Loss Aversion: a Significant Barrier to Social Change

“The ability to scare the hell out of people is much greater than the ability to attract them to equities.”

– Brian Barish

What have you got to lose? It seems like a question that should only be asked of a scared, desperate person, or of someone who is knowingly on the winning side of a rigged game.

What have you got to gain? Now, that is something you ask an optimist or an idealist, right?

These two questions are at the core of leading social change. If the best future that someone can imagine is one where they have simply protected what little they have, then your task becomes exponentially difficult.

There is an idea that economists and marketing professionals talk about called, loss aversion. The basic idea is that people have a tendency to strongly prefer avoiding losses to acquiring gains. This is a concept that apparently transcends mere financial considerations. It can also be thought of in terms of the “losses” being in the form of loss of status, or of access.

Ultimately the loss aversion leads to risk aversion. That is what the privileged and the affluent are banking on. Not only is loss aversion at the center of all negotiation, it is also the enemy of positive change, and innovation.

As I pointed out in a previous post on risk aversion, Risk-taking is the only prescription for overcoming complacency, apprehension, and fear of failure.  At some point risk-aversion becomes an inescapable pessimism. A vision of a different world becomes unimaginable.

Avoiding this hopelessness requires vision, and a belief that the gains you desire are realistically achievable. It also helps to be reminded that your fear arises in part, from the fact that there are people who don’t want things to change, who are doing their best to keep you scared. Don’t let them.

(See more on vision here, and here.)

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