Cheerful Pessimism

Even though optimistic people live more successful lives, pessimism has its place in the short term. Pessimism can support the realism we so often need. Confused? Think about a pilot, for instance, you’d rather have him an upbeat outlook at security or a mercilessly realistic one? Let’s call it practical pessimism because it serves us well. It is pessimism in the short term. You can still be optimistic about the end goal. But as Tai Lopez says, practical pessimism will lead you to your optimistic end goal.

Charlie Munger, the Billionaire who is known for his wisdom about decision making and rationality, has called himself a “cheerful pessimist.” I’d like to adopt his style and here is why. When someone asked Martin Seligman — the father of positive psychology – about helping him to change the top executives of his company to become optimists, he was reluctant. The reason is that he was worried about the harm he might do if those executive corps might need a healthy dose of pessimism. Someone needs to put breaks on the overly optimistic executives after all.

There is considerable evidence that depressed people are wiser as an experiment from Lauren Alloy and Lyn Abramson showed. Test subjects were given three different degrees of control over the lighting of a light. One group had perfect control, the second group had no control whatsoever. The people in both groups then were asked to judge how much control they had. Depressed people were very accurate both when they had control and when they didn’t. But the nondepressed people judged that they had a great deal of control even if they didn’t!

The investigators then wondered if switching lights might not important enough to people, so they added monetary rewards. If the light went on the subjects won money, if it didn’t they lost money. Under one condition all the people had some control, but the task was rigged so that everyone lost money. In this situation, the nondepressed people said they had less control than they actually had. When the task was rigged so that they won money, they said they had more control than they actually had. Depressed people, on the other hand, were rock solid and accurate whether they won or lost.

Now I understand why the best Investors like Warren Buffett and Charlie Munger have such a cheerful dose of pessimism! Reading the book Learned Optimism was the first time I read about actual experiments showing the use of practical pessimism. Other experiments showed that pessimistic people are much more accurate when they asses their own skills. Depressed people also are more accurate when they recall memories of the past. In short, lopsidedness among nondepressives and evenhandedness among depressives seems to be the norm.

It is important to notice however that these findings don’t make pessimism superior to optimism. It is still the optimists who have more success in life. They have what it takes to take action, while the pessimists become lethargic. Evolution has preserved certain pessimism because it serves us in some situations. But do we have to become pessimists just to get the benefits of seeing things more clearly? I don’t think so. I think we can train ourselves to become more prudent and realistic while preserving optimism for the end goal.

Perhaps the best blend is to become cheerful pessimists like Charlie Munger.