Everyone Should Relax and Pooh!
Optimism, Cognitive Function, and The Hundred Acre Wood
A scientific study caught my eye about optimists. No, silly, not the one from Harvard that found that optimists had overall better health, recovered from surgeries quicker, dealt with disease better, and had longer life expectancies. That study is so 2008.
Instead, I am referring to the new study that came out last month called, Looking on the (B)right Side of Life: Cognitive Ability and Miscalibrated Financial Expectations by Chris Dawson. In it Dawson supported his hypothesis that those who make poor financial decisions are overly optimistic. Futhermore, overly optimistic people have lower cognitive abilities. Putting it bluntly, if you see nothing but rainbows and sunshine, you’re stupid and make stupid financial decisions.
Chris Dawson’s lengthy introduction gives a nod to past studies that found positive effects to “unrealistic optimism” or “optimism bias” like greater self-esteem and a sense of hope even in unpleasant situations. He states that there have been over 1,000 studies done on unrealistic optimism explained as “the tendency for individuals to overestimate the chance of favorable outcomes occurring and underestimate the chance of bad (Weinstein, 1980).” What makes his study different is that he wants to focus on whether people choose to be upbeat as a sort of coping mechanism or whether people with an overly optimistic view possess lower cognitive abilities leading to poor financial decisions.
Then as studies must do, Dawson lays out the ground rules for testing his hypothesis: over 36,000 participants in the UK with a specific focus on their expectations for future financial success versus the reality of their financial results. As Dawson points out, “Financial expectations are crucial for key household decisions such as consumption, investments and savings.” Having realistic or more pessimistic outlooks for the future finances will benefit the population rather than having overly optimistic viewpoints that could lead to ruin.
Participants were asked and their responses were recorded regarding if they felt that their financial situations would be better, worse, or the same next year. Then, they were given cognitive tests like listening to a list of ten words then having to orally recall them, starting at 100 and begin subtracting by seven until told to stop, and naming as many animals as possible within one minute.
Once the data was collected, all the math formulas and calculations, scatterplots, and bar graphs produced conclusively proved that people who are overly optimistic are lacking in cognitive abilities and make dire financial decisions based on their optimism.
But all this raises more questions. For example, since this study was only conducted in the UK and has, to my knowledge, not been repeated elsewhere, can one conclude that overly optimistic people are dumber in the UK than in the U.S.? After all the United States has produced some heavy hitters in the business and tech world who took chances in order to be successful.
One has to be quite optimistic to start a business. There are a great deal of failures, to be sure, but the United States has risen above all developed nations when it comes to creating businesses. Even U.S. News and World Report has the United States listed as the number one entrepreneurial country. And our GDP leaves all other countries listed—including China—in the dust.
Dawson would most likely retort that those with successful companies are realistically optimistic, carefully analyzing future goals and setbacks rather than blindly moving ahead based solely on a positive mindset. He would have a point. But think of how many took chances based on a dream, failed several times, learned from their failures, recalculated, and finally succeeded. I would not put Thomas Edison, the Wright Brothers, Milton Hershey, or Steve Jobs in the lower cognitive ability category.
Not being a scientist and certainly lacking the cognitive skills in math submitted in this study, I am still more apt to believe that overly optimistic people make a choice to keep their heads in the financial sand than being cognitively impaired. We are living in an age of self-centeredness, for sure, and there are people in every society (since the beginning of time) who have made rash and ignorant decisions. One quick scan of Instagram and TikTok will show you that. The question becomes if these wannabe influencers behave like idiots or, basically, prostitute themselves because of lower cognition or because they understand the marketplace.
Also, how does life experience factor into financial decision making? Suze Orman, famed financial advisor, illustrated countless times how people’s emotions factor into financial decisions. For example, I have a master’s degree and understand how to budget. But I have also had numerous health problems that have caused me, at times, to spend based on emotion. You can’t take it with you is accurate. Though no one advocates cashing in your 401(k) to raise llamas in the Andes, sometimes an optimistic splurge here or there isn’t so bad. Does that make me an outlier?
For argument sake, however, let’s say this study is accurate. That means all our politicians who spend like drunken sailors should get their heads examined. It’s not just Joe who has cognitive dissonance. Federal and state governmental systems are financially on the brink. Low cognitive skills must be to blame.
What happened between 2008 and 2023 that has caused a reversal in studies regarding optimism? This isn’t the first of its kind study. In 2019, there was Debt Relief Improves Psychological and Cognitive Function, Enabling Better Decision-Making. Also, Time to Get Real on the Power of Positive Thinking was published in 2020. Both can be found at sciencedaily.com.
We see the news and optimism isn’t thriving. The world’s population is dealing with out-of-control substance abuse. Mental health issues are on the rise. Our U.S. active military had its highest suicide rate in 2022, and the same year Americans, in general, had the highest suicide rates since 1941 (The National Pulse). Now we have a study about optimistic people lacking the ability to reason. Why can’t we just be happy? Something is wrong.
As I read through Dawson’s study, for some reason all I kept thinking about were the characters in Winnie-the-Pooh. Pooh, a lovable bear with “very little brain,” who loves deeply and keeps a positive attitude even when things become a bother. He doesn’t always think things through, as evidenced when he eats too much honey and gets stuck in Rabbit’s hole until he loses enough belly fat to squeeze through. But, he has friends at his side, he is optimistic, and he is content. To be sure, Eeyore would score higher on a cognitive test. Yet he’s also the complete opposite personality. He’s forever pessimistic and looking for the other shoe to drop. Which personality type would you prefer to spend a day with?
Pooh’s optimism is needed more than ever, especially in a 24/7 media system that is forever telling us about horrible things. If Winnie-the-Pooh was written today, even Pooh would be on Xanax. We used to recognize ourselves in the simplicity of the characters in The Hundred Acre Wood. But by 2023, the A.A. Milne’s characters have been muddled and altered to fit a new world view.
John Kerry and Greta Thunberg are Eeyores. For all of their so called intelligence, all they do is spread fear and lies about human beings causing climate change. If we don’t act NOW the world will end. They have helped create a generation of depressed youth.
Bill Gates is Rabbit attempting to be pragmatic by pushing lab grown meat to not only fend off starvation (a noble goal) but also curb climate change. Gates’ world will be less reliant on farmers and livestock and more reliant on Bill Gates— which is a power-grabbing, financial win for him (not very noble).
Clergy and educators used to be wise like Owl, but they have joined modern bandwagons rather than guiding their parliament morally, ethically, or educationally.
The entire Republican Party is Piglet without the charm. They are afraid of their own shadows and will never stand up for their constituents. Rather than remaining steadfast with conservative values, they try not offend anyone and end up fighting amongst themselves.
Tigger represents the Democrats. They gleefully bounce from one Party-created disaster to the next. Democrats don’t really care about their constituents and are never truthful. It’s a game to win that makes them giddy without regard for the consequences. Like Tigger, the more they try to “help” the worse things get.
Those of us that still believe that the United States is salvageable are Poohs. We are plain speaking, overly optimistic, and we get ourselves in many misadventures. On the flip side, we know the sun will rise tomorrow and we’ll start anew. We have faith. And whether that makes us seemingly lacking in intellect and “miscalibrated,” so be it. There are too many useless studies trying to drag us down.
As Pooh said, “It is more fun to talk with someone who doesn’t use long, difficult words but rather short, easy words like, ‘What about lunch?’”
I couldn’t agree more.
I’d rather be a Pooh bear. I have a PhD, but was told as a graduate student if you are writing at a level that a fourth grader can’t understand then you’re trying to impress people not communicate I’d rather be an optimistic communicator.