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Optimism Bias
WHY WE’RE WIRED TO LOOK ON THE BRIGHT SIDE?
Nope.
Not Me.
No Way.
Our brain has a built-in Optimism Bias. The phenomenon is also often referred to as "the illusion of invulnerability," "unrealistic optimism," and a "personal fable". The Optimism Bias refers to our tendency to overestimate our chances of positive experiences and underestimate our chances of negative experiences in the future. This can cause overconfidence in our professional ventures and personal lives.
Optimism Bias phenomenon was initially described by Weinstein in 1980, who found that the majority of college students believed that their chances of developing a drinking problem or getting divorced were lower than their peers. At the same time, the majority of these students also believed that their chances of positive outcomes like owning their own home and living into old age were much higher.
Research consistently supports that most of the population (approx. 80%) exhibit an Optimistic Bias. However, there are large costs to the Optimism Bias in our personal and professional lives. We overestimate our chances of success. We assume that the projects we plan will be completed in shorter time and budget than they actually are. We assume our relationships will last longer than they realistically might.
This over-optimism can be traced to many sources. One of the most powerful is the tendency of individuals to exaggerate their own talents to believe they are above average in their endowment of positive traits and abilities. And this over-optimism can feed our over-confidence bias. We are likely to think of ourselves not only as better drivers and planners than we truly are, we may also over-estimate our kindness, honesty, modesty and other moral personal traits.
In business situations, people’s native optimism is further magnified by two other kinds of cognitive bias — Anchoring and Competitor Neglect. In addition, political pressures to emphasize the positive and downplay the negative undermines an organization’s ability to think critically.
On the other hand, it's necessary to be an (realistic) Optimist. Optimism motivates us to pursue our goals. After all, if we didn't believe that we could achieve success, why would we even bother trying? Optimism enhances well-being by creating a sense of anticipation about the future. Optimism encourages us to persevere, even in the face of hardship or rejection. It pushes us to believe in our own abilities. It's an evolutionary hallmark, because it facilitates envisioning what is possible, allowing us to be courageous and innovative.
Yet, overall it is important to be aware of how our optimism can blind us to negative outcomes and result in poor decision making, which can sometimes have disastrous results. People might skip their annual physical health check-ups, not wear a helmet or their seatbelt or not save for an emergency fund.
Being an optimistic does not mean everything will be flawless and awesome. It means there are going to be failures and setbacks, but those are what inspires people to find and innovate an enhanced, alternate or a new solution.
“Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be. We also tend to exaggerate our ability to forecast the future, which fosters overconfidence. In terms of its consequences for decisions, the optimistic bias may well be the most significant cognitive bias.”
Based on Kahneman’s wide research, he suggests two different ways to combat Optimism Bias:
Taking an Outside View — Also known as reference-class forecasting, under this approach we primarily identify an appropriate reference class; meaning we should look at base rates on how long it takes to complete a specific type of task on average and then use this as the basis to make prediction judgements.
A Pre-mortem Approach — As part of this approach, team members predict how a project could fail and then work backwards to prevent these issues. The pre-mortem approach is an exercise for teams to predict potential areas of failure that could go wrong during the project and why. By forcing team members to consider negative outcomes, we can resist the shortsightedness of overconfidence.
Blind optimism is not good but a little optimism does go a long way. It can act as a self-fulfilling prophecy. By believing that we will be successful, people are in fact more likely to be successful.
“In her 2012 TED talk cognitive neuroscientist Tali Sharot explains:
If you are an extreme optimistic penguin who just jumps down blindly hoping for the best, you might find yourself in a bit of a mess when you hit the ground. But if you’re an optimistic penguin who believes they can fly, but then adjusts a parachute to your back just in case things don’t work out exactly as you had planned, you will soar like an eagle, even if you’re just a penguin.”