Loss aversion dictates that the pain of losing something is greater than the joy of receiving it. In my experience, this has lead me to sticking with a job I hate for 9 years because I’m afraid of losing the money I earn. There are millions of things I could do rather than this, but I’m terrified of losing that safety blanket and so I stick with it.
Now that’s not a fun topic, is it?
How about another example – I am currently twelve weeks post ileostomy surgery and I am the healthiest I’ve been in over two years. My first surgery went perfectly, my surgeon is a wizard, and after some early teething problems my stoma is pretty much perfect. Because of that, I am now terrified to have my reversal surgery in five weeks time. I’m hyper aware that if it doesn’t work out perfectly, I have potentially thrown away a really good stoma and opened up my world to more uncertainty and pain.
That was… also not fun.
So what’s the go with loss aversion? Why is it such a controlling factor in the lives of myself and so many others? And how can we change this phenomenon to serve us rather than hinder us?
Firstly, I want to talk about the idea of having something to lose. In both the examples I’ve given of myself there is very clearly something that I don’t want to lose, and so my mind is telling me to protect it. This I assume is a natural instinct left behind from hundreds of years ago, when your “something to lose” was the food that would keep you alive or the wood to start a fire that would keep you warm. Unfortunately in the present, when we have all our basic needs met, all the extra goodies we could potential lose are just a massive source of anxiety.
Hungry dogs run faster.
I’ve loved this quote ever since hearing Jason Kelce scream it at the Philadelphia Eagles Superbowl parade. Hungry dogs run faster is an eternally present notion in so many disciplines, but none as obvious as sports. Champions in their respective sports have been quoted thousands of times over, saying the second one is harder to win than the first. Once you’ve won it all it’s harder to get up for those early workouts, it’s harder to go past the steak at the restaurant – you’ve deserved it! All the while, their opponent is working harder than ever to knock them off the top. My favourite example of this comes from the UFC – a phenomena that absolutely exemplifies loss aversion.
Act 1: A hungry young fighter comes onto the scene, with a dream of being UFC World Champion. He developed this dream after knocking out drunks every weekend, while working the door of a local club to put food on the table. Enter the UFC: an opportunity to establish actual wealth for his family, that $50,000 “KO of the night” bonus looking incredibly alluring. He quickly realises that being the guy who puts on a show, knocking people out in spectacular fashion, is a one way ticket to stardom. Stardom = money. Stardom = a title shot.
Act 2: Our hungry young fighter has a handful of wins under his belt, and is now facing more serious competition. He is on top of the world – booked to fight the champion. Confidence is running high – he’s fit, on weight, mentally prepared, coming in with no injuries. He walks into the cage already having won. The old champion is folded like a lawn chair inside the first round, the new champion has his arms raised, the belt is around his waist, his fans on social media go apeshit. The dawn of a new era they say! Our guy, the knockout king! There’s not been this much buzz and excitement in the division for years, our fighter is sitting pretty.
Act 3: Our fighter has his first title defense. The world is ready for him to come and knock out another contender, cut a promo, and be the media darling he has been recently trained to be. Except he doesn’t. The world is sitting in front of the TV, shouting WHAT ARE YOU DOING!? HIT HIM! It’s a snoozefest. Our fighter is on top of the world now, with a lot of people trying to knock him off. Because of that, he’s now actively trying to avoid losing rather than going out and winning – and so he moves away from what got him this success in the first place to a far safer strategy.
So how do we stop this from happening? How can we turn loss aversion on its head, and make it work for us? I propose three ideas:
- Focus on the process.
- Give everything away
- Dare to be great.
Focus on the process
Firstly, I want to share something from James Clear’s book Atomic Habits. In the book James poses this question: “If you completely ignored your goals and focused only on your system, would you still succeed?” This question is based on the idea that while goals are a great early indication of what direction you should be going in; once you’ve figured that out they’re a net negative to your progress. I know it sounds wrong at first, but it makes sense doesn’t it? I’ve written out personal goals hundreds of times, large and small, and have never had any sustained success hitting them. And what if I did reach my goals? What then? Would I still have the motivation to keep doing what got me there? Would I even care anymore?
