Monday, October 30, 2017

Losing loss aversion -- Current evidence does not support that losses, on balance, tend to be any more impactful than gains

Gal, David and Rucker, Derek, The Loss of Loss Aversion: Will It Loom Larger Than Its Gain? (September 30, 2017). Journal of Consumer Psychology, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3049660

Abstract: Loss aversion, the principle that losses loom larger than gains, is among the most widely accepted ideas in the social sciences. The first part of this article introduces and discusses the construct of loss aversion. The second part of this article reviews evidence in support of loss aversion. The upshot of this review is that current evidence does not support that losses, on balance, tend to be any more impactful than gains. The third part of this article aims to address the question of why acceptance of loss aversion as a general principle remains pervasive and persistent among social scientists, including consumer psychologists, despite evidence to the contrary. This analysis aims to connect the persistence of a belief in loss aversion to more general ideas about belief acceptance and persistence in science. The final part of the article discusses how a more contextualized perspective of the relative impact of losses versus gains can open new areas of inquiry that are squarely in the domain of consumer psychology.

Keywords: Loss Aversion, Sociology of Science
JEL Classification: A14, M31, D03, D81, D01, G02

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