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Why We Love the Status Quo

September 18, 2010

Source: pobrecito33 on Flickr

Losses loom larger than corresponding gains

Would you rather make $100 with a small possibility of losing $75 instead, or would you rather make $25 with no potential to lose anything? If you are like most people, you would select the second option. This despite the fact that there is potentially greater benefit to the first option. This is because people will rather hold on to what they have now than risk losing it for something better. We worry that we’ll never get back to what we had. This phenomenon is called Loss Aversion in the fields of decision-making and economics.

The basic premise of Loss Aversion is that losses have a greater impact, psychologically, than potential gains. Thus, the chance of losing something weighs more heavily than the excitement of gaining something of the same value. For $500, you could do all the market research and setup for an online business that would make you $1000/week with minimal work. That’s a pretty minuscule amount of money to not have to worry about money. But most people will never make that jump, because they fear losing the money more than they are enticed by the prospect of financial freedom.

Preferring the Devil You Know

Our attachment to the status quo apparently extends beyond simply wanting to hold on to what we’ve already got. System Justification describes the tendency of people to prefer, defend, and even actively support the status quo, even when it is not in their best interests. Status Quo Bias describes the tendency of people to prefer established behavior patterns, unless the reasons to change are very compelling. Most people will stick to their old habits, even if they hold them back from their dreams.

Presented the opportunity for change, I honestly don’t think most people see the pros and cons, realize there are more pros, and still avoid the change. I think what happens is that we naturally bring the potential losses to mind first. We can get so wrapped up in worrying over what we’d lose that we lose sight of what we would gain. Thus, our decision to hold on to the status quo is informed by simple ignorance of the true consequences of change.

This mindset to avoid change makes sense in some ways. We know the current way is working well enough. It has been working as long as we’ve been doing it. So why change? The new way is strange and unknown to us. There could be unforeseen difficulties, or it might sound better than it is. Better to just stick with what we know works, right? After all, we have made it this far.

Looking Back Over the Path We’ve Walked

The truth is, though, the current life you lead has all the traits of that change you’d like to make. Before you went to college, you were probably nervous because, while you knew how to navigate the academic and social life of high school, college presented a whole new set of challenges. Despite all the exciting stories your parents told, you guessed there would be unforeseen difficulties, and you had never dealt with them before, so you had no guarantee that you’d even be able to handle them. But if you were like most people, the pressure to attend college far outweighed the resistance you might have had to it, and that is undeniably a good thing. Most of the positive changes we try to make in life are solitary choices. There are no teachers and guidance counselors telling you to do it. There are no family and friends who want to help you and who have already done it. All you have are stories of others who have done it.

If you are happy with your life now (or even content with it), take a second to think back to all the hard work that it took to create your life. Four years of high school, where you studied 8 hours a day, in addition to homework, followed by four years of college, where you did even more studying. Months of intense and frustrating job searches, followed by hours and hours of work. Sounds horrible doesn’t it? But it wasn’t really that bad. Same goes for whatever changes you might be interested in making.

The trick to countering Loss Aversion and Status Quo Bias is to take a step back and took at all sides of the equation. Don’t ask yourself, “What’s the worst that could happen?” This question does help to some degree, but it only makes you realize why you shouldn’t avoid the change, rather than why you should actively pursue it. Instead, ask yourself, “What’s the best that could happen?” Assuming the change you’re contemplating is even mildly interesting, the answer to that question should get your blood pumping, filling your head with ridiculous notions of adventurous discovery and freedoms won. And if you are wrong, you’ll simply end up in a new status quo, with which you will be happy (or just content), and you’ll be afraid of losing that too.

For more info on Loss Aversion, check out this article.

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One Comment leave one →
  1. Andrey Skvortsov permalink
    January 20, 2011 5:56 pm

    I accidentally came up over this post and it made me want to comment. :) This problem (risk averse) is very well described in books on poker player psychology. The problem you describe as loss aversion exists, but often it is more complicated than that. In life it is hard to estimate odds of winning chances if you risk something. Say if you know for sure that odds of losing 75 are 1 in 4 than you are even with just taking 25. You often estimate you odds worse and so you do not take the bet for that sole reason and not because you want to maintain your status quo no matter what! I agree with the point is that to succeed in any kind of business it is better to be risk neutral.

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