In survey after survey, in rich and poor countries alike, people report feeling satisfied with their family lives, happy with the neighbourhoods they live in, and optimistic about their personal futures. Yet the same people tell pollsters that their countries and the world are going to hell in a handbasket.

Consider some examples. According to the Eurobarometer poll, around 60% of people predict that their job situation will remain the same, while 20% expect their situation to improve. Yet most people systematically expect the economic situation in their home country to deteriorate or remain the same. Expectations about individual outcomes move very little over time, while expectations about national economic performance worsen with recessions and improve with booms, just as you might expect.