Home All Psychological Capital — PsyCap

Dave Shearon, MAPP, applies positive psychology to both law and education. Dave writes articles about applications of Positive Psychology to law and education at his site. He co-authored the recently published book, Smart Strengths: Building Character, Resilience and Relationships in Youth. Full bio.

Dave's articles are here.

Psychological Capital: Developing the Human Competitive Edge by Fred Luthans, Carolyn M. Youssef, and Bruce J. Avolio, introduces both a significant stream of research and an important framework for the application of positive psychology to organizations.

The stream of research involves a construct they call “PsyCap” — a composite construct made up of self-efficacy, hope, optimism, and resiliency.

The framework suggests that the application of positive psychology to organizational success and leadership requires support and development of multiple interrelating and mutually supportive constructs that have theoretical and empirical research behind them, valid measurement techniques, are state-like and therefore can be developed, and have been shown to impact performance.

The book is aimed at popular audiences, but it is also significantly annotated with extensive references section at the end of each chapter referring to the research-base underlying each facet of the construct. This book should be readily accessible to those with background in the relevant research. I suspect it might be less immediately clear to those without familiarity with the underlying research. For practitioners involved in applying positive psychology to organizations and group performance, this is a must read!


Fred Luthans is the George Holmes University distinguished Professor of management at the College of Business Administration, University of Nebraska-Lincoln.

Carolyn Youssef
did her doctoral work in management at the University of Nebraska-Lincoln under Dr. Luthans. She focused on resiliency development in organizations, leaders, and employees. She is assistant professor in the College of business administration at Bellevue University in Nebraska.

Bruce Avolio is also a professor in the University of Nebraska-Lincoln and holds the Clifton chair and leadership. He is particularly associated with leadership development, especially transformational leadership. Clearly, one would expect this book to focus on the world of business and it does.

Book Organization

The first chapter introduces this framework, discusses the criteria, and acknowledges the contributions of positive psychology research, the Positive Organizational Studies (POS) approach from the University of Michigan School of Business, and the Positive Organizational Behavior (POB) approach associated primarily with the University of Nebraska-Lincoln.

Chapters Two through Five are each devoted to one of the four facets of PsyCap. Each chapter introduces the underlying construct and its research-based, provides a story demonstrating a construct, discusses impact on performance at the individual and organizational level and considers potential pitfalls.

Self-efficacy comes from the work of Albert Bandura. The authors treat the construct as best described by the term “confidence.” It is a forward-looking expectancy that one’s abilities will be sufficient to meet a particular challenge.

Hope is the construct developed by C. Rick Snyder. Dr. Snyder approached hope as a way of thinking that involves goals, pathways (waypower) and agency (willpower). The authors suggest that the pathways component of this construct distinguishes it from self-efficacy and optimism and provides a unique contribution to PsyCap.

Optimism is primarily taken from the positive explanatory style of Martin Seligman, although it also discusses the future orientation approach of Carver and Scheier. Interestingly, although the chapter leans heavily on explanatory style, the PsyCap construct introduced later in the book draws in its items for optimism from the Carver and Scheier model. Frankly, I am a little confused as to whether the micro-intervention introduced later in the book develops positive explanatory style or positive expectancies for the future. However, while the two constructs are separate, it may be that, in the context of an integrated approach including self-efficacy, hope, and resiliency, any effective intervention will actually develop both. I hope that future work in this area will address this point more clearly in reference to the prior research base.

Resiliency is also an area with multiple research streams. I am personally more familiar with that developed by Karen Reivich and Andrew Shatte which uses explanatory style as a key component. The resiliency research used in this construct, however, draws from the “assets” approach of Ann Masten and colleagues from the University of Minnesota.

In Chapters 6 and 7, the authors consider additional constructs which they believe may have potential for inclusion in PsyCap. They classify these as cognitive (Creativity and Wisdom), affective (Well-Being, Flow and Humor), social (Gratitude, Forgiveness, Emotional Intelligence, and Spirituality), and higher order (Authenticity and Courage). Those familiar with the Values in Action Character Strengths Questionnaire will recognize that each of these except Well-Being and Flow are considered character strengths in the VIA.

Well-being is the topic of research form from the work of Ed Diener and colleagues. Flow is the construct developed by Mihaly Csikszentmihalyi that is incorporated into the Authentic Happiness conceptualization of happiness — pleasure, engagement, and meaning — as engagement. I have not yet had an opportunity to compare the research-based referenced in this book to that discussed in Character Strengths and Virtues.  These chapters  demonstrate how open PsyCap is for future development.

