loss aversion

I have a confession to make.  I live with two hoarders.  And for someone that doesn’t like clutter or mess, I find it quite challenging.

But, although I find it challenging, I can also understand it, from a psychological point of view.

We all share a cognitive bias (mental shortcut that we are mostly unaware of) called loss aversion.

Loss aversion tells us that we are driven more strongly to avoid loss than to achieve gain.

In the case of my family members, the thought of throwing something out, giving it to charity, etc. is too much of a loss.  The loss of memories, the thought of giving away something gifted to them (doesn’t matter how long ago or the fact it no longer gets used) is too much for them to bare.  So, they prefer to hold onto EVERYTHING.  Despite clutter, despite their lack of cupboard space and despite not being able to find the things they want easily…

Loss aversion also tells us our mind is geared about 2-2.5 times more towards the negative than positive.

Why do we have this bias or mental shortcut?  It’s because loss aversion had evolution advantages.  Those that treated threats (negative events) more urgently than opportunities (positive events) had a better chance of survival (note 1).

What does loss aversion have to do with your goals?

A lot actually.

Firstly, loss aversion suggests that you will tend to stick with what you have unless there is a good reason to switch.  In other words, you are resistant to change. And, when thinking about change, you will focus more on what you might lose rather than what you might gain.

For example:

  • Trying to lose weight – your automatic tendency might be to focus on the yummy food you will have to give up, rather than how great it will feel to lose the weight.
  • Trying to exercise more – you might focus on the loss of sleep if you have to get up earlier than usual, rather than the health benefits from exercising.
  • Want to build a business – you may tend to focus more on the loss of free time, rather than what you’ll gain from your own business.

You probably won’t even be aware of this but it might be enough to stop you pursuing your goal.

Secondly, when you think about your goal, not achieving it is a loss and exceeding your goal is a gain.  Due to your bias toward negativity, the aversion to failing to meet your goal will be much stronger than the desire to exceed it.  Your fear of failure will weigh much more heavily than the desire to achieve your goal.

So, how can you use this?

1)  Awareness:  Just being aware of it can be enough to make you less vulnerable to it.  Increasing your awareness around your thoughts towards change can help bring out your tendency towards loss or the negative.

Increasing your awareness around loss and negative biases works.  When you want to make a change or work towards a goal, rather than relying on your automatic thoughts to make decisions that drive your actions (or in-actions), bring these thoughts to your conscious so you can make deliberate decisions that will lead you towards your goals.

I tried this with my 11-year-old ‘hoarder’ recently to encourage her to clean out her room.  To help her make conscious decisions on what to keep and what to donate/throw out, I asked her to go through all of her things and ask the questions ‘do I use it?’ and  ‘if I had the choice today, would I buy it?’  If the answer to these was no, she no longer needed it.  The result – three large plastic tubs of toys cleaned out of her room!

2) Your Why: You need a really big reason as to WHY you want to achieve your goal.

Make your purpose or your reason for change so BIG that no matter what you ‘lose’ in the pursuit of your goal, it cannot possibly compete with what you gain from achieving your goal.  And, remember, you are geared towards the negative by about 2-2.5 times more than the positive so your WHY needs to be MASSIVE.

Remind yourself of your WHY every single day.  Loss aversion will mean that you’ll be geared towards the loss and the negative automatically.  So, overcome this by reminding yourself why that goal or that change is so important to you.


Read more articles on goal setting…


Note 1 – “Thinking, Fast and Slow” Daniel Kahneman.  

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