Having realistic expectations could make you happier than being over-optimistic

There are fairly good arguments for optimism and pessimism both. Optimists, who see the best in everything, are likely to have a sunnier disposition; pessimists, on the other hand, would argue that their negative expectations never leave them disappointed when the worst actually happens.

But in the end, it might be realists who win out. According to a study published in Personality and Social Psychology Bulletin, being realistic about your life outcomes is likely to make you happier than overestimating them.

David de Meza from the London School of Economics and Chris Dawson from the University of Bath examined data from 1,601 individuals who took part in the British Household Panel Survey between 1991 and 2009. This longitudinal survey covers a range of topics including health, finances, household composition and more.

The team looked first at unrealistic optimism. Unlike optimism, this isn't simply a belief that something good might happen, but an "excessive belief in the probability of good realisations" that is so strong you are likely to make mistakes in your predictions.

To measure levels of unrealistic optimism, two questions were pulled out of the survey: "how do you think you will be financially a year from now?" and "would you say that you are better off, worse off or the same financially than you were a year ago?". Comparing these expectations year on year with participants' actual financial situation was the basis for measuring optimism.

The researchers looked at how this unrealistic optimism was related to participants'  psychological wellbeing and life satisfaction. (They also took into account demographic information which has been linked to wellbeing, including marital status, children, monthly income, education attainment, location and consumption of tobacco.)

As expected, those with realistic beliefs had higher psychological wellbeing than those with both low and high expectations. The most pessimistic participants had a 37.2% higher level of psychological distress than realists, with optimists not faring much better: they had an 11.8% higher level of distress. Life satisfaction also suffered for both parties: for those holding the most pessimistic expectations there was a 21.8% reduction and for the most optimistic a 13.5% reduction in general wellbeing compared to realists.

Why this was the case, however, is unclear. It could be that optimists end up perpetually disappointed as their expectations fail to materialise, and although pessimists may avoid that disappointment, they may be more likely to experience dread or anxiety before anything even happens.

The team also points out that any plan made based on an inaccurate belief is likely to deliver a worse outcome than one based on rationality. Both over- and under-estimating financial outcomes, for example, is unlikely to yield good results: optimists may fail to adequately save, whilst pessimists could avoid profitable opportunities.

Whether unrealistic optimism would also have the same effect in a non-financial domain is yet to be seen. Finances are particularly susceptible to unrealistic optimism, which research has shown tends to be greatest in areas perceived to be under an individual's control. It would be interesting to know whether similar results are found for an outcome that is completely out of someone's control — their genetic susceptibility to a particular medical condition, for example.

None of this is to say that optimism in general is a bad thing, and some research has suggested it has benefits of its own. But being overly or unrealistically optimistic may not provide those same effects.

For those who consider themselves more realistic than optimistic, however, the study's results could come as a relief. Culturally, positive thinking is fairly influential, with self-help gurus and wellness influencers often promoting it as a way to achieve life goals; it's also been the basis of many bestselling books. But, as this study shows, rejecting positive thinking doesn't have to make you miserable.

Further reading

– Neither an Optimist Nor a Pessimist Be: Mistaken Expectations Lower Well-Being

About the author

Emily Reynolds is a staff writer at BPS Research Digest