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A University of Bath's study, "Looking on the (B)right Side of Life: Cognitive Ability and Miscalibrated Financial Expectations", claims that over-optimistic people have "low cognitive ability."
The November study publication led by Chris Dawson set off a pessimist's picnic of headlines. Neuroscience News ran with "Optimism Linked to Poor Decision-Making and Lower Cognitive Skills," Fox News, often seen as the harbinger of pessimist views, declared "Optimism linked to bad decision-making, lower cognitive ability: study." Both lacked nuance in distinguishing between over-optimism and realistic optimism.
We can blame the University of Bath Press Release with the headline "Optimistic thinking linked with lower cognitive abilities - new research" and journalists who did not read or research beyond the press release.
Dr Dawson's subsequent comments may reveal something of his research and publication motive, his distaste for "positive thinking" "embedded in our culture."
Overview of the Bath Study
The Bath study asserts that "over-optimism" is associated with being less intelligent. It focused on financial forecasting and concluded that an overly optimistic outlook correlates with lower cognitive abilities. Focusing on how an optimistic outlook regarding financial matters might connect with cognitive skills, the study marked a departure from broader examinations of optimism. It proposed that individuals who consistently overestimate future income and underestimate expenses tend to score lower on specific tasks linked to financial decision-making. However, it's crucial to note that the study does not claim a direct cause-and-effect relationship and focuses on specific cognitive functions, not general intelligence. As such, while it prompts reflection on the interplay between psychological dispositions and cognitive skills, its findings invite cautious interpretation and further research for a comprehensive understanding of optimism and financial decision-making.
Critique of the Study's Conflation of Realism with Extreme Pessimism
One weakness of the Bath study is that it equates realism with pessimism, indeed “extreme pessimism.” This conflation diverges from the traditional interpretation of realism as a balanced view of circumstances. David Rothkopf offered a contrasting perspective during the COVID epidemic: "Optimism is realism. That may be a hard concept to embrace in the middle of a rapidly worsening global pandemic and a crushing economic crisis. But history shows it is the right one." Rothkopf’s assertion challenges the study's implication. A reasonable retort would be that "over-pessimism" could similarly be linked to a lack of intelligence. Both extremes imply a departure from balanced judgment, potentially affecting the quality of decision-making.
The research report does not clearly define optimism, the best contemporary definition being a belief that good things will happen and that things will work out in the end.
Other Studies Show Optimists, in General, Are More Successful Financially
Research indicates that optimists often experience greater financial success. A Harvard Business Review study found that optimists make smarter financial moves and reap benefits. A True Colors PEOPLE Solutions case study revealed that optimistic consultants sold significantly more insurance than their pessimistic counterparts. Studies have shown correlations between optimism and improved life expectancy, health, professional performance, and financial decision-making. Optimists are more likely to seek financial advice and take steps to improve their financial status.
The Benefits of Unrealistic Optimism
Dr. Andrew Cuthbert, Clinical Director at Timber Creek Counseling, offers a counter-narrative to the study's findings, highlighting the psychological advantages of unrealistic optimism. Nobel Laureate Daniel Kahneman also supports this view: "Unrealistic optimism is a necessary characteristic for achieving great things." These insights emphasize the role of optimism in fostering well-being, resilience, and the capacity to pursue and relish future successes, presenting it as a catalyst for action and accomplishment.
Even if We Were Dumber, We're More Joyful and Healthier
Pessimists are often self-reinforcing grumps, whereas optimists bring a sense of joy and possibility. High-quality research shows that optimism is the key trait associated with healthy longevity and better health. It's also about leadership, entrepreneurship, strategic thinking, innovation, and resilience. Optimists do better in various aspects of life, fostering environments of family, friendship, and community that rely on positive outlooks rather than pessimism.
Conclusion
In sum, while focusing on over-optimism in financial forecasting, the University of Bath's study fails to capture the essence and benefits of optimism. Optimists are not just more joyful; they often do better in life, contributing significantly to family, friendship, and community. Life encompasses far more than financial forecasting, and it is the optimists, not the pessimists, who tend to drive positive change and foster a sense of community and belonging. This understanding calls for a more holistic psychological and financial research approach that appreciates optimism's broader, multifaceted impact on human cognition, emotion, and behaviour.
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