Resiliency and differentiation of national economic expectations and private lives in the United States over the Post-Second World War period.

Abstract

In this dissertation I explore one aspect of the interrelation of structural economic change and individual lives through examining the relationship between expectations about national economic conditions and people's expectations for their personal financial futures. A review of the relevant literature identifies two central themes. First, individuals distinguish and may compartmentalize between external or national conditions (what goes on out there) and personal conditions (what is happening in their lives). Second, Americans' optimism in the social system rebounds after falling. These concepts are labeled differentiation and resilency, respectively, and are argued in the literature to be factors which provide social stability. To examine these issues, I conceptualize the theoretical link between national economic and personal financial conditions in terms of the relationship between public and private economic spheres. This link is conceived of both as a covariation and as a property of mean levels, and both are subject to changing economic and political conditions. This assumption is examined by analyzing two dimensions of this link--the Gap and Constraint of the relationship. The Gap of the relationship indicates the direction and magnitude in relative Optimism in the two spheres. The Constraint of relationship measures the association between the two spheres. To test these hypotheses I use data from the Survey of Consumer Attitudes, which has conducted a combination of personal and telephone surveys of a national probability sample in the United States since 1948. The analysis spans the years 1960-1993. Results indicate that the interconnection between private and public economic conditions becomes salient as private Optimism drops. High levels of private versus public Optimism do provide a relative buffer between the two spheres; however, this only applies during periods of relative Optimism for personal economic conditions. Second, time has changed the dynamics of both aspects of economic Optimism. Political factors have less influence on both the Gap and the Constraint in later years. Economic factors increasingly influence both aspects of the relationship over the time span of the analysis. An alternative theory is that recurring Gaps weaken public confidence through their effect on the otherwise stable private trend.