Chapter 8 is entitled “Measurement and Development of PsyCap: Assessing the Return on Investment.” This chapter introduces the research validation of a 24-item questionnaire to measure PsyCap. The instrument itself and is provided in an appendix to the book. Each of the facets of PsyCap is addressed by questions drawn from the research on those facets. As noted, the optimism questions focus on future expectancies rather than explanatory style. The authors also discuss research during the past few years linking PsyCap to desirable outcomes in the workplace. Finally, this chapter describes the development of a “microintervention” involving one to three-hour facilitated workshops with components aimed at each of the constructs in a sequence that begins with hope, moves to realistic optimism, builds efficacy/confidence, and increases resources for resilience.


The authors summarize research so far as suggesting that such a microintervention can obtain 2% average increases in PsyCap. They calculate the return on dollar spent on such an investment for large, medium and small companies through two different methodologies from the published literature on estimating financial impacts. Such The estimated returns are outstanding. For example, in one research study conducted with 74 engineering managers, the authors estimate a 270% return on investment. However, in accord with the balanced nature of this book throughout, the authors also include material on potential pitfalls in their analysis.




Luthans, F., Youssef, C., & Avolio, B. (2007). Psychological Capital: Developing the Human Competitive Edge. Oxford University Press.

Luthans, F., Youssef-Morgan, C. & Avolio, B. (2015). Psychological Capital and Beyond. Oxford University Press. (Added later)

Csiksentmihalyi, M. (1990). Flow: The psychology of optimal experience.. New York: Harper Perennial.

Peterson, C. & Seligman, M. (2004). Character strengths and virtues: A handbook and classification. Oxford: Oxford University Press.

Reivich, K, & Shatt?, A. (2002). The Resilience Factor: 7 Keys to Finding Your Inner Strength and Overcoming Life’s Hurdles. New York: Broadway Books.

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jeffdustin 17 December 2007 - 2:21 am


Psycap is a powerful term that adds to the ability to talk about the blending of optimism, hope, resiliency, and self-efficacy. I really get a kick out of knowing that there is a balanced research review of the different constructs. The very best section of your article is definitely the return on investment analysis. Which micro-interventions can reasonably drive approximately how much positive change? These kinds of questions to me are always sticky and fraught with methodological dangers.

A second point is the optimism is more about future expectancies and not about explanatory style. I think of the future when I hear the word optimism and that is, in my mind, the more popular usage of the term.

So, Dave, how do you score in PsyCap?

Dave Shearon 17 December 2007 - 9:52 pm


I did the questionnaire thinking about my current job which I’ve been doing for 20 years, and my score was very high. I then took on the mindset of attempting a new career and took it again, and my score would have been significantly lower. This fits with the context-specific nature of the state-like aspects of the underlying PsyCap constructs.

Jeff Dustin 23 December 2007 - 7:22 am


What is difference between PsyCap and the older term, morale?

Dave Shearon 23 December 2007 - 9:59 am

PsyCap is a higher-order construct built on the theory-based and empirically-validated constructs of self-efficacy, hope, optimism, and resiliency. It might be thought of as the answer to “What is morale, really, how can we measure it, and what guidance is there for how to change it?”

Jeff Dustin 23 December 2007 - 7:32 pm

I suspected the same. Morale might be thought of as the folk wisdom response to PsyCap. I am curious if there are folk interventions that have great value in raising PsyCap. That interests me…along the lines of Haidt’s Happiness Hypothesis…that modern ideas often have ancient roots. What would really be cool is if there was a computer program that tracked your psycap via several validated measures and spit out a nice readout for you to see graphically.

Let’s say for a personal example, that I am planning to fix up an old house…how many more dollars can I expect with high PsyCap than a low PsyCap score, all else equal?

I am sincerely glad that you wrote this piece on PsyCap. It really is exciting stuff and I hope you do follow-ups about this research.

erika 21 November 2008 - 1:39 pm

i very interesting with PsyCap theory, and i will doing research about organizational change characteristics, one of the variabel is PsyCap. People in Indonesia, my country, need to learn more about PsyCap to make them more optimistic with every kind problems which around in my country. in my research, PsyCap will combined with local culture.
thank u

Sheetal Ruikar 27 April 2012 - 1:51 am

Mr Dave,
I have been reading on PsyCap and it is really an exciting construct more so because it has a valid tool. I was trying to search for similar such constructs that may be possibly found in The Indian Psychological tradition/philosophical tradition.Would you know anything about it?


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