(Chocolate) Loss Aversion

Maybe one shouldn’t experiment on kids, but I do. Behavioral Economics is the buzz these days (did you see that Nobel Prize?) and it has huge potential implications for social behavior change, if folks like me can figure out how to use it. How to begin, though? Write something into a workplan? Hire a consultant? Take a course? Contract out the work? Maybe all of those things. First, though, I thought I’d try it out on my kid.

Like many of us, my child has a wee phobia about math tests, and so we are practicing test-taking at home. My kid gets a practice test, I set a big count-down timer, and then I stride around the dining room looking stern and peering over my son’s shoulder as he works. This is supposed to habituate him to the stress of test -taking. But wait, we haven’t gotten to Behavioral Economics yet – this is still just psychology. Usual psychology (or parenting) would say you should provide an incentive to put effort into the test, maybe with a reward for each question answered correctly. My son’s currency of choice is chocolate, so normally I’d think to give him a couple of chocolate chips for each question he got right. But instead I decided to experiment with a behavioral economics concept called loss aversion.

Loss aversion is the idea that people care more about losing what they have than they do about gaining something new. Imagine dropping a dollar on the ground, and it gets stuck in the grate of a dirty drain. You’ll probably lean down and pick it up – it’s your money! But if you were walking along and saw that dollar in the dirty drain, you might just walk on by. A dollar is a dollar, but that isn’t the way we always behave. I thought it might be the same with my son and chocolate chips – maybe he’d be more motivated to tackle each question under threat of having chocolate chips taken away than he’d be with the prospect of chocolate chips rewarded.

I set my son up with his test, the timer, and a plate of chocolate chips – two for each question in a neat line set right in front of the test paper. I told him that the chips were for him, but that I would take and eat two of his chocolate chips for every question he got wrong. Then I told him to start, and did my intimidating teacher routine until he finished. I sat down and graded his fake quiz (which included gimmie questions like his father’s middle name and the batting average of his favorite baseball player, because I’m not that cruel). Turns out I had to eat some chocolate chips, because his father’s middle name isn’t Joe. As we sat there together munching our chocolate chips I explained loss aversion and thanked him for being my test subject. He was gracious and did not report me to IRB for lack of informed consent.

My point here is that it can seem like a major deal to take a concept or practice that is new to you (and maybe new to your field, as behavioral economics is to social behavior change) and just use it. It somehow doesn’t seem okay to simply try something that isn’t your own, that isn’t your area of expertise, especially when you are doing something like designing health programs that impact people’s lives using taxpayer money. But this is how we grow – by trying something in a low-risk way, thinking about how it could work in another context, and trying it there. We must find low-risk ways to try out new things.

This kind of low-risk experimentation is not some spectacular innovate-test-fail-learn- succeed cycle, just a thoughtful trying, learning, and using of new concepts. I’m more comfortable applying new ideas at work in this way, starting small and moving up. So for now, loss aversion at home with chocolate chips. Maybe that will give me enough confidence with the concept to apply it in a small way the next time I am designing an intervention. How? No idea yet. Maybe someone needs to threaten to take away my chocolate chips until I figure that out.

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