By Peter Andrew
I like optimists. Who doesn't? Optimism is one of America's defining national characteristics, and was an essential part of this country's rise to greatness. But some academic studies suggest that people with too rosy an outlook can get themselves into trouble, especially financially, and can-do can quickly turn into couldn't-do.
The trouble with optimism
Of course, it's not just Americans who can find their optimism tipping over into overconfidence or even self-delusion. Last year, Australian researchers uncovered similar traits in their compatriots. Unusually optimistic subjects in their trials tended to work fewer hours, have shorter planning horizons and fail to clear their credit card balances in full each month.
But there's plenty of that here too. A 2005 Duke University study, Optimism and Economic Choice, found a similar correlation in the U.S. And another, published in the Journal of Economic Psychology in 2007, indicated that the overoptimistic often make poor choices when choosing a new credit card.
For example, those who usually roll forward significant balances might seek out the best credit card reward programs when their rational, optimal choice would have been finding the lowest APRs. Presumably, they kidded themselves that their lives would change: Their income would grow, they'd win the lottery, or they'd magically alter their patterns of behavior and start zeroing their balances each month. Read the full article »