Unchecked Optimism
Why are we blind to trouble?
Investing principles applied to life: Honesty. Clear thinking. Humility.
A positive outlook for the future inspires us. It shields us from demoralizing obstacles and ignites our motivation to push forward with a delightful naivety.
“If I knew it was this hard I never would've done it” – countless entrepreneurs, founders, and CEOs.
But. While optimism can be helpful before embarking on a new venture, unchecked optimism during that venture can be fatal.
"The Optimism Bias: A Tour of the Irrationally Positive Brain" is a book by Tali Sharot that explores the tendency of human beings to be overly optimistic about the future. Sharot researches the neuroscience behind optimism and she also examines the evolutionary roots of optimism and its implications for understanding human behavior.
She argues that optimism bias is a fundamental aspect of human psychology.
Neuroscience of optimism
Believing the future will be better than the past/present is known as optimism bias. Like with all biases, it commonly lacks a rational basis, which in this scenario involves the belief that the future will be superior to the present or past. But there certainly are logical explanations for why this bias exists.
“Humans do not hold a positivity bias on account of having read too many self-help books,” Tali Sharot writes in her book, “Rather, optimism may be so essential to our survival that it is hardwired into our most complex organ, the brain.”
Let's delve into the brain, starting with the 'boss' itself—the prefrontal cortex (PFC). The PFC is the control center of the brain and helps us make decisions and control our behavior. Studies have shown that this area tends to favor optimistic outlooks over pessimistic ones due to its involvement in emotional regulation and stress reduction. Optimism is associated with lower stress levels, so the PFC promotes optimism as a means of achieving well-being.
Next up is the dopamine system, which activates when we anticipate rewards (or experience positive outcomes). The activation of our dopamine system brings about a pleasurable feeling as dopamine is released throughout our body. Our brain will thus favor optimistic outlooks because they are closely linked to the positive feeling of a dopamine rush.
These are just two biological examples out of several mechanisms working together to form a bias for optimism.
Subjective thought tangent: Research has shown that humans tend to weigh negative information more heavily than positive information. For instance, losing $1000 is typically more than twice as painful as the joy from gaining $1000. Look up Tversky and Kahneman’s work on this subject. It's interesting to note how Sharot highlights the brain's tendency to downplay the likelihood of future negative outcomes when we know our reactions to those are so harmful.
Unchecked optimism
We've seen that there are internal forces inclined toward optimism, which serve our well-being more than actually predicting future outlooks. If we know that our perspectives of the future by default are subject to optimism, then checking in on our optimism regularly is necessary.
Like with a compass needle that by default is off by a couple of degrees, regular evaluations and inspections of the terrain are necessary to keep moving in the right direction.
We consume a lot of information, much of which can provide valuable data points for assessing the future. However, if this information is unconsciously clothed in optimism, the real value of that information decreases.
“[Optimism bias] takes rational reasoning hostage”, in the words of Tali Sharot.
And if our default optimism also acts as a navigator for what information we absorb, truly valuable information about what lies ahead may never meet our eye. It's like wearing rose-colored glasses that filter out the nuances and potential warning signs that we need to be aware of, leading to complacency and overconfidence.
What should be an equal approach of optimism and realistic assessment can become completely out of balance.
To end
Optimism is truly powerful, fueling our drive and ambition toward a brighter tomorrow. “Although the belief in a better future is often an illusion,” Sharot explains, “optimism has clear benefits in the present. Hope keeps our minds at ease, lowers stress, and improves physical health.” This positive outlook not only energizes us to pursue our goals but also fosters a powerful hope for the future.
However, optimism is a double-edged sword.
It will get you going, yes, but unchecked optimism can also be what causes the fall of whatever you got going.
See also an earlier essay on low expectations.