Being Optimistic Is Good. Knowing about Optimism Bias Is Better.

The belief that things will be better in the future is called optimism bias. Being overly optimistic can lead you to miss an important health check up or make bad financial decisions.

A close up of a hand doing a thumbs-up sign. (Klaus Vedfelt)
A close up of a hand doing a thumbs-up sign. (Klaus Vedfelt)

Most of us think we are prudent in how we make decisions. We weigh our options and make the best possible choice in any given situation. But the cognitive reality is that people constantly underestimate the likelihood of something bad happening to them and overestimate the chances of positive events. This belief that things will be better in the future is known as optimism bias. Being overly optimistic can lead you to miss an important health check up or make bad financial decisions. There are also larger societal implications.

Recent research by Professor Chris Dawson from UK's University of Bath, published in the Strategic Entrepreneurship Journal, points to the significant effect optimism bias has on the labor market.

The study shows how financial optimism bias is both a necessity and the Achilles's heel of entrepreneurship. Starting your own business is a very forward-looking action but you open yourself up to much uncertainty. And studies have shown that optimism is highest at such moments, especially as the fate of the business is in your hands. Notably, research asserts that optimists are more likely to be attracted to activities that inspire more optimism.

While being your own boss tends to cause greater job satisfaction, there's a downside. For one, according to studies cited by Dr. Dawson, most entrepreneurs don't do well—a few are, statistically speaking, very successful. And with the amount of money people invest in their businesses (70% on average), the return on investment is the same as if they invested in stocks that tracked the market. Too many people go into it than should, he concludes.

Another problem is that optimists tend to be dissatisfied with their pay. In fact, the higher their financial optimism is before going into self-employment, the more likely they'll be dissatisfied with their entrepreneurial earnings.

Optimism bias also finds its way into sports. A 2015 study of NFL fans and sports reporters found they had overly optimistic expectations of their team's success. When 1,116 fans were asked to predict how many games their team would win, the average prognostication was 9.59. As there are 16 games in total, the average should be 8. The difference, according to the research, is due to optimism bias. Getting passionate about a team makes you think they'll be more successful than can be reasonably expected.

Buffalo Bills fans watch the action against the Cincinnati Bengals at Paul Brown Stadium on December 19, 2004 in Cincinnati, Ohio. (Photo by Andy Lyons/Getty Images)

A similar trend held among 32 ESPN reporters studied by the scientists. They were each assigned to one NFL team. When predicting their team's win total, they were also overly positive.

"Previous studies suggest that just following a team intensely can lead to bias, so that is also probably going on here. Fans and experts alike can get focused on improvements or changes for the team that they follow, and don't realize that it's an arms race with other teams who are also improving," said Professor Brad Love from University College London, the study's senior author.

Tali Sharot, a neuroscientist at University College London, wrote a book on the subject where she explores what makes our brain engage in overestimating outcomes. Dr. Sharot works in experimental psychology, exploring how people make decisions. She writes that “our brains aren't just stamped by the past. They are constantly being shaped by the future."

In her 2012 TED talk, Sharot calls optimism bias a “cognitive illusion" which 80% of us have. She also defends it as an inevitable and useful feature of the human experience, giving three reasons for why it's good to be an optimist:

1. “Whatever happens, whether you succeed or you fail, people with high expectations always feel better."

2. “Regardless of the outcome, the pure act of anticipation makes us happy."

3. “[Optimism] changes objective reality. It acts as a self-fulfilling prophecy." Being optimistic has been shown to lead to success and health benefits of reduction in anxiety and stress.

Sharon's larger point in the talk is that as long as we are aware of the our own optimism biases, we can protect our actions from its harms. But this should not ruin the optimism that we often need.

See the full talk below:

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A landslide is imminent and so is its tsunami

An open letter predicts that a massive wall of rock is about to plunge into Barry Arm Fjord in Alaska.

Image source: Christian Zimmerman/USGS/Big Think
Surprising Science
  • A remote area visited by tourists and cruises, and home to fishing villages, is about to be visited by a devastating tsunami.
  • A wall of rock exposed by a receding glacier is about crash into the waters below.
  • Glaciers hold such areas together — and when they're gone, bad stuff can be left behind.

The Barry Glacier gives its name to Alaska's Barry Arm Fjord, and a new open letter forecasts trouble ahead.

Thanks to global warming, the glacier has been retreating, so far removing two-thirds of its support for a steep mile-long slope, or scarp, containing perhaps 500 million cubic meters of material. (Think the Hoover Dam times several hundred.) The slope has been moving slowly since 1957, but scientists say it's become an avalanche waiting to happen, maybe within the next year, and likely within 20. When it does come crashing down into the fjord, it could set in motion a frightening tsunami overwhelming the fjord's normally peaceful waters .

