Why Pessimism Sounds So Smart
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This episode is about pessimism and why IT is so seductive and IT sounds so smart. But before we go on, I think we need to define the opposite, which is optimism. Now if you are optimistic about the world and about the future, and I think I am being what I call a real optimist, does not mean that you think everything's going to be great in the future.

That is what I would call complacency. If you think everything's going to be good in your own life, in the world, that's not optimism. That's a complacency. Optimism, I think, is a belief that the odds of a good outcome are in your favor over time, even when you know there you going to be setbacks and problems and chAllenges along the way.

It's the simple idea that most people wake up in the morning trying to make things a little bit Better and more productive than wake up looking to cause trouble. That's the foundation of optimism. It's really not that complicated.

And look, it's not guaranteed either. It's just the most reasonable bet for most people is to be an optimist about the future. But look, despite that, we have to acknowledge that if you read the news, if you talk to people, not just in a crazy election, there are like this.

But on almost every year, pessimism rules the day. The irony of that is that if you are any bit of a student of history, and you look back and you see how much progress we've made in the last, you know, forget, last hundred years, the last ten or twenty or thirty years, it's astounding. We are as a society, so much wealthier, healthier, have so many cool new toys and tools and were more productive than we've ever been.

And yet every day you turn on the news and IT is pessimism, pessimism, pessimism, particularly if you're looking at something like the economy or the stock market is always going to be the most pessimistic views prevail. But even if you're talking about new science and health and technology, pessimism gets people's attention in a way that optimism does not. This is not a new idea.

There's a history and named dear dream a classy. And many years ago he wrote in the new york times a quote, for reasons I have never understood, people like to hear that the world is going to hell. We'd like to hear IT.

It's what they want to hear when they are reading history of the news. People, bangladesh not want to read about how good things are or are going to be. Their attention is drawn to pessimism and bad news and scary forecasts.

And something that always hit me with this is the reason our attention is drawn to them is because pessimists tend to sounds smarter. They tend to sound like they know what you're talking about in a way that the optimists do not. It's so often that if you see an optimist, he kind of looks like he's club and aloof.

And he said, the future is going to be bright and everything is going be good. He looks detached. reality.

If you listen to a pessimist, you're like her. She's SHE knows if she's talking about that is that is a good stuff right there. This person has got their finger on the polls.

They know it's going on. And again, it's IT is always been like that. This is not a new phenomenon with our modern media at all.

John store mill wrote one hundred and fifty years ago, he wrote, quote, I have observed that IT is not the man who hopes when others despair, but the man who despaired when others hope is was admired by a large class of persons as a sage, not readily the author he wrote in his book the rational optimist, that quote, if you say the world has been getting Better, you may get away with being called naive or insensitive. If you say the world is going to go on getting Better, you are considered embarrassingly mad. If, on the other hand, you say a catastrophe is imminent, you may expect a macarthy genius award, or even the nobel prize.

And look in, in my world, in many of your world, in finance and money, in investing. You see this all the time where you watch C, N, B, C. It's the bear who says a recession is coming, stocks are gona crash there, who gets all the attention? The optimist is kind of push to the side.

But this idea goes so far beyond money in economics and investing. There is a study from harvard several years ago that shows that those publishing negative book reviews are seen as smarter and more competent than those giving positive reviews of the same book. And that study and sunset up so well. They said, quote, only pessimism sounds smart. Optimism sounds superficial.

And so where we talk about is why that might be, why does pessimism sounds smart? Why is IT so intellectually seductive to us and capture our attention more than optimism does, especially in a world where if you are attached to the reality of what has occurred over the last hundred years, you should be an optimist. There's there's one very broad and so here that can capture a lot of what we're talking about, which is that there's clearly more at stake with pessimism.

Dan economy, late psychologist, once wrote that when directly compared or weighted against each other, losses loom larger than gains. This, a cemex, between the power of positive and negative expectations or experiences has an evolutionary history. Organisms that treat threats as more urgent than opportunities have a Better chance to survive and reproduce.

So of course, we are drawn to the negative because there's more at stake to win over time. You have to first survive over time so that threats are going to capture more of your attention than opportunities. But there are several other reasons why pessimism sounds so smart and captures our attention.

I want to go through a couple of them now. One, and I think this is a really big one that explains a lot of what's going on here, is that progress happens too slowly to notice, but setback ks happen too quickly to ignore. One other way to summary that is there are lots of overnight tragedies, but there are almost never overnight miracles.

So think about something like the improvement in health care over time. One of the biggest and most important news stories of armed lifetimes, and over the last hundred years, has been the incredible decline in heart disease mortality. Now on a per capital basis, death from heart disease has declined more than seventy percent since one thousand and sixty, not even that long ago, a seventy percent decline in heart disease mortality.

If you had a heart attack in one thousand and sixty five, even if you made is to the hospital, you are probably dead, where if you have a heart attack today and you make IT to the hospital, there's actually a very good chance you're gona end up OK and walk out of there and live the rest of your life. Completely different world now that we have blood pressure medications, Better technologies, Better medicine such as such a and look, if you add up how many lives that has saved since the thousand nine hundred and sixty, the seventy percent decline in heart disease mortality per capital IT is in the millions of lives saved in the last sixty years or so. That is incredible.

Millions of life saved from new technology, Better science, Better medicine. But how often do you hear that statistics? How often is that in the news? How often do people talk about how amazing that is that maybe you or your parents or grandparents are alive today and they would not have been sixty years ago? Almost never.

We never hear about IT. And here's the reason why what happened over the last sixty years that seventy percent decline was basically a one or two percent improvement every year. IT happened very slowly in any given year.

