I was briefly quoted by Christopher Carosa, CTFA, in his article, “What Bagels, Loss Aversion, and Reframing the Company Match Can Show the 401k Fiduciary About How to Help Employees Save More Money for Retirement” in FiduciaryNews.com 2/27/2018 (link). Here’s some more of my two cents on the subject:

Would you rather (A) go to the gym three times a week for a month, or (B) have your friend mail your signed check, for twice the amount of your gym membership, to your least favorite politician?

Most people will pick A over B every time, no contest.

That’s loss aversion.

Loss aversion means that people are more likely to act in order to prevent a loss rather than to receive a comparable gain. Setting up a situation in which not keeping your word will result in a punishing consequence, something you don’t want to happen, will increase the likelihood that you will do what you said you would do.

Individual behavior is affected by the presence of others. There is a natural tendency to want to appear successful to others, or put our best foot forward.  This is played out every day on Instagram and Facebook. But, if no one knows whether we went to the gym or binge-watched Netflix all weekend, we might as well stay home and do the easier thing.  On the other hand, if someone is meeting us at the gym, or if we promised to report back to a friend about our workout session, we are less likely to stay home.  Having supportive witnesses, as well as loss aversion, can work together to increase our follow-through.

Finally, it’s important to reward yourself for doing what you said you’d do. Reinforcement is a powerful tool, so be sure to schedule a fun activity with friends, or something else you enjoy, after your session at the gym.

So, next time you want to make sure that you make better use of your gym membership, or complete any unpleasant chore, consider using a combination of:

  1. Loss aversion (setting up a punishing consequence for failing to do the thing),


  1. The buddy system (asking a friend or coach to be your witness),


  1. Reinforcement (rewarding yourself after you do the thing).

You may be surprised at how much you can accomplish if you set yourself up for success with this triple-play!

Learn more about the science behind it here:

  • Daniel Kahneman and Amos Tversky’s article in Econometrica March 1979, “Prospect Theory: An Analysis of Decision Under Risk”.  (link)
  • Eldad Yechiam’s Science Brief for the American Psychological Association’s Psychological Science Agenda January 2015, “The psychology of gains and losses: More complicated than previously thought.” (link)
  • William D. Crano’s paper, “Milestones in the psychological analysis of social influence,” Group Dynamics: Theory, Research, and Practice, Vol 4(1), Mar 2000, 68-80 (link)

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