The voice of the skeptic - here goes the excessive optimism! / Michael Shermer

An extreme distortion of reality can be dangerous 

Are you a better than average driver? I am Knows I am like that. I am willing to bet that 90% of you believe that you are like that too because it is a well-documented phenomenon known as the "above average effect", which is part of the psychology of optimism.

And so the psychologist Daniel Kahneman writes in his book "Thinking, Fast and Slow" published in 2011: "People tend to be overly optimistic when it comes to their relative status in any activity in which they have moderate success." But optimism can quickly degenerate into over-optimism. Studies have shown, for example, that senior financial managers "are grossly overconfident about their ability to predict the market." This became clear in a test questionnaire submitted to them by researchers from Duke University who collected 11,600 forecasts of senior financial managers and compared them to the real market results. The researchers found a correlation smaller than zero. Such overconfidence can be costly. "The survey showed that the managers who were the most confident and optimistic about the Standard & Force (SP) stock index also demonstrated excessive confidence and over-optimism about their companies' chances of success, and therefore they also took higher risks than others," writes Kahneman.

Isn't optimistic risk-taking an integral part of building a successful business? Yes, but in moderation. "One of the benefits of an optimistic nature is in encouraging adherence to a goal in the face of obstacles," explains Kahneman. But a "persistent optimistic bias" can be harmful: "Most of us see the world as a friendlier place than it really is, we value our virtues more than they really are and think the tasks we take on are more attainable than they probably really are." For example, only 35% of small businesses in the US survive. But in a survey of entrepreneurs, 81% of them estimated that their chances of success are more than 70%, and 33% of them even went so far as to state that their chances of success are 100%.

So what? Kahneman cites a study conducted in Canada, which tested participants in an inventor assistance program who paid to receive an objective assessment of their invention, based on 37 criteria. The study found that 47% of inventors "continued to develop their invention even after being told the project was hopeless. These persistent (or stubborn) entrepreneurs averaged double their losses before giving up.” Failure is not a possibility that crosses an entrepreneur's mind, but all too often it is the outcome in reality. Such high-risk entrepreneurs ignore the phenomenon of loss aversion that most of us feel: the loss hurts and hurts us twice as much as the pleasure of the profit. A trait that developed in us during evolution in an environment of scarcity and uncertainty.

Those who are sworn in with an optimistic bias apparently succeed in overcoming loss aversion due to a phenomenon I call "biographical sample bias": biographies (and autobiographies) are written about entrepreneurs who have succeeded to an exceptional degree, while nothing is written about those who fail.

Remember Steve Jobs. His persistent optimistic bias was channeled through what one of Jobs's colleagues called a "distorting reality field." According to Jobs' biographer, Walter Isaacson, "At the root of Jobs' reality distortion was the belief that the rules did not apply to him... He had a feeling that he was special, chosen, enlightened." Jobs' optimism was transformed into a reality-distorted ambition to control the laws that only applied to others. This is manifested in a variety of ways: legality (use of handicapped parking, driving without a license plate), morality (accusing Microsoft of stealing ideas from Apple while both companies stole the idea of ​​the mouse and the graphical user interface from Xerox), personality (refusal to recognize his daughter Lisa even after a paternity test - meaningful) and practicality (defeating the rich giant IBM in the computer market).

But there was one reality that Jobs' warped-reality optimism couldn't completely bend to his willpower: cancer. After he was first diagnosed with a treatable type of pancreatic cancer, he initially refused surgery. "I really didn't want them to open my body, so I tried to see if some other things would do the job," he admitted to Isaacson. Those other things included drinking copious amounts of carrot and fruit juice, colonics, hydrotherapy, acupuncture and herbs, veganism and "some other treatments he found online or by consulting with people around the country and contacting them," Isaacson says. All this did not work.

A lesson emerges from this heroic tragedy: reality must prevail over hopeless optimism. Nature cannot be distorted.

About the author

Michael Shermer is the publisher of Skeptic magazine (www.skeptic.com his new book is The Believing Mind. Follow him on Twitter: @michaelshermer