7 reasons why it is easy to be pessimistic

I recently read an excellent online piece from the Australian website Quillette, which provides long-form journalistic analysis on a variety of subjects.

This particular article was about pessimism, and asked the very pertinent question that if life is said to be better than ever, why does the world feel so depressing?

It resonated with me, as I’ve written previously about the importance of optimism and the fact that the life we enjoy today is significantly better than that experienced by previous generations.

But despite so much empirical evidence to the contrary, it still seems to be far too easy to be prone to a pessimistic outlook than one of positivity.

The Quillette piece, set out some compelling  reasons why we’re prone to pessimism and it prompted me to consider the same issue from my own perspective as a financial planner.

So, here I have set out some  reasons why the world seems this way, and why having an understanding of how easy it is to fall into a negative mindset can help you overcome the inherent bias towards bad news over good.

1. Cataclysmic events sell papers and attract clicks

As any good news editor will tell you, “bad news is good news” when it comes to attracting viewers and readers.

Just a quick glance along the row of newspapers in your local shop will reveal that many are happy to lead with bad news knowing that, in a competitive market, it can help give them an edge.

Given that, it’s really no surprise that so many people can be easily prone to bouts of pessimism.

Social media doesn’t help in this regard either. There seems to be a tendency continually highlight bad news, and to boil every issue down to a binary choice between right and wrong and good and bad.

2. It’s easier to blow up a building than to build one

The terrible events that often makes the front pages, or are the lead story in news bulletins, tend to happen suddenly.

A stock market crash, an oil spill, or a devastating flood can happen in an instant and create panic and fear among both those involved, and observers.

Take a sudden investment market downturn as an example. After such an event it’s always easy to find headlines about billions being wiped off the value of shares, and the plethora of such headlines can easily cause concern among investors.

In contrast, the recovery from such a market fall – and there is nearly always a recovery – is much more gradual, and far less likely to attract any headlines.

Progress is gradual and often imperceptible, while bad things tend to happen quickly so they the latter are more likely to grab the headlines.

3. Bad news travels quickly

Bad news doesn’t just sell. It also spreads quickly.

We’re living in an age of mass communication where it’s just as easy to read the news from Newcastle in New South Wales, Australia than the city of the same name in the north of England.

This means that it’s far easier to find out about bad news. Because of how often that you see and read about it,  there’s an inevitable tendency for you to overestimate the frequency of how often such events occur.

4. We’re weirdly attracted by disaster and the macabre

Most people’s reaction to disastrous occurrences is one of horror that they have happened, mixed with concern for the victims. But, nevertheless, we’re irresistibly drawn to them.

The reason for this is that we have been programmed by evolution to be receptive to bad events and signs of danger because we can then learn from them.

Relating this back to your financial planning, sudden market falls are often described in cataclysmic terms. However, I’ve written articles about why market volatility is nothing to be afraid of and why the correct reaction is not to fear a bear market  but, instead, to tune out the news and focus on your long-term goals.

5. We see more bad things, because we’re allowed to

There’s actually a positive angle to the fact that we can easily be subjected to so much bad news.

Such positivity derives from the fact that we live in an open, democratic society, whereas in authoritarian regimes, bad news will often be heavily censored or ignored altogether.

Furthermore, we are free to complain about both real and imaginary violations, while in less tolerant societies, such dissent is supressed and punished.

So the fact we can, and do, find out about bad events is a reason for optimism and a handy prompt that things could be far worse than they are.

6. We’re always seeking continual improvement

As we become safer and more prosperous, it’s natural for us to raise our own personal bar and to expect further safety and prosperity.

But by continually raising your own standards and expectations, you run the inevitable risk of never being satisfied.

I’ve written about the danger of continually moving your personal goalposts, and comparing yourself to others. The usual outcome of such “keeping up with the Jones’s is that you are never properly happy with what you have now.

This is sometimes described as the “conservation of outrage”: a state of mind that leads you to feel that you are constantly standing still, or even falling back, rather than actually advancing.

7. Once a solution has been achieved, people forget about the original problem

With a tendency to focus on the present and immediate future, we tend to forget how far we’ve come in a relatively short period of time.

For example, there are still people working in my industry of financial advice who started their career in offices with no desktop computers, and where all the complicated calculations, that we now access at the touch of a button, had to done manually.

The speed of advance in communication and digital technology means that we’ve grown used to a “new normal” without stopping to realise how good the relative situation is compared to before.

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If you’d like to talk through your financial planning arrangements then please get in touch.

You can call me on 07769 156 250.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Equity investments do not afford the same capital security as deposit accounts.