"It could happen anytime, but the risk just goes way up as this glacier recedes," says hydrologist Anna Liljedahl of Woods Hole, one of the signatories to the letter.

The Barry Arm Fjord

Camping on the fjord's Black Sand Beach

Image source: Matt Zimmerman

The Barry Arm Fjord is a stretch of water between the Harriman Fjord and the Port Wills Fjord, located at the northwest corner of the well-known Prince William Sound. It's a beautiful area, home to a few hundred people supporting the local fishing industry, and it's also a popular destination for tourists — its Black Sand Beach is one of Alaska's most scenic — and cruise ships.

Not Alaska’s first watery rodeo, but likely the biggest

Image source: whrc.org

There have been at least two similar events in the state's recent history, though not on such a massive scale. On July 9, 1958, an earthquake nearby caused 40 million cubic yards of rock to suddenly slide 2,000 feet down into Lituya Bay, producing a tsunami whose peak waves reportedly reached 1,720 feet in height. By the time the wall of water reached the mouth of the bay, it was still 75 feet high. At Taan Fjord in 2015, a landslide caused a tsunami that crested at 600 feet. Both of these events thankfully occurred in sparsely populated areas, so few fatalities occurred.

The Barry Arm event will be larger than either of these by far.

"This is an enormous slope — the mass that could fail weighs over a billion tonnes," said geologist Dave Petley, speaking to Earther. "The internal structure of that rock mass, which will determine whether it collapses, is very complex. At the moment we don't know enough about it to be able to forecast its future behavior."

Outside of Alaska, on the west coast of Greenland, a landslide-produced tsunami towered 300 feet high, obliterating a fishing village in its path.

What the letter predicts for Barry Arm Fjord

Moving slowly at first...

Image source: whrc.org

"The effects would be especially severe near where the landslide enters the water at the head of Barry Arm. Additionally, areas of shallow water, or low-lying land near the shore, would be in danger even further from the source. A minor failure may not produce significant impacts beyond the inner parts of the fiord, while a complete failure could be destructive throughout Barry Arm, Harriman Fiord, and parts of Port Wells. Our initial results show complex impacts further from the landslide than Barry Arm, with over 30 foot waves in some distant bays, including Whittier."

The discovery of the impeding landslide began with an observation by the sister of geologist Hig Higman of Ground Truth, an organization in Seldovia, Alaska. Artist Valisa Higman was vacationing in the area and sent her brother some photos of worrying fractures she noticed in the slope, taken while she was on a boat cruising the fjord.

Higman confirmed his sister's hunch via available satellite imagery and, digging deeper, found that between 2009 and 2015 the slope had moved 600 feet downhill, leaving a prominent scar.

Ohio State's Chunli Dai unearthed a connection between the movement and the receding of the Barry Glacier. Comparison of the Barry Arm slope with other similar areas, combined with computer modeling of the possible resulting tsunamis, led to the publication of the group's letter.

While the full group of signatories from 14 organizations and institutions has only been working on the situation for a month, the implications were immediately clear. The signers include experts from Ohio State University, the University of Southern California, and the Anchorage and Fairbanks campuses of the University of Alaska.

Once informed of the open letter's contents, the Alaska's Department of Natural Resources immediately released a warning that "an increasingly likely landslide could generate a wave with devastating effects on fishermen and recreationalists."

How do you prepare for something like this?

Image source: whrc.org

The obvious question is what can be done to prepare for the landslide and tsunami? For one thing, there's more to understand about the upcoming event, and the researchers lay out their plan in the letter:

"To inform and refine hazard mitigation efforts, we would like to pursue several lines of investigation: Detect changes in the slope that might forewarn of a landslide, better understand what could trigger a landslide, and refine tsunami model projections. By mapping the landslide and nearby terrain, both above and below sea level, we can more accurately determine the basic physical dimensions of the landslide. This can be paired with GPS and seismic measurements made over time to see how the slope responds to changes in the glacier and to events like rainstorms and earthquakes. Field and satellite data can support near-real time hazard monitoring, while computer models of landslide and tsunami scenarios can help identify specific places that are most at risk."

In the letter, the authors reached out to those living in and visiting the area, asking, "What specific questions are most important to you?" and "What could be done to reduce the danger to people who want to visit or work in Barry Arm?" They also invited locals to let them know about any changes, including even small rock-falls and landslides.

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