Key trait: Researchers have identified a personality characteristic that boosts business success.

Optimism, a personality trait found in about 80% of people, often fosters the development of persistence, collaboration, and ambition—qualities that are generally beneficial in life and traditional employment. Research has indicated that optimists in paid jobs tend to earn more than their pessimistic counterparts. However, when it comes to entrepreneurship, this sunny disposition may not be as advantageous, writes PsyBlog.

In a study published in the European Economic Review, researchers discovered that pessimism can be beneficial for entrepreneurs: pessimistic business owners earn, on average, 30% more than their optimistic peers.

The study highlighted the challenges faced by entrepreneurs, including lower earnings, longer working hours, and higher risks compared to salaried employees. Optimists often fail to fully recognize these difficulties, which can lead to risky ventures and poor decision-making.

Dr. Chris Dawson, the lead author of the study, noted: "Too many people start their businesses based on personal profit. As a society, we glorify optimism and entrepreneurial thinking, but when these two elements are combined, it's worth considering the reality." He referenced popular media as an example of how excessive optimism often leads to misguided ventures.

Professor David de Meza, co-author of the study, also emphasized the societal costs of failed enterprises. He pointed out that while policymakers often encourage entrepreneurship as a driving force for economic growth, they may overlook the personal and financial repercussions of failures. "The personal and societal consequences of failed enterprises cannot be underestimated, yet that is exactly what optimists do. Policymakers should not promote the wrong types of startups," he stated.

This research calls into question the traditional view of optimism as an universally beneficial trait. While it may contribute to success in structured environments, such as paid employment, the study suggests that pessimism provides entrepreneurs with a crucial advantage by offering a more grounded and cautious perspective.

By tempering ambition with realism, pessimistic entrepreneurs can avoid poor decisions and maximize financial returns. According to some economic theories, excessive confidence, often associated with optimism, leads to inflated expectations and risky behavior. Overconfident individuals are more likely to overestimate their abilities and underestimate risks, especially when making financial decisions. This further reinforces the idea that a pragmatic approach rooted in pessimism may be better suited for high-risk situations like entrepreneurship.