We put more effort into avoiding losses than making gains

The discovery that we care more about losses than equivalent gains has been hugely influential in behavioural economics. The idea was introduced back in 1979, in a paper by Dan Kahneman and Amos Tversky. Since then, it’s been demonstrated in a huge range of settings, and led to some effective interventions for everything from sales teams to students. Take this finding from 2016: when students are given maximum grade points at the start of the semester and then lose points according to their performance in exams and assignments, they do better in the end than students who start with zero points and must work to accrue grade points instead.

It’s often assumed that these interventions work because people choose to exert more effort to avoid losses than to make equivalent gains. But there has been only limited work to explore this, write Ana Farinha and Tiago Maia at the University of Lisbon, in their new paper in the Journal of Experimental Psychology: General. So the pair set out to investigate. They used an experimental set-up that focused not on task performance — as is generally the case in this field of research — but rather on how much effort participants opted to make to avoid losses or make gains.

In the first study, 32 young adults had to “inflate” one of two balloons that were presented to them on a screen, either to gain points, or to prevent the loss of points. One of the balloons was always relatively easy to inflate — taking 25 presses on the spacebar using the index finger of the non-dominant hand. To inflate the other, a participant had to press the spacebar 75 times with the pinky finger of their non-dominant hand. This was the “high effort” balloon.

There were also two trial types. In the “gain” type, screen indicators showed that inflating the high effort balloon would give the participant a number of points (the number varied across trials), while the low effort option was literally pointless. In the “loss” type, inflating the low effort balloon led to a loss of points, while inflating the high effort balloon prevented loss, preserving the participant’s points balance. In both cases, then, going for the high effort option was always better for achieving the goal of having as many points as possible at the end.

The results were clear: the participants chose to exert more effort to prevent losses than to gain points. In the loss-avoidance trials, they went for the high effort option 79% of the time, whereas the figure for gain trials was only 59%.

The team also ran a similar experiment with 29 children aged 7 to 17. And they found a very similar pattern of results. The children went for their high effort option in 84% of loss-avoidance trials but only 64% for gain trials.

These percentages were group averages. But Farinha and Maia report that a difference was clear for most individuals, even the children. This, plus the large and very similar effect sizes that they found in their analysis of the adult and child data, suggests that this effect might reflect a fundamental feature of human behaviour, they write. However, they do also concede that this would need checking “across laboratories, contexts and cultures.”

For now, the pair argues that the main importance of the new work is this: “Our findings demonstrate, arguably more definitively than other work, that people explicitly choose to exert more effort to avoid losses than to obtain gains.” (Their italics.)

The fact that children showed very similar results to the adults was significant, the team adds. Though all kinds of successful interventions for adults are based on our stronger aversion to loss than drive for gain, this isn’t something that has been applied in schools — at least, certainly not widely. There might be some arguments for doing so: if kids are motivated to expend more effort, they should do better. However, there are also reasons to be extremely cautious. Young children, especially, could easily view deductions as punishments — and that could lead to anxiety.

There is clearly a long way to go in this field. But, hopefully, new work will lead to more, and better, ways to help us all to achieve our goals.

– People exert more effort to avoid losses than to obtain gains.

Emma Young (@EmmaELYoung) is a staff writer at BPS Research Digest