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August 07, 2020 3 min read

Many people are taught the power of positive thinking as the pavement for happiness and fulfillment. While we know that negative thinking is a top predictor of adverse life events, a new study suggests that realistic thinking may be the most effective route¹. 

Drawing of smiley face on the streetA recent study in the Personality and Social Psychology Bulletin compared people's financial expectations in life to their actual outcomes over 18 years². They discovered that overestimating consequences resulted in lower overall well-being than realistic expectations. 
The study inquired about self-reported life satisfaction and psychological distress to determine "well-being."

Additionally, the researchers examined the participants' finances and whether they over or underestimated the money. 

Traditional "positive thinking" suggests that just being optimistic and positive is enough to guarantee happiness and positive outcomes. The study's findings instead emphasize that realistic assessments are far more effective and beneficial than mere positive thinking alone. 

Pessimists commonly justify their negative thinking as realistic, but there is a vast difference between the two. The study found that those with "mistaken expectations, whether optimistic or pessimistic, do worse than realists." In reality, those who were strongly pessimistic experienced a 21.8% decrease in long-term well-being than the realists. 

The common theme is that inaccurate beliefs lead to more unfortunate decisions and, ultimately, worse outcomes. Whether the expectations are rooted in optimism or pessimism, being unrealistic has a negative long-term result. Dr. Chris Dawson, the Associate Professor in Business Economics at Bath's School of Management, explains that an unrealistic mindset most greatly affects "decisions on employment, savings, and any choice involving risk and uncertainty." 

Realism is the Key 

Too often, constant positivity touts as the solution to our happiness. Dr. Chris Dawson and his team set out to carefully examine this prevailing belief and assess if there are any downsides to optimism. 

Man looking gloomyWhat they found is that both unrealistic optimism and pessimism have some glaring downsides. According to Dawson, realists experience the highest long-term happiness. "For optimism, you have the idea that it is good. It makes you feel good now. If you expect good things to happen, future success makes you feel good in the present. By being optimistic, you set yourself up for huge amounts of disappointment. There are two counteracting emotions."³

At the moment, optimism makes us feel good. We feel positive and hopeful about the future. It is great for now but can lead to poor decisions and crushing disappointment later on. 

Imagine the case of COVID-19. According to co-author Professor David de Meza, "Optimists will see themselves as less susceptible to the risk of Covid-19 than others and are therefore less likely to take appropriate precautionary measures." People who are unrealistically positive may not properly assess risk and set themselves up for worse outcomes, impacting them more psychologically due to extreme disappointment. 

On the other hand, pessimism is also dangerous. Dawson explains that pessimism has the reserve effect as optimism. While optimism offers short-term happiness and more long-term disappointment, hopelessness "makes us feel bad now, but on the flip side, you're immune to disappointment." 

The daily gloom, dread, and dominant-negative emotions associated with pessimism also impact people's decisions. In terms of COVID-19, de Meza says that "pessimists, on the other hand, maybe tempted never to leave their houses or send their children to school again." 

Woman basking on the sunlight in the woodsThrough their research, Dawson and de Meza have found that "it's best to be realistic. It increases long-term happiness, long-term psychological well-being by quite a large amount." Being realistic about potential risks and outcomes allows us to make the best decisions possible and set ourselves up for better results. With realistic expectations, you are not crushed by present or future disappointment; you acknowledge and prepare for risks without letting them hold you back.

Staying with the authentic example of the COVID pandemic, de Meza concludes that "neither strategy (optimism or pessimism) seems like a suitable recipe for well-being. Realists take measured risks based on our scientific understanding of the disease." Realists set themselves up for ideal outcomes by acting based on facts rather than emotions and expectations. 

Contrary to popular belief, the recent study demonstrates that realistic thinking is more effective than optimistic and pessimistic perceptions. Biased views force us into counteracting emotions and decision errors that lead to worse outcomes. To increase your chances of well-being and success, it is best to approach decisions and situations with a sober mind. It means that you should be aware and acknowledge both risks and opportunities and base your decisions on accurate information.




(1) Kinderman P; Schwannauer M; Pontin E; Tai S (October 2013) Psychological Processes Mediate the Impact of Familial Risk, Social Circumstances and Life Events on Mental Health

(2) de Meza, D; Dawson, C (July 2020) Neither an Optimist Nor a Pessimist Be: Mistaken Expectations Lower Well-Being

(3) The University of Bath (June 2020) Realists experience the highest long-term happiness