There was nothing worth talking about. You're never going to open up the newspaper. And IT says, breaking news, heart disease mortality declined by one tenth of one percent last month.

That will never make a headline. But over the course of seventy years, IT changes everything. IT compounds like anything else.

And most good news, just like that. IT just compound slowly, a kind of is a slow boil in the background. So it's very easy to ignore because it's so slow.

But I think about bad news, think about paul harbor and how is the entire world changed in one hour. Think about september eleventh and how everything in the world change in thirty minutes and covered, which basically seem to hit overnight. practically.

We're think about a stock market crash that happens in one week. In the stock market loses forty percent its value. Bad news tends to happen very quickly.

And because IT happens quickly, you cannot look away. IT is going to catch your attention because IT happened overnight and there is no equivalent of perl harbor or nine eleven for good news. There's no such thing where the world changes for the Better dramatically in thirty minutes.

IT doesn't happen, but IT happens very frequently with bad news. And even something like a car accident or a tree falling in your yard. Bad news tends to happen instantaneously.

Good news is slow compounding in the background. So even if the good news is more powerful over the long run, it's going to make a bigger difference in the world. IT is easy to ignore because we are caught paying attention during the headlights to the bad news that happens very quickly, right next one.

This ones may be a little IT more controversial, but I think that happens a lot, which is that misery loves company. And so pessimism shows that not everything is moving in the right direction, which helps you rationalize the personal shortcomings and the chAllenges that you have in your own life that we all have. This loves company, as they say.

And so realizing that things outside of your control could be the cause of your own problems is a very comforting feeling. And so we're attracted to IT. And so if you, as many of us, including me, do from time to time, feel that we're falling behind, that we're not doing a good enough job.

There are chAllenges that we don't know the answer to. Sometimes I can feel good to read a new story about other people struggling as well. IT makes you put your own struggles and insecurities and chAllenges into context.

That feels good. Number three, the idea that pessimism requires action. You have to do something, whether optimism usually means stay the course and just don't do anything.

And that's why pessimism gets your attention more because you have to go and do something about IT. So pessimism in the stock market is, hey, you need to sell your stocks. You just sell everything that you have right now.

You'll get you your attention because you need to do IT as I get out run. There's a fire. There's somebody chasing you grabbed your attention because there's an action to take right now.

But you don't anna, read an article by an optimist that says everything's fine, just don't do anything maybe that feels a little bit that feels good if you believe IT, but you can just push that article decide there's no you need to added to your checklist of things to do. You are going to much more likely to pay attention to something if you need to do IT rather than just the fine print that you can ignore over time. So tell someone that everything will be great and they're likely to either struck you off or offer you a skeptical eye about what they say.

But if you tell something that they are in danger, they you will have their undivided attention. They will have a big recession. And the newspapers and cnbc are gona call you and ask for your opinion.

But if you say that we are a headed for an average growth and an average outcome, everybody cares. No one's going to listen to you, right? Next one.

This one I think, is very common, particularly in finance. Optimism sounds like a sales pitch, while pessimism sounds like somebody who is trying to help you. And often that is the case, a lot times that the optimists are the ones who are trying to sell you something.

And IT is a sales pitch. But in general, most of the time, optimism is the correct default setting and businesses can be as big of sales pitches as anybody else. Especially I think that's true if it's a topic that is emotional, like money or politics or even health, that tend to be kind of travel and emotional.

That's when the best mist, I think, can actually get you your attention the most. There are two topics that will affect your life, whether you are interested in them or not, and those are money and health. Doesn't matter whether you like those topics, those topics like you, and they will affect your life one way or another.

And while health issues tend to be individual, is your own life, money issues in the economy, in the stock market or more systemic, like we're kind of all in this together and where the economy is going to go on the stock markets to go. And so in any connected system where one person's decisions can affect everybody else, h, it's understandable while financial risk gain this spotlight and financial pessimism gains the spotlight and capture your attention in a way that few other topics can. In one last one here is that pessimists often extra present trends of what's going on today without accounting for how things can change and adapt in the future.

So finding something that is ugly and scary and pessimistic today, and assume I gonna stay like that forever, is a very easy assumption to make that. Look, the budget deficit is like this today. And if you assume it's like that for the next fifty years, it's gonna terrible.

People do things like that all the time. And it's very persuasive because you're not saying the world's gna change. You're saying it's not going to change.

IT seems like less of a stretch than imagining how something might adapt, but that's usually not how of the world works. Things do change. Things do adapt.

Problems, correct? And people figure out new ways how to do things and how to put up chAllenges that they had, threats, incentives, solutions in equal mangat ude. The bigger the threat, the bigger the risk, the more incentive of there is for people to figure out what to do about IT. That is a very common plot of economic history that is too easily forgotten by the passionate who forecast in straight lines that we are very, very good at figuring out new ways to solve chAllenges. And the bigger the chAllenge, the more intent of there is to adapt.

In two thousand, four of the new year times interviewed Stephen hawking, the scientist whose incurable motor neuron disease had left him paralyzed and unneeded LED to talk since age twenty one, through his computer, which, of course, is how he spoke, hawking told the interviewer how excited he was to sell books to lay people and just how great and fun his life was. Can your times ask them? They said, are you always this cheerful in hawking is, replied, I love is, replied, he said, quote, my expectations were reduced to zero when I was twenty one.

Everything since then has been a bonus. Expected things to be great in being very optimistic means a best case scenario that often feels flat. Pessimism reduces expectations, narrowing the gap between possible outcomes and the outcomes that you feel great about.

And so maybe that is part of why it's so seductive. Expecting things to be bad is the best way to be pleasant. Surprised when the night that's IT for this episode. Thanks again for listening, and we'll see you next time.