I touched on it in this post years ago (but would like to share a little more that I glossed over back then). I used to have a photo on my phone of what I considered my ideal body to look like. At the time I was lifting weights 4-5 times a week religiously, striving to attain this goal of the ideal body. After waking one day, I looked in the mirror, realised I’d reached the goal and was happy with how my body looked – then never consistently lifted weights again. I simply didn’t care anymore, and I still don’t! I haven’t looked like that photo since that single morning and it doesn’t bother me a bit.
So what could change, how can we remove this negative aspect of goal-setting? The solution is to focus on the system that underpins the goal, or your process. If you fall in love with doing the work, the goals fade away – the process you’ve established is what gets you up in the morning to do the work. Instead of focusing on an ideal job, or an earnings benchmark, I could instead focus on self improvement and doing my absolute best at my current work – creating the confidence that I am able to walk away from these old benchmarks and jobs into something different and better.
At a recent party, a close friend said “I worked hard at uni to get this paycheck, and I’m now working hard in this job for my next paycheck”. It stuck with me – would I be as afraid of walking away from my current job, if I was approaching each day as an opportunity to show my worth for a better job?
Give everything away
It’s hard to be worried about losing something when you’ve already given it away, right? Austin Kleon talks about this concept in his book Show Your Work! Austin states that many people have the issue of being hoarders, where they keep their work and their processes to themselves. When you create this huge nest of ideas, plans, creations etc. you end up making a mass of things you’re afraid to lose.
I think a good context to understand this is a comedian – say a comedian works on their routine for a year and ends up with a really great hour of material they know works. They get laughs, they get TV appearances, everything is going well. There becomes a point where this lot of material begins to be old or stale, doesn’t quite get as many laughs, and leaves people wondering when they’re going to hear something new. Due to this, a good comedian is forced to throw away their material right as it peaks – in order to start again.
This constant cycle of creating and throwing away is their process, it is what allows them to be great. What can we take from this? Don’t hang your hat on something just because it works – that’s loss aversion. If the comedian was afraid to lose the distinction they had from this material that worked, they’d never look for more material and would end up withering away from the spotlight. The lesson is to always be working on the next thing, always be creating, always think of what else is possible – the habit of throwing the old away to look for the new stops loss aversion in its tracks.
Dare to be great
I think the most impactful method or idea for me is this – dare to be great. I wrote it in my journal one day after having a bit of an anxious moment about loss aversion, particularly the fear I’ve been having around my reversal surgery. The things that I have right now, and how “good” I am at something, are all built around my own frame of reference. A lot of work that I find terrible could be considered amazing by someone who doesn’t write, while what I’d consider my best work would be considered rubbish by someone who is a world-class writer. That is freeing – in that we too have the ability to take this idea and move the frame of reference in our own minds. I have a stable job that supports the lifestyle I have, and despite some of its shortcomings it is good. But, what if I left and found something great? What’s the worst that could happen, the next thing I find is actually worse than what I had? All the more reason to get back out there and keep looking. I currently have an ileostomy bag that has given me my health and my life back. There are a few minor inconveniences and adjustments to life with it, but it is good. You see where I’m going here – what if the reversal surgery works out perfectly? I’ll no longer have the bag, I’ll get back half an hour of every morning for myself, I won’t have to deal with the public health system, or airport attendants looking at me like I’m an alien. Wouldn’t that be great?
These three ideas all work in unison; and while one might speak to you more than another, they all play off each other to form a system that removes loss aversion. If you focus on the process, continuously making new work to replace the old, and truly believe you can constantly learn and improve forever – it would be pretty hard to fear losing what you’ve got.
If you have trouble with loss aversion in your life, why not try some of the ideas I’ve discussed and let me know how it goes. You can reach me by email email@example.com, through Instagram @bradiscomfy, or just by leaving a comment. Cheers!