"Whatever you can do, or dream you can, begin it. Boldness has genius, power, and magic in it."

-- Johann Wolfgang von Goethe (1749-1832)

If Goethe's couplet appeals to you, it may be that you're more than reasonably talented, optimistic about achieving goals, and you persevere when things get frustrating. Like Goethe, you think that "to measure up to all that is demanded of him, a man must overestimate his capacities."

Overestimating yourself -- having positive illusions about what you can do and how well you'll do -- is more common and healthy than most people think. Studies show that emotionally healthy people often interpret reality in a self-enhancing way to pursue dreams and to protect themselves from uncomfortable truths.

A 1979 study by L.B. Alloy and L.Y. Abramson at the University of Pennsylvania shows that nondepressed people typically see themselves with a rosy glow. And they underestimate how often others judge them negatively.

In contrast, depressed people assess their strong and weak points and recall negative criticisms from others more realistically. The researchers are not sure whether depression leads people to be realistic or whether realistic people are more vulnerable to depression.

Psychologist Shelley Taylor of the University of California, Los Angeles, also found illusions at work in her studies. "Most people," she says, "generally exaggerate how competent and well-liked they are and how much in control they are of their lives, while depressed people are more in tune with their shortcomings and their lack of control."

In one study, Taylor found that "cancer patients who deceived themselves into thinking their prognoses were better than they actually were fared better emotionally."

Their optimism, Taylor says, was an attempt to see their situation in the best possible light, rather than as a retreat from reality.

Such positive illusions -- or benign self-deceptions -- come in various guises:

Denial. When coping with a painful loss -- death, separation or rejection or a diagnosis of disease -- short-term denial is a healthy part of coping.

Denial keeps people buoyant as they adapt to unwelcome news.

Psychologist Martin Seligman of the University of Pennsylvania says that denial keeps people from ruminating. "Going over and over the source of your trauma produces depression," Seligman says. He regards denial as a temporary measure until "you can make decisions about your loss and can cope better."

But when people deny they need medical advice or treatment for a chronic illness or refuse to accept that a relationship is over, it's time to take off the rose-colored glasses, psychologists say.

Selective attention. When events threaten self-esteem, Taylor says, most people focus on the positive changes resulting from the situation as a way to adjust. For example, more than 90 percent of cancer patients studied reported a willingness to put more effort into their relationships and feelings of being stronger, more self-assured and more compassionate.

Depressed people focus on the bleaker part of reality. In a shattered relationship, says psychiatrist George Vaillant of Dartmouth University, hanging on to bitter memories produces mental anguish. "It's not the loss that causes distress," says Vaillant. "It's that we forget the love and remember the hate."

Re-labeling. When a task creates anxious feelings, says Washington psychologist Thomas McKain, emotionally healthy people label it "exciting." In this way, they temper anxiety's debilitating effects and use the rush of hormones to become bold and ready for action.

It's our reaction to the situation that matters, he explains. While our physical response to a challenge -- the surging fight-or-flight hormones -- is the same, our emotional state varies with our reaction.

At Catholic University, McKain just completed a study on writing anxiety that bears this idea out. He found that anxiety comes from thinking negatively about your writing task and having negative expectations about your success, rather than from your lack of writing skills.

"Anxious people," says McKain, "can learn to catch the negative thoughts that keep them from accepting challenges they want to take." McKain, like Goethe, also says, "Begin it. Taking that first step in getting the task under way, our study showed, blocks anxiety."

New York psychiatrist Manuel Zane gives reasons why the bold at heart succeed: "Emotionally healthy people expect to be afraid that they might not be able to pull it off when accepting a challenge, but they're willing to risk failure for a chance at satisfying rewards. Anxious people want to act without any fear. And when they fail, they avoid trying again."

Acting the part. By making believe we're the person we want to be, we sometimes make dreams come true. The late actor Cary Grant once was asked how he rose from humble beginnings in England to become a debonair, urbane gentleman of the world.

He replied that he started to act like the person he wanted to be and "eventually, I became that person."

In a troubled relationship, seeing yourself and another positively enhances mutual respect.

"When people start to think of themselves that way, they become that way," says Arlington psychotherapist Pamela Finnerty-Fried.

Optimistic style. How we think about events affects how well we cope and how much we achieve. Seligman's studies of optimism and pessimism show a predictable pattern.

"Depressed people think of good and bad events in roughly the same way. Nondepressed people have this major illusion: If it's a good event, 'I did it, it's going to be permanent, it's going to help me in everything I do.' If it's a bad event, 'You did it to me, it's going away quickly.' "

But shifting responsibility for a bad event without careful thought has hazards. "If you contributed to a professional or romantic rejection," says Maryland psychologist Regina Ottaviani, "it would be helpful to be honest about it and look at what was going on" to learn from the experience or save the relationship.

But having grandiose ideas without the skills and experience to back them up can lead to disaster. "Manic people," says Zane, "may see themselves so much better than they actually are that they invest in businesses, get in over their head, lose all and fall into depression."

But Zane thinks skilled people can have grand ideas without self-deception. "Overestimating your abilities might push you to begin fulfilling your dream," says Zane, "but unrealized or unrecognized talent allows you to stay with it. Emotionally healthy people may do better than others simply because their positive, hopeful approach motivates them into a new challenge."

Encouraging this positive approach -- seeing yourself and your life with a rosy aura -- fosters mental health, according to UCLA's Taylor.

"It's useful to think in terms of teaching people how to regard an event positively," she says, "rather than to interpret it as realism.

"We can be straightforward with patients about the fact that a lot of meaning is self-creation."