Abstract:

How do individual expectations about future economic status affect multidimensional psychological well-being (MPWB)? Using original data from 92 countries (N = 34,834), we map the global distribution of the gap between objective status and subjective expectations about one’s economic future and examine whether the position on the income ladder buffers the mental toll of economic pessimism. In preregistered mixed-effects models and robustness specifications, we find that a shift from a neutral to a negative economic outlook is consistently associated with a 0.65 SD decline on the MPWB scale; moreover, subjective outlook explains roughly seven times more variance in MPWB than objective economic position. We find no consistent evidence that individual income protects against this negative effect, but find limited evidence in favor of the buffering effect of individual net worth. Confidence in the forecast significantly amplifies the mental toll of economic pessimism. At the national level, neither GDP per capita nor the Gini coefficient moderate these effects. The findings provide a uniquely global assessment of the psychological costs of negative economic expectations, demonstrate the cross-national nature of the association between economic outlook and psychological well-being, and highlight the policy importance of accounting for subjective economic expectations.