Two studies addressed parallel questions about the correlates and consequences of self-enhancement bias. Study 1 was conducted in a laboratory context and examined self-enhancing evaluations of performance in a group-interaction task. Study 2 assessed students' illusory beliefs about their academic ability when they first entered college and then followed them longitudinally to test claims about the long-term benefits of positive illusions. Both studies showed that self-enhancement bias was related to narcissism, ego involvement, self-serving attributions, and positive affect. Study 2 found that self-enhancement was associated with decreasing levels of self-esteem and well-being as well as with increasing disengagement from the academic context. Self-enhancement did not predict higher academic performance or higher graduate rates. Thus, the findings suggest that self-enhancing beliefs may be adaptive in the short term but not in the long term.