Purpose of review: What is the relationship between rationality and mental health? By considering the psychological literature on depressive realism and unrealistic optimism it was hypothesized that, in the context of judgments about the self, accurate cognitions are psychologically maladaptive and inaccurate cognitions are psychologically adaptive. Recent studies recommend being cautious in drawing any general conclusion about style of thinking and mental health. Recent findings: Recent investigations suggest that people with depressive symptoms are more accurate than controls in tasks involving (...) time perception and estimates of personal circumstances, but not in other tasks. Unrealistic optimism remains a robust phenomenon across a variety of tasks and domains, and researchers are starting to explore its neural bases. However, the challenge is to determine to what extent and in what way unrealistic optimism is beneficial. Summary: We should revisit the hypothesis that optimistic cognitions are psychologically adaptive, whereas realistic thinking is not. Realistic beliefs and expectations can be conducive to wellbeing and good functioning, and wildly optimistic cognitions have considerable psychological costs. (shrink)