How Powerful a Motivator is Avoidance?

by Rachel Edwards

Losing something makes us twice as miserable as gaining the same thing makes us happy – in other words we avoid loss twice as much as we want to incur a gain.

In a test run with over 1000 students, mugs were given out (which were meaningful to the students). The students were put into pairs and one of the pair was told they would be selling the mug, and the other buying. The seller was asked how much they’d be prepared to part with the mug for, and the buyer asked how much they’d spend. On average, the seller wanted twice as much for the mug as the buyer was prepared to pay.

This experiment describes loss aversion. Loss aversion can produce inertia, or a strong desire to stick with what we have. For any of us still paying fees to a gym we never attend, or a magazine we don’t read, or higher fees to a credit card company than available elsewhere, we’re probably experiencing some inertia in order to avoid loss.

So, can we frame information in a certain way to make it more effective and influence people’s choices?

It seems so: a group of homeowners were 300% more likely to carry out energy efficiency improvements in their home when they learnt they were losing 50 cents a day versus homeowners who were told they could save 50 cents a day by doing the same thing.

Most of us are aware of how our mood can affect our decisions, whether we’re extravagant when we’re happy or grumpy when we’re tired. Have you ever wondered if your mood affects your pocket? An experiment was run to assess the impact of mood on how much we spend.

A group of people was split into two; half of the people watched a sad film clip and were asked to write about it, the other half were asked to watch something neutral (a short film showing calming fish swimming around). The people were then instructed that they were moving on to a separate activity (unrelated to the film clips) asked to identify how much they’d pay for certain items. The people who had watched the sad film clip were prepared to pay 30% more than the neutral group, and willing to sell items for 33% less than the neutral group.

Applications for these ideas in our day to day lives are plentiful; whether we’re pitching a new idea to the team (“we’ll lose £100k if we don’t implement this” versus, “we could save £100k by doing this right”) or just organising our diaries so that we make sure our moods don’t aversely affect our decisions.

This article was inspired by ideas discussed in ‘Nudge’ and ‘Yes’.