Researchers from the University of Bath (UOB) found that higher levels of financial optimism were associated with poorer mental performance. The research was published in the journal Personality and Social Psychology Bulletin.
The study’s authors surveyed thousands of people in the UK about their economic expectations and compared the answers with their actual financial situation several years later. The surveys also included questions designed to assess verbal fluency, mathematical ability, abstract thinking, memory, and word recall.
Those with higher cognitive abilities tended to be less optimistic: Participants who scored highest on cognitive tests were 22% more likely to be classified as realistic.
Previous studies have found a link between an optimistic outlook on life and better health and higher overall quality of life. New research shows that being overly optimistic can lead to bad decisions, such as how much money to save for retirement.
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