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. 2020 Dec:28:100410.
doi: 10.1016/j.jbef.2020.100410. Epub 2020 Oct 6.

Financial well-being, COVID-19, and the financial better-than-average-effect

Kinga Barrafrem  1 , Daniel Västfjäll  2   3 , Gustav Tinghög  1   4
Affiliations

Financial well-being, COVID-19, and the financial better-than-average-effect

Kinga Barrafrem et al. J Behav Exp Finance. 2020 Dec.

Abstract

At the onset of the COVID-19 outbreak we conducted two surveys in the United Kingdom and Sweden (N=2021) regarding how people assess the near future economic situation within their household, nation, and the world. Together with psychological factors related to information processing we link these prospects to financial well-being. We find that, although generally very pessimistic, a substantial proportion of individuals believes that their households' economy will be doing substantially better than the national and global economy, suggesting a "financial better-than-average" effect. Furthermore, we find that the pessimism regarding future household economic situation and being financially ignorant are associated with decreased financial well-being, while the (inter)national economic situation is not. This study shows how contextual factors and personal aspects shape financial well-being during turbulent and stressful times.

Keywords: Better-than-average effect; COVID-19 and finance; Financial ignorance; Financial well-being.

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Figures

Fig. 1
Fig. 1
Respondents anticipation of how the COVID-19 outbreak will affect the future economic situation of own household, own country, and the world. United Kingdom sample (left) and Sweden sample (right).
See this image and copyright information in PMC

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