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Loss Aversion

What is Loss Aversion?

First identified by Nobel Prize-winner Daniel Kahneman, Loss Aversion is a psychological principle that says people will go to great lengths to avoid losing. In fact, the psychological pain of losing is twice as powerful as the pleasure of winning.

Loss Aversion in the real world

A study was conducted to see if framing cancer treatments using Loss Aversion could improve surgery opt-in rates. The research team hypothesized that opt-ins rates were related to how the options were framed.

To test this hypothesis, doctors presented patients with two options. Each framed surgery as a potential gain or a possible loss — the results were staggering.

  1. Surgery framed as a gain“The one-month survival rate of surgery is 90%.”
  2. Surgery framed as a loss: “There is a 10% chance of death in the month post-surgery.”

When framed as a gain, 84% of people chose surgery. But when framed as a loss, only 50% opted in. This simple application of Loss Aversion increased surgery opt-ins by 54%.

Example Vault: Loss Aversion

Loss Aversion: NASA
Loss Aversion: Facebook