In the February 2004 issue of “Personality and Social Psychology Bulletin,” Dr Brian Gibson and Dr David Sanbonmatu explained the results from their study. 308 volunteers gave an assessment of their expectations prior to gambling, and based on this information the participants were deemed either optimists or pessimists. The optimists were found to get caught up in the excitement of winning and prolong a losing streak, whereas the pessimists were more likely to recall their losses and adjust their behavior accordingly, which led to better gambling results.

The conclusion of the study was that pessimists were better at evaluating negative risks. They easily recall loss and make moves to avoid it. Basically, they learned from their bad experiences and made effort to prevent it from happening again.

The optimists would remain unrealistically hopeful even when the odds were against them. They would recall the thrill of winning and continue believing that their next lucky shot would be there soon, but this would prolong their losing streak. As Albert Einstein said, “Definition of Insanity: Doing the same thing over and over again and expecting different results.”

The Good Side of Pessimism

The study showed that pessimists are more cautious when it comes to risk. That makes them better at not only gambling, but investing as well. Many people see the advantage of being pessimistic when it comes to managing a budget, where unfortunate circumstances are planned for; buyer’s remorse is felt beforehand, preventing an unnecessary purchase; and a realistic view on one’s finances takes place (e.g., “I can’t afford the latest and greatest”). It’s like the opposite of entitlement. Instead, pessimists feel that they are not exempt from the woes of the world and accept their fate. They realize bad stuff happens and it’s just as likely to happen to them than to anyone else.

Pessimists may not make for a cheerful wait staff at a restaurant, but they sure make the best lawyers. Seligman’s survey of law students at the University of Virginia showed that pessimists were more successful in their pursuit of becoming a lawyer and even got better job offers after school. For some well paid careers being a pessimist proves to be more profitable.

The Flip Side

As the Wall Street Journal points out the most optimistic of optimists actually set themselves up for failure by expecting everything to go their way and not preparing for setbacks. US News Money points out that the most pessimistic of pessimists give up hope, and rather than making preparatory moves with their money are overly conservative or irresponsible, thinking, “What’s the use anyway?”

The Best Way

Being a realistic optimist is overall the best way to be; to expect that good things can happen, but that bad things are just as likely to happen so it’s important to be prepared, while keeping the mindset that it will get better with time and effort. But if you must be pessimistic, the best place to do it is with your money. Expect the worse, plan for emergencies, underestimate your income and overestimate your expenses, and never expect money to magically appear when you need it. Perhaps that’s not pessimistic at all, just realistic.

(Original photo by Artemuestra, used under Creative Commons license.)