Financial Well-Being in the Covid-19 Period: How Better Than Average Bias Shapes the Perception of Future Economic Conditions

Abstract

This study aims to discover individual perceptions or views of future economic conditions at the global household, national, and economic levels during the COVID-19 pandemic. We also tested the relationship between variable financial ignorance, financial literacy, and financial well-being during the pandemic. Broadly speaking, the findings of this study show that individuals have an overview of future economic conditions during the pandemic.  What makes this interesting is that it turns out that individual expectations of future economic conditions during the pandemic will be different at the household, national, and global levels.  The test results concluded that individual optimism about future economic conditions is stronger if the talk is about the economy at the private or household level. In contrast, this optimism will fade if individuals are asked to assess the future economic prospects during the pandemic at the national and global levels, where they are relatively more pessimistic.  This finding once again confirms the existence of better-than-average behavior in which individuals will evaluate themselves better than when they evaluate other entities. Better-than-average behavior is quite like optimism bias that, if not managed properly, can cause toxic positivity due to an irrational sense of optimism.