Is optimism the key to failure?

AgenciesUpdated: Wednesday, May 29, 2019, 05:40 AM IST
article-image

London : Optimistic thinking is leading people to set up businesses that have no realistic prospect of financial success, according to a study which has found that pessimists are less likely to proceed with unpromising entrepreneurial ventures. The research from the University of Bath, the London School of Economics and Political Science, and Cardiff University in the UK, explores the financial consequences of becoming an entrepreneur for optimists

People with a tendency to overestimate their chances of doing well and underestimate their  probability of failure. Tracking individuals as they move from paid employment to setting up their own business venture, the study found that business owners with above average optimism earned some 30 per cent less than those with below average optimism. Many of the optimists would have been well advised to remain an employee, according to the study.  Despite entrepreneurs earning on average less, working longer hours and bearing more risk than their counterparts in paid employment, optimists are more likely than most to mistakenly think they have found a good business opportunity and that they have what it takes to exploit it successfully.

Realists and pessimists are less likely to proceed with unpromising entrepreneurial ventures. Studies consistently report that about 80 per cent of the population have an overly optimistic outlook. This can increase ambition and persistence, encourage others to cooperate, and generally enhance performance. Ominously though, basing choices on faulty assessments also leads to participation in activities doomed to fail.  “Our results suggest that too many people are starting business ventures, at least as far as personal returns are concerned,” said Chris Dawson, an associate professor at the University of Bath.

(To receive our E-paper on whatsapp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

RECENT STORIES

Bhagat Singh death anniversary: 7 movies based on the life of Bhagat Singh

Bhagat Singh death anniversary: 7 movies based on the life of Bhagat Singh

10 shayari by Mirza Ghalib that beautifully captures the pain of love, life and heartbreak

10 shayari by Mirza Ghalib that beautifully captures the pain of love, life and heartbreak

Teachers' Day 2021: Wishes, greetings in Hindi, Marathi to share on SMS, WhatsApp, Facebook and...

Teachers' Day 2021: Wishes, greetings in Hindi, Marathi to share on SMS, WhatsApp, Facebook and...

Meet Akhil Poddar young head of Rajasthan-based Poddar Group of Industries who inspires people to...

Meet Akhil Poddar young head of Rajasthan-based Poddar Group of Industries who inspires people to...

Nirjala Ekadashi: Things to keep in mind about the rituals and celebration

Nirjala Ekadashi: Things to keep in mind about the rituals and celebration