BARELY a week goes by without a report on the amount of confidence among consumers, businesspeople and investors. Optimism is what’s wanted—Keynes talked of the “animal spirits” that influence economic activity. Pessimists are routinely denounced as Jeremiahs. Those who try to bet on diminishing prices find their activities are restricted.A cheery disposition may be de rigueur for societies to function. Daniel Kahneman, a psychologist and Nobel economics laureate, has a chapter in his book “Thinking Quick and Slow” which describes overconfidence as “the engine of capitalism”. No entrepreneur can be sure that his plotted investment will succeed but if no one took a risk, new products and jobs would never be made. A certain blindness to the odds may be de rigueur. According to Mr Kahneman, the chances of an American small business surviving for five years are just 35%. But question individual entrepreneurs about their prospects and 81% reckon they have a better than seven-in-ten chance of success.This self-confidence may be innate, just as most people reckon they are better-than-average drivers. And it would seem…

Original post by The Economist: Business