Does Anxiety Improve Economic Decision-Making?

We study the associations between everyday economic decision-making quality and people's emotional states. Using high-frequency, highly disaggregated consumer "scanner" data, we show that the cost of poor decision-making is substantial, on average equal to around half of day-to-day consumption budgets. While material circumstances help explain decision-making quality, how people feel about those circumstances is equally important. Contrary to evidence that stress and worry impair performance in settings where distraction is costly, we find these same feelings are associated with improved decision-making for frequently made consumption choices. This is consistent with worry increasing attentiveness to decisions within households' locus of control.

Source: arXiv:2603.21874v1 - http://arxiv.org/abs/2603.21874v1 PDF: https://arxiv.org/pdf/2603.21874v1 Original Link: http://arxiv.org/abs/2603.21874v1