Adopting an evidence-based mindset

The news cycle has a way of focusing our attention on the dramatic and usually negative things that are happening around the world. Over time, this can result in an internal image of a world that is disintegrating, which in turn instills feelings of helplessness and anxiety. In fact, if we look for good news, there is lots of it around.

In his June 2016 column, ‘Outside the Flags’, Jim Parker of Dimensional Fund Advisors in Australia lists ten positive news items that haven’t garnered a lot of headlines, but nevertheless indicate significant progress on several fronts. Included in his list are positive markers for gains in the fight against poverty and ill health. For example, over the last 25 years, two billion people around the world moved out of extreme poverty. Within that same time frame, mortality rates among children under the age of 5 have fallen by 53%. In the period between 2000 – 2015, life expectancy increased by five years globally, and by even more in parts of Africa (9.4 years). The news for individual investors has been very good as well--over the last 25 years ending May 2016, one dollar invested in a global portfolio of stocks would have grown to more than six dollars.  Jim Parker’s full article (with sources), Ten Reasons to be Cheerful, can be found at this link.

While individuals cannot control events on the world stage, there are strong reasons to seek a more balanced view of how the world is progressing. If we believe that the world is falling apart, we see our options for living a fulfilling and happy life as being limited. We will see the future as being a frightening place for our children and grandchildren. Even our health can be affected. Harvard Health Publications cite many US and European studies that show a connection between having an optimistic outlook and overall health, longevity, and an ability to recover better from an illness or injury.1 Some of these studies show a link between specific medical conditions (e.g., heart disease and high blood pressure) and optimism.

Life can be complicated and difficult.  Those who advocate taking a positive approach to life are not referring to a Pollyanna viewpoint that insists that there are always silver linings.  They also do not bury their head in the sand or ignore distressing aspects of reality. Rather, they suggest improving on our response to bad news by looking for solutions and alternative ways of interpreting events. In our personal lives, a pessimistic outlook can be self-fulfilling in that it robs us of our motivation to try hard enough to prevent failure.

What are the characteristics of an optimist? Scientists measure optimism in a couple of ways:

  • The extent to which a person expects good outcomes in life.
  • How a person explains good and bad events -- Optimists and pessimists explain happenings in different ways. Pessimists assume that negative effects of bad events will last a long time and will affect everything they do. In the personal realm, they assume bad news is their fault.  Optimists tend to take credit for good news (and not accept responsibility for bad), assuming that good outcomes will be lasting and affect many areas of their lives. Optimists also tend to see adverse situations as temporary and limited in their scope.

Obviously, it would be optimal to find a realistic balance in our interpretations of events and their resulting environments. In the personal realm, a clear-eyed view might result in attributing success to our ability and failure to lack of effort.

Knowing that our minds calculate probability based on the events that come quickly to mind, we can control how much of the constant stream of unfiltered news we allow into our lives. We can take power from terrorists and fear-mongers who want to fix our attention on negative events. We can seek out news reporting that puts isolated events in a broader context and adopts an evidence-based mindset. We can take comfort from looking around us and seeing that, overall, good people and good intentions far outweigh the bad.

As Martin Seligman, author of Learned Optimism, said: “Life inflicts the same setbacks and tragedies on the optimist as on the pessimist, but the optimist weathers them better.”


1. Harvard Health Publications http://www.health.harvard.edu/heart-health/optimism-and-your-health

 

Dale Berg is a Senior Financial Advisor with Assante Financial Management Ltd. providing wealth management services to principals of family-owned and privately held companies. The information mentioned in this article is for general information only. Please contact him to discuss your particular circumstances prior to acting on the information above.