What is loss aversion, you ask? Well, let’s get right into it. We’ll start with this article from Harvard Business Review, which discusses both loss aversion and conformity. The latter term you probably understand at work — it’s why new ideas are stunningly rare. But as for “loss aversion,” well, let’s get into that.
Humans have a negativity bias, which is logical. Most of our thoughts in a given day are negative. But in this context, “negativity bias” means our fear of losing usually outstrips our potential thrill from winning. In short: we are terrified of taking risks. Cultures like Silicon Valley have deified risk-taking, and in the process a few guys over there have made eye-popping amounts of money. In general I think we all know that risk is a good thing when somewhat managed, but most of us are clueless about how to manage it.
I’m guilty of this 100 percent, or even higher than that. In 2012, I was living in Queens surrounded by friends. I was restless in my job and potential career arc, though, so I went to graduate school at the University of Minnesota. At that point, my only real connection to Minneapolis was an airport layover. Going to grad school had pros and cons, but I’m not sure it was worth the risk — or the debt. Then I moved to north Texas for a job. Again, pros and cons — but I got canned from that job. I’m maybe not the best with “taking a leap” risk decisions, you know?
