Economists find positive thinking may not make you rich but this logic could

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Maintaining a positive attitude and mindset is often described as a key aspect of living a happy, meaningful life. Indeed, numerous schools of thought, self-help, and philosophy believe that our thoughts dictate our realities. Think positively, and everything else will work itself out accordingly.

There’s no doubt that optimism is an admirable trait, but a surprising new study is challenging the notion that positive thinking always leads to happiness. Researchers from the University of Bath and the London School of Economics and Political Science found that realists usually attain more long-term wellbeing than optimists.

A group of 1,600 participants was surveyed on their financial expectations for the future, and then had their actual financial outcomes tracked for 18 years. Each person also filled out a series of surveys measuring their life satisfaction and any psychological distress.

Regarding long-term happiness, realistic expectations were associated with greater feelings of wellbeing than overestimating one’s financial future.

With these results in mind, the study’s authors say it’s advisable to make decisions based on accurate, unbiased facts. It’s important to believe you can be successful and achieve your dreams, but it’s also a mistake to assume that everything will just fall in place because you’re being optimistic.

Positivity is often advertised as a self-fulfilling prophecy; “I’m going to make $10 million because I believe I’ll make $10 million.” Ultimately, though, if one doesn’t make any actual plans to achieve that goal, they are setting themselves up for inevitable disappointment and sadness when $10 million doesn’t fall in their lap.

So, should everyone just be negative all the time to avoid ever being disappointed or let down? Pessimism isn’t the answer either, according to the study’s results. Pessimists, or people who constantly see nothing but the downside of life, also fared poorly in the study compared to realists. 

All of this suggests that the best mindset to take in this life is a realistic one. It’s important to stay upbeat, but not so optimistic that one loses touch with reality. 

Interestingly, it’s estimated that most people are “unrealistic optimists,” even if they don’t necessarily realize it. Most of us simply assume good things will happen to us, events will fall in our favor, etc, while simultaneously failing to consider any possible snafus.

“Plans based on inaccurate beliefs make for poor decisions and are bound to deliver worse outcomes than would rational, realistic beliefs, leading to lower well-being for both optimists and pessimists. Particularly prone to this are decisions on employment, savings, and any choice involving risk and uncertainty,” explains Dr. Chris Dawson, Associate Professor in Business Economics in Bath’s School of Management, in a release.

“I think for many people, research that shows you don’t have to spend your days striving to think positively might come as a relief. We see that being realistic about your future and making sound decisions based on evidence can bring a sense of well-being, without having to immerse yourself in relentless positivity,” he continues.

The study’s authors also hypothesize that these findings may be occurring in pessimists and optimists for different reasons. Optimists see their wellbeing decrease over time because they’re unprepared to deal with disappointment, while pessimists find it hard to enjoy legitimately successful developments because they’re constantly expecting the worst to occur at any given moment.

When it comes to the ongoing COVID-19 pandemic, researchers say that both optimists and pessimists may be allowing their mindsets to play into their response to the viral threat.

“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. Pessimists, on the other hand, may be tempted to never leave their houses or send their children to school again. Neither strategy seems like a suitable recipe for well-being. Realists take measured risks based on our scientific understanding of the disease,” says co-author Professor David de Meza, of LSE’s Department of Management.

The full study can be found here, published in Personality and Social Psychology Bulletin.