The digital literacy dilemma: how information overload and negative media amplify economic gloom

Against the policy backdrop of Digital China and the national campaign to enhance digital literacy and skills, this paper uses nationally representative 2019 China Household Finance Survey (CHFS) data to examine the impact of digital literacy on individuals’ economic expectations. We employ an ordered logistic regression and conduct robustness checks (alternative estimators, variable/sample substitutions, and instrumental variables). Empirical analysis reveals a counterintuitive ‘capability paradox’: individuals with higher digital literacy display more pessimistic expectations. Mechanism analysis shows that increased attention to financial and economic information is the key mediating channel. We further propose that two dimensions of the information ecosystem moderate this path: information overload (raising cognitive load and decision fatigue) and a negative media environment (activating negativity bias), which together amplify the effect of heightened information attention on pessimism. Financial literacy exhibits a similar paradox. These findings challenge the traditional digital empowerment narrative and suggest a coordinated policy response that pairs literacy promotion with proactive governance of the information environment to help stabilize expectations.