Some recent polling got me thinking about the relationship between psychology — people’s beliefs and outlooks — and objective reality.

After 18 months of economic hammering, Canadians report feeling … better off! And more optimistic about their financial future. A national telephone survey by Ottawa-based Praxicus Public Strategies found that 75% of 1,000 respondents said their financial situation is the same or better than it was a year earlier, and 87% expected their situation will remain stable or improve further over the next year.

A year ago, more than one-third of respondents in a similar poll reported deterioration in their financial situation. This year, roughly the same ratio — 35% — were rated by Praxicus as “optimists,” those whose financial situation is better than a year ago and who expect further improvement in the year ahead. Overall, the polling firm reports “a 13-point turnaround in financial direction” since the 2009 survey.

Alberta was hit hard in this recession, with unemployment more than doubling and tens of thousands of recent migrants leaving. Yet people surveyed on the Prairies outperformed in the area of good cheer, with 40% feeling optimistic and only 3% pessimistic. Perhaps many of those hardest hit had already left. And some people in Alberta almost welcomed the downturn. There’d been a widespread feeling that our boom had gone too far and was causing a lot of problems — not least an obnoxious entitlement mentality among younger workers.

When the downturn hit, there truly was near-panic in the Calgary business community, and nowhere more so than among the 25- to 35-year-olds. They’d never experienced anything but good times, and had no idea how to cope with an economy going backward. Perhaps learning to live without a Mercedes ML-430 at age 26 has acquainted them with the concept of economic limits. Having survived a year of it, people have come out the other side feeling better, even though our economy is still struggling and provincial finances are in a far worse mess.

Praxicus’ national results suggest Cana-dians are aware that our country has dodged a global economy-wrecking bullet that has hammered at least two dozen developed countries far harder than ours. Still, I’m surprised at the degree of optimism. I would have expected more people to be worse off and to feel pessimistic about the future. We usually think of Americans as the over-the-top optimists. But this time, they are the ones in a grim mood. Many are failing to be charmed by the Obama administration’s trillion-dollar-plus bailout and stimulus programs, and showing a bipartisan disdain for almost all politicians’ promises.

The recent Praxicus survey didn’t ask about Canadian attitudes toward government. But it’s interesting that in one of the few Western countries that did not have to go bananas on stimulus spending, due to many years of prudent financial policies, people seem to feel better about the future. Perhaps tightening one’s belt, hanging in there and focusing on the things that really matter works better than trying to spend your way out of trouble. Or maybe people feel better when they retain some control over their financial fate rather than becoming entirely dependent on vast new government programs.

People’s answers to polls might be influenced by which aspect of their finances comes to mind when they’re asked to consider the past year, right now and the year ahead. Three main things determine the typical person’s overall financial health: current income, home value and investments. One person might have been hammered in the markets but had just received a raise. What is that person thinking when the question is asked? Someone else could have been bumped down to part-time while the house value held steady. My own feelings mirror the polling result. A year ago, I considered my financial situation weaker than the year before, and worried that things could get far worse. Today, all three of my main financial criteria are stable or improving. IE



More of George Koch’s writing can be read at the weblog www.drjandmrk.com