eight large surveys conducted in the U.S., U.K., and 14 European countries. These surveys involved over 140,000 participants who provided information on their income, savings, and sometimes total assets alongside their level of optimism.
The analysis revealed that more optimistic participants generally reported higher savings. For instance, a one-standard-deviation increase in optimism was linked to a $1,352 increase in savings for households with a median balance of $8,000. This correlation remained significant even after accounting for demographic factors like age, gender, and socioeconomic status.
"After controlling for those variables, the effect size of optimism was similar to what previous research has found for conscientiousness," noted Gladstone. "Optimism also appears to exert a slightly stronger influence on savings behavior than financial literacy and risk tolerance."
The researchers found this effect most pronounced among lower-income individuals. According to Gladstone, at higher income levels people have more opportunities to save automatically or simply have surplus income they can set aside. "For someone living paycheck to paycheck," he added, "saving can feel futile. But an optimistic outlook may provide the motivation to set aside money despite present challenges."
This study could influence financial education programs aimed at increasing saving rates among vulnerable populations by integrating optimism-building techniques with traditional financial literacy training.
"Ultimately," concluded Gladstone, "a mindset of hope for the future paired with skills to manage money wisely may be key to helping more people build financial security."
The study is titled “A Glass Half Full of Money: Dispositional Optimism and Wealth Accumulation Across the Income Spectrum” by Joe Gladstone and Justin Pomerance.
