A month or so ago I looked at some research that explored our perceptions of optimism.  The results of the study found that being optimistic about pending success seemed to have little actual input into our actual success.

In other words, optimism seemed to be a tad over-rated, and this level of caution is something shared by leaders such as Warren Buffett.

“Both our operating and investment experience cause us to conclude that ‘turnarounds’ seldom turn, and that the same energies and talent are much better employed in a good business purchased at a fair price than in a poor business purchased at a bargain price,” Buffett is quoted as saying.

Such unwarranted faith in positive outcomes is manifest throughout the business world, but a recent study highlights how optimism appears to be preferred compared to cynicism nonetheless.

The paper, published by the American Psychological Association, found that a cynical personality can have a strong negative effect on your income levels.

“While previous research has associated cynicism with detrimental outcomes across a wide range of spheres of life, including physical health, psychological well-being and marital adjustment, the present research has established an association between cynicism and individual economic success,” the authors say.

How cynicism hurts

The study looks at cynicism via a national survey of Americans, and then looks at the income they earn at various points in their life.  The analysis revealed that high levels of cynicism was linked with lower income levels.

A similar study of around 16,000 Germans found similar results, with people with low levels of cynicism generally earning $300 extra each month compared to their cynical peers.

The authors suggest that this is mainly down to societal factors.  It emerged that the link between cynicism and income was strongest in countries that display high levels of altruism.

“There are actually some countries where cynical individuals do not necessarily earn less than their less cynical compatriots,” the authors say. “These countries are those with pervasively high societal cynicism scores, rare pro-social behavior (e.g., charity donations) and widespread antisocial behavior (as indicated by high homicide rates) – in other words, countries where cynicism might be justified or even somewhat functional.”

Blocking collaboration

The authors suggest that cynicism could be hurting our income levels because a cynical attitude can make it harder to trust others, and therefore make us less likely to engage in collaborative and cooperative opportunities.

It renders us unlikely to trust the motives of other people, and may even prevent us from asking for help when we need it, all of which can undermine our financial success.

“For example, employees who believe others to be exploitative and dishonest are likely to avoid collaborative projects and to forgo the related opportunities,” the authors say.

So it would seem as though a healthy balance is ideal, ie not being so optimistic that you are in essence naive, but not being so cynical that you shut yourself off from potential opportunities.