04/29/2011 04:56 pm ET Updated Jun 29, 2011

Don't Worry, Be Happy: It's Better for Your Health and Pocketbook

A new Citibank survey reveals that women are significantly less optimistic than men about the future of the economy. For the first time since July 2010, women's and men's views have diverged on where the economy is headed. Citi's quarterly survey includes an "Economic Pulse" index that ranks male and female optimism regarding the future of the economy, derived by subtracting negative responses from positive responses on 8 questions relating to employment, local economic conditions, personal financial situation (debt, savings) and willingness to buy big-ticket items.

Why So Gloomy, Ladies?
While both men and women were less optimistic in April, the female optimism index dropped a full 10 points to -16, on a scale of +100 (life is great through rose-colored glasses) to -100 (the world will end tomorrow). By comparison, men are not quite as dour; their optimism score fell only 2 points to -8.

"It's probably the most interesting result that came out of the survey," according to Jonathan Clements, Director of Financial Education at Citi Personal Wealth Management. He speculates that three factors have contributed to this sudden drop in women's less than rosy views:

  • Cost of gas and food is rising, thus taking a bigger chunk out of a small or nonexistent paycheck.
  • Women tend to be the "family CFO" so they are more aware of the squeeze on the household's already tight budget.
  • Women are naturally more risk averse, and recent events (the Middle East crisis, the Tsunami and nuclear issues in Japan, and the Washington budget battles) make the world feel much riskier.

Moreover, Clements points to two subgroups of women who are especially pessimistic: women with only a high school degree and women aged 45-64. "Presumably [high school educated women] are going to be the people who have somewhat lower incomes, and therefore the rise in economic spend on staples like gas and groceries are going to hurt them more." He reckons that the older women fall into the categories of the family purchasing department and risk-averse women fearing the increasing global risks.

Furthermore, nearly half of all American women in the Citi survey classified themselves as "working class" or "poor" (versus only 38 percent of men).

Optimism Versus Risk Aversion

Are women really more risk averse? A group of researchers in New Zealand and the Netherlands have demonstrated that women are naturally less optimistic than men over economic growth, interest rates, inflation and future stock performance. And this holds true over time and across several countries, regardless of education level or income. As a further twist, the researchers show that optimism and risk aversion are not actually correlated, but women's natural lower optimism is what really drives their investment decisions and life outlook. As proof, they point to the fact that very optimistic women hold 5 percent more stocks in their portfolios than the most optimistic men. But, they still haven't answered the question of why women are more pessimistic than men.

Why Not Be Happy?
Optimism is good for your health, according to several health studies. Optimists have lower blood pressure, less stress and recover from surgery or major illnesses better (and quicker).

Perhaps women aren't as optimistic as men since the majority seem to still bear the brunt of responsibility for home and family care, and they see and live with the consequences when a child becomes ill. Or perhaps it's because more than a quarter of the kids in the U.S. live in single parent households, and the odds are more than five to one that it's a mom who's heading that family. Or it might have something to do with the fact that women, on average, still earn less than men or maybe because women tend to live longer than men -- they know they've got to stretch their smaller paychecks over many more years. There's no magic answer here - it might even be a combination of all these factors and more...

What are your thoughts? Are you optimistic?

Cross-posted from