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Coaching

Losing it hurts more

The pain of losing something we have is about twice as great as the pleasure that comes from gaining something new.

This idea was first formalised by Daniel Kahneman and Amos Tversky as Loss Aversion. It’s the idea that we prefer to avoid the loss of something, over achieving an equivalent gain.

This limitation in thinking can quite easily cause us to baseline our position badly. It may stop us making a valuable change as we hold on too tightly to something we already have, or it might stop you going after a valuable opportunity because you fear losing something you already have.

You can run through a number of experiments to see how much you are affected by Loss Aversion. For a simple test, think about an item you own. Pick something that doesn’t have a large sentimental value, and that can easily be replaced. Maybe think about a TV or other electrical utility item. Imagine losing it or breaking it. How do you feel?

Now imagine that you win a new version, modern, up-to-date and better than your current model. How would that make you feel?

If you feel worse with the Loss, then that’s an example of a type of Loss Aversion. It’s very common. I’m happy with my current TV, and I’d certainly feel worse losing it.

To escape from the effect, you can frame goals and outcomes differently. Looking at the cost of things as an example. Would you prefer a £10 discount or would you prefer to avoid a £10 surcharge? Most of us prefer to avoid the surcharge, as we see that as a loss.

When you’re being coached, you’ll find it’s a lot more powerful to phrase your goals in positive terms. If a goal might cost you something to achieve it, try and baseline the goal so you don’t phrase it as including a loss.

As an example, think about investing time and effort in yourself, rather than spending money for an uncertain gain, or giving up your weekends. Don’t be forced to exercise (losing free will), but be thankful for the opportunity to improve your fitness.

Framing in this way will move you away from Loss Aversion, and give you the tools for success in your chosen endeavour.