For years, the mantra of positive thinking has been promoted as the best and most correct path to happiness and success. However, a recent study from the University of Bath in the UK sheds light on the dark side of optimism, revealing its association with lower cognitive skills and poor decision-making. We used ChatGPT to explain why you shouldn't be so optimistic all the time.
The study, led by Dr. Chris Dawson of the university's School of Management, challenges the notion that unwavering optimism is a beneficial trait. It drew data from a survey of over 36,000 households. By comparing people's expectations of their financial well-being with their actual outcomes, the researchers found that those with higher cognitive ability demonstrated a 22 percent increase in the probability of "realism," and a 35 percent decrease in the probability of "extreme optimism." In other words, smarter people, who score higher in fluency, fluent thinking, numerical thinking, and memory, think less optimistically and thus set expectations that they can also fulfill, compared to dreamers who never achieve the results they believe they can achieve.
Dr. Dawson explains that the results of the study are surprising: "Predicting the future exactly is difficult, and for this reason, we may expect people with low cognitive ability to make more errors in judgment – both pessimistic and optimistic. But the results are clear—low cognitive ability leads to more flattering biases for themselves. People delude themselves to a certain extent."
The consequences of this cognitive bias are of particular concern in the context of large financial decisions. Employment choices, investments, savings, and any decisions involving risk and uncertainty are susceptible to the negative effects of unrealistic optimism. Dr. Dawson warns that unrealistically optimistic financial expectations can lead to excessive consumption, debt, insufficient savings and even entry into business ventures prone to failure.
Dr. Dawson emphasizes the need to recognize and challenge the common human trait of unrealistic optimism. "The problem with being programmed to think positive is that it can negatively impact the quality of our decision-making – especially when we have to make serious decisions. We need to be able to get around this, and this study shows that people with high cognitive ability are able to manage it better than those with low cognitive ability."
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