It may not pay to look on the bright side: Being optimistic can lead to making bad decisions, research finds
- The study surveyed 36,000 British households and the data included cognitive test results
Anyone entering the new year with renewed optimism should beware: research shows that positive thinking may not lead to a prosperous future.
Researchers at Bath University have found that an optimistic outlook can lead to poor decision-making, with serious consequences for people's financial well-being.
Excessive optimism is also linked to lower cognitive ability, with dreamers performing poorly on tests of verbal fluency, problem solving, numerical reasoning and memory.
In contrast, those with higher cognitive skills were more realistic – even pessimistic – about the future.
Researchers from Bath University have found that an optimistic outlook can lead to poor decision-making, with serious consequences for people's financial well-being (Stock Image)
Excessive optimism is also linked to lower cognitive ability, with dreamers doing poorly on tests of verbal fluency, problem solving, numerical reasoning and memory (Stock Image)
The study used data from a British survey of 36,000 households, including the results of cognitive tests.
Researchers looked at people's expectations of financial well-being and compared them to actual results, which were measured annually for ten years.
'The results are clear. Plans based on overly optimistic beliefs lead to bad decisions and will inevitably produce worse results than realistic beliefs.
People are fooling themselves to a certain extent,” says Dr Chris Dawson of the university's School of Management.