Tom Gardner and Morgan Housel (The Motley Fool) recently published a LinkedIn article called, Why Does Pessimism Sound So Smart? (Especially When Things Are So Good.)

Here is the gist of it:

If you say the world has been getting better you may get away with being called naïve and 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 catastrophe is imminent, you may expect a McArthur genius award or even the Nobel Peace Prize.

Part of the reason for this is that we, as humans, respond more strongly to losses:

There’s clearly more at stake with pessimism. Daniel Kahneman won the Nobel Prize for showing that people respond more strongly to loss than gain. It’s an evolutionary shield: “Organisms that treat threats as more urgent than opportunities have a better chance to survive and reproduce,” Kahneman once wrote.

The behavioural economic theory being referred to above is called Prospect Theory.

Tom Gardner and Morgan Housel (The Motley Fool) recently published a LinkedIn article called, Why Does Pessimism Sound So Smart? (Especially When Things Are So Good.)

Here is the gist of it:

If you say the world has been getting better you may get away with being called naïve and 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 catastrophe is imminent, you may expect a McArthur genius award or even the Nobel Peace Prize.

Part of the reason for this is that we, as humans, respond more strongly to losses:

There’s clearly more at stake with pessimism. Daniel Kahneman won the Nobel Prize for showing that people respond more strongly to loss than gain. It’s an evolutionary shield: “Organisms that treat threats as more urgent than opportunities have a better chance to survive and reproduce,” Kahneman once wrote.

The behavioural economic theory being referred to above is called Prospect Theory.