Study: For Long-Term Well-Being, Turn to Power of Realistic Thinking

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Emerging research in the journal Personality & Social Psychology Bulletinsuggests realistic thinking is a more effective strategy than forced positive thinking for obtainment of long-term happiness.

In a new study, researchers from the University of Bath and London School of Economics and Political Science (LSE) studied people’s financial expectations in life and compared them to actual outcomes over an 18-year period.

They found that when it comes to the happiness stakes, overestimating outcomes was associated with lower well-being than setting realistic expectations.

The findings point to the benefits of making decisions based on accurate, unbiased assessments.

The study results question the “power of positive thinking.” This strategy frames optimism as a self-fulfilling prophecy in which believing in success helps deliver success, along with immediate happiness generated by picturing a positive future.

Negative thinking should not replace positive thinking though. Pessimists also fared badly compared to realists, undermining the view that low expectations limit disappointment and present a route to contentment.

Their numbers are dwarfed though by the estimated 80 percent of the population classed as unrealistic optimists. These people tend to overestimate the likelihood that good things will happen and underestimate the possibility of bad things. High expectations set them up for large doses of destructive disappointment.

The study findings are based on an analysis from the British Household Panel Survey — a major UK longitudinal survey — tracking 1,600 individuals annually over 18 years.

To investigate whether optimists, pessimists or realists have the highest long-term well-being the researchers measured self-reported life satisfaction and psychological distress. Alongside this, they measured participants’ finances and their tendency to have over- or underestimated them.

“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,” said Dr. Chris Dawson, associate professor in business economics in Bath’s School of Management.

“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.”

The results could also be due to counteracting emotions, say the researchers. For optimists, disappointment may eventually overwhelm the anticipatory feelings of expecting the best, so happiness starts to fall. For pessimists, the constant dread of expecting the worst may overtake the positive emotions from doing better than expected.

In the context of the Covid-19 crisis, the researchers highlight that optimists and pessimists alike make decisions based on biased expectations: Not only can this lead to bad decision-making but also a failure to undertake suitable precautions to potential threats.

“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,” said co-author Professor David de Meza from LSE’s Department of Management.