Does it pay to be optimistic?

Does it pay to be optimistic?

Does it pay to be optimistic? 1920 1280

When it comes to decision-making, Optimism Bias can play a huge part. Yet having a tendency towards this bias doesn’t simply mean we always have a sunny outlook on life. It causes someone to believe that they themselves are less likely to experience a negative event and more likely to enjoy a positive outcome than other people with the same attributes and circumstances.

Interestingly this can also lead us to making poor decisions.

For example, we may decide we are perfectly fine to skip our yearly dental check-up when in reality this could mean certain things get missed. Or we may think that we need to invest less than is advisable for a comfortable retirement, because everything will turn out well and we will be wealthy in old age regardless.

Cognitive neuroscientist Tali Sharot, author of The Optimism Bias: A Tour of the Irrationally Positive Brain, notes that this bias is very common and is seen across the world.

Optimism Bias can also have benefits. For example, if we expect good things to happen we are more likely to be happy. Having an optimistic outlook on life is beneficial for our mental health.

As a Financial Services Professional guiding and advising clients through their financial decisions, how do you respond if your client is prone to this type of bias? They themselves may be unaware that Optimism Bias is potentially sabotaging the fulfilment of their financial objectives and achieving good outcomes. As a professional it is key to be aware of this possibility, as it may undermine the value of your advice and guidance, however good this is.

To find out more about our bespoke behavioural bias software, which provides clients with insights into a range of biases, including Optimism Bias, contact us at [email protected]

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