Tools for Changing the World

Would you rather have a 50% chance of winning $1000, or receive $400 outright? Think about it.

Now, would you rather have a 50% chance of losing $1000, or just pay $400?

If you’re among the majority, you’d take the $400 gain but opt for the gamble when it comes to the loss. And if you’re among the majority who can do arithmetic, you probably realize that these aren’t the most rational choices.

Welcome to the world of “loss aversion”.

Daniel Kahneman and Amos Tversky asked numerous questions like the above and published their results in 1979. Over and over, their research showed that we are far more sensitive to the possibility of loss than the possibility of gain.

This means that when choices are expressed in terms of losses, we react differently than when they’re expressed in terms of gains.* Kahneman and Tversky showed this in another study in which they asked this question:

Imagine that your country is preparing for the outbreak of an unusual disease that is expected to kill 600 people. Two programs to fight the disease have been suggested. If Program A is adopted, 200 people will be saved. If Program B is adopted, there is a one-third chance of saving 600 people and a two-thirds chance of saving nobody. Which would you prefer?

If you chose Program A, you’re in the majority again, along with 72% of the people in the study. But try this one:

Imagine that your country is preparing for the outbreak of an unusual disease that is expected to kill 600 people. Two programs to fight the disease have been suggested. If Program A is adopted, 400 people will die. If Program B is adopted, there is a one-third chance that nobody will die and a two-thirds chance that 600 people will die. Which would you prefer?

Most of the study participants (78%) chose Program B this time, even though the two scenarios are identical.

How you describe an issue changes how people respond to it. A pamphlet about breast self-examination (BSE) was found to be more effective when it described the negative consequences of not doing BSE than when it described the positive consequences of doing it. People will pay more for a product advertised to prevent a negative event than for one advertised to result in a positive event – especially when the product must be bought immediately.

So, focus on the lost productivity if the building isn’t made handicapped-accessible, not on the gains that will occur if it is. Tell people how much money they’re losing by wasting electricity, not how much they could save if they stopped. Describe what will happen if people don’t make the sensible change you’re promoting.

And, of course, keep reading this blog. Just think of how many useful tactics you’ll miss out on if you don’t.

* It applies to losing choices, too. Jiwoong Shin and Dan Ariely had students play computer games that paid varying amounts of money according to which of three “rooms” the students clicked on. Each player had a limited number of clicks that could be used to either gain money in the current “room” or move to a different one. Switching rooms cost a click, so the players who earned the most were those who tried all three rooms then stayed in the one with the highest rewards.
Shin and Ariely then added a new feature to the game: any room not being clicked on started to shrink and eventually disappeared. It shouldn’t have made any difference once a player had picked the “best” room – but the students kept wasting clicks to keep the other rooms open and their earnings dropped by 15%. We apparently hate losing options as much as we hate losing anything else.