Extreme optimists are simple-minded

Overly optimistic people overestimate the probability of positive outcomes occurring - such as how much money they will earn or how long they will live. On the other hand, they underestimate the occurrence of negative circumstances, such as the likelihood of developing an alcohol problem. Such rose-tinted spectacles can lead to systematic decision-making errors and risky behaviour. Chris Dawson from the University of Bath wanted to know why so many people are nevertheless prone to this cognitive bias, and found that low mental ability leads to more self-flattering beliefs.

The economist used data from a representative British long-term study and analysed the information from more than 36,000 households. Among other things, he compared people's expectations of their financial well-being with their actual financial status and also took into account their intellect, including verbal fluency, fluency of thought, numeracy and memory. He was able to link excessive optimism with lower cognitive abilities. In addition, those with the best scores were 22 per cent more likely to be "realistic" and 35 per cent less likely to be "extremely optimistic". Such test subjects were also more likely to have pessimistic expectations of the future.

Decisions on important financial issues such as investments, employment or savings were particularly susceptible to this effect and sometimes had serious consequences for the individual. The author surmises that intelligent individuals are more capable of suppressing automatic optimistic reactions when existential matters are at stake.

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