Print This Post Print This Post

Raw Concepts: Avoiding a Loss vs. Achieving Gains

Most people are more concerned with avoiding a potential loss than achieving a potential gain. It’s an aspect of human nature that’s very underappreciated but continually comes into play in our daily lives in significant ways.

Some evolutionary psychologists speculate that we emotionally weigh negative outcomes fives times stronger than we weigh positive outcomes. Evolution is primarily driven not by striving for gains and achieving the best possible outcome but by constantly avoiding costly mistakes and averting loss. This leads to the concept of the least costly mistake.

The least costly mistake concept says that when making decisions, we put more emphasis on choosing the path with the least disastrous potential risk rather than the path with the most potential gain. To understand the least costly mistake concept, it’s necessary to consider the most costly mistake ever: death.

If all your mistake causes you to do is miss an opportunity to gain ground, there may always be a future opportunity to gain ground. It sucks, but you may get a second chance later, and you didn’t lose much, if anything. But if your mistake is costly, not only are you worse off before, but you’ve impaired your future opportunities to gain ground. And if you make the most costly mistake, death, you’ve closed off all second chances. Permanently.

For these reasons, being biased toward averting losses rather than maximizing gains makes sense. Throughout evolution, people strongly biased toward maximizing gains over averting losses died more and as a result got permanently weeded out of the gene pool. Thus we’re all descended from the remaining people, the ones biased toward loss aversion. And we inherited their loss aversion tendencies.

This is why the pain a person feels from losing $100 will far outweigh the joy they feel from gaining $100. This is why the heartbreak of losing a mediocre relationship far outweighs the joy of gaining one. This is why people fight harder to keep from losing a decent relationship but don’t fight as hard to improve a decent relationship into a great one. Human nature makes avoiding steps backwards much more crucial to people than maximizing steps forward.

As with anything, both traits taken to their extremes are detrimental. However, I think you’re more likely to find the avoidance of potential losses to be the trait taken to extremes.

Recommended Reading:

Sway: The Irresistible Pull of Irrational Behavior by Ori and Rom Brafman is an excellent pop psychology that talks about loss aversion and other logical traps people fall into.

6 Responses to “Raw Concepts: Avoiding a Loss vs. Achieving Gains”

  1. That makes perfect sense under the lens of evolutionary analysis. If the evolution made those who value loss more than gain more fit, why is it that optimists who are happy value gains more than their losses? According to the Authentic Happiness by Martin Seligman, he summarizes that people who are happy don’t dwell on their losses; they learn to detach from negative emotions and rebound to positive emotions. In application to relationship, if an optimist get rejected, he would simply say, “bus comes every 10 minutes and move on” while a pessimist would have difficulty erasing this rejection from his head.
    This is conflicting, because optimists certainly value gain more than their loss, but according to the evolutionary perspective, pessimists should have a reproductive advantage due to their reverse beliefs on loss and gain. Does this imply that in the future, evolution will weed out the pessimist?

  2. T-Wonderful stuff. Please write a post on how you used [or could use] this knowledge.

  3. Conqueror, there will be more real-life illustrations of loss aversion, but here’s one example.

  4. Does this imply that in the future, evolution will weed out the pessimist?

    Chad, a big misconception people have about evolution is that it always weeds out things that aren’t beneficial to our survival or reproductive chances on a long enough timeline. This isn’t true however. It’s not enough that a trait be counterproductive or useless, it has to be bad enough to significantly increase your likelihood of dying or not reproducing. For example an appendix is useless, and if it bursts you can die, but it’s not counterproductive enough to survival for it to be weeded out of the species, so it continues to stay with humankind. So pessimists, while maybe not faring as well as optimists in life, still manage to live long lives and still manage to reproduce. So I don’t see pessimism getting weeded out of the species anytime soon.

    In modern Western society, or the First World, dying is not that easy. We have so many safety nets that I think the risktaker and the optimist can thrive better today than in any time previously in human history, but I don’t expect the pessimistic bias to die out anytime soon either because they’re still surviving and reproducing as well, especially in societies with less safety nets.

  5. Also Chad, the notion that happy people are the ones who don’t dwell on their losses after they happen doesn’t negate the idea that most people would rather prevent potential losses before they happen.