Positive thinking is a lot more than blind faith—and its power over people's lives is awesome. Optimists fare better than pessimists in almost every respect of life, often achieving more and enjoying greater social success. Optimistic people are also less susceptible to depression and physical ills. Says psychology professor Martin E. P. Seligman of the University of Pennsylvania, "There's evidence that optimism bolsters the immune system."

Psychologists believe optimism and pessimism are habits we learn as children, and our parents are our role models. When a water pipe broke and flooded your new home, did your father lament, "Why did I pick such a lousy house?" Or did he declare, "Our contract guaranteed everything would be in perfect condition, so I'll have the builder fix the plumbing and replace the damage"?

"Optimism is a habitual way of explaining setbacks to yourself," says Seligman. Here's how it works:

The pessimist believes bad events stem from permanent conditions (" I failed the math quiz because I don't have a head for numbers.") and good events from temporary ones (" My husband brought me flowers because he had a good day at work."). The optimist, however, attributes failure to temporary causes (" I failed the test because I didn't pay attention.") and favorable situations to enduring causes. (" He brought me flowers because he loves me.")

The pessimist allows a disappointment in one area of his life to pervade the rest. Say he's laid off from work. The pessimist not only feels bad about losing his job, but he also starts to worry that his marriage is in trouble and his kids are out of control. The optimist doesn't let one setback contaminate his whole life. So at the moment I don't have a job, he thinks. My wife and I are still close, and my kids made the honor roll.

When things go wrong, pessimists blame themselves. If another driver dents your packed car, you chide yourself for parking in a "stupid" spot. The optimist ascribes such trouble to a fluke or looks for a new approach—"Next time I'll park where there are few cars."