Loss Aversion and Schools

Traditional economic models hold that we, being the rational beings we are, love getting things just as much as we hate losing them. Not actually the case, as Daniel Kahneman (Thinking, Fast and Slow) and others have pointed out. We are far more sensitive to actual and perceived losses than we are to gains.

What does this mean in practice? Well, it means all kinds of things, and in Kahneman’s words, “The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics” (300). If you compare the goodness (i.e., utility) of gaining two dollars with the badness (i.e., disutility) of losing two dollars, losing two dollars carries greater weight in our minds because we are more loss averse. We feel the pain of loss more deeply than we celebrate gains. Some might react to tax cuts with a smile and relief, but they might then react to tax hikes with pitchforks and protests (tax cuts being seen as a gain, tax hikes as a loss) . It’s an interesting asymmetry, with many consequences.

This loss aversion works at deep levels of our consciousness. Kahneman cites a study of golf putts by Devin Pope and Maurice Schweitzer at the University of Pennsylvania. They compared the success rates of golfers putting for a birdie with those of golfers putting to avoid a bogey. If you look at a birdie as a “gain” and a bogey as a “loss” (with par seen as breaking even), then you can see loss aversion at work here. After analyzing 2.5 million putts (!), Pope and Schweitzer found that golfers putting for par (i.e., avoiding the “loss” of a bogey) were 3.6% more successful than those putting or a birdie. Though it might seem small, that’s an enormous difference of more than 90,000 successful putts. It’s also one of the clearest, most interesting, most powerful illustrations of loss aversion that I’ve read.

How can the idea of loss aversion affect educational practice? One general way lies just in rethinking how we frame and conceive of things. Let’s say, for example, that your school has mandatory study hall, which students can liberate themselves from after one term of good grades. In that way, liberation from the study hall might be seen as a gain of more free time–a motivating incentive, right? But loss aversion would suggest that students might be more motivated to escape study hall in the first place (i.e., avoid losing their free time to study hall). Let’s say that only students with low grades after the first few weeks have to attend study hall, and you publicize that fact quite clearly. Research suggests that in this framework students will work much harder and seek more extra help to avoid the loss of free time that study hall represents.

I’ve also been playing around with how assessment practices could incorporate loss aversion. In such a framework assessment might end up looking something like scoring golf. First, we’d need clear rubrics for every type of assignment we give. Students would have to know exactly what the minimum expectations for an assignment should be, and the bar should be set high. Think of it as “par” for every assignment. If students meet all expectations, their grade stays the same. If they exceed expectations, their grade goes up one or two points. But if they fail to meet expectations, their grade decreases a bit, depending on how many standards they failed to meet.

In order for this to work, however, all students have to start with some grade that they can work to defend against loss. It’s up to the teacher, of course, what that number should be. In my mind I’ve been playing around with the number 90 (on a 0-100 scale), but maybe that just shows that I’m the product of a grade-inflated generation. Maybe it should be 85. Or lower. I don’t know–it’s open for discussion. It needs to be high enough for students to want to preserve it, but not so high that everyone walks away with A’s just for meeting expectations.

If the theory of loss aversion holds true, then such a grading system should be a powerful motivator for students. Students who need to get an A+ on everything have a way to aim high. Students who often struggle start the term with a high grade and a high incentive to keep working hard. This is not a fully formed idea, I concede, but I think it has some potential. I also recognize that this idea resides within a fairly traditional school framework, with grades, teacher-generated rubrics, etc. As with all my ideas, I wouldn’t be surprised to hear that many other people have already thought of it. If so, I’d love to hear about other people who might be doing something similar.

Works Cited

Kahneman, D. (2011). Thinking, fast and slow. New York, NY: Farrar, Strauss, and Giroux.



2 Comments so far. Leave a comment below.
  1. I enjoyed your post a lot. I strongly agree with your premise that motivating students is a key to learning, and your proposed approach sounds like an interesting way to harness ‘natural’ loss aversion. I wonder, though, about the inherent contextual difference between playing golf [an intrinsically motivating and autonomous pursuit] and attending school [fill in the blank].

    If you don’t already know it, you might check out the research on intrinsic vs. extrinsic motivation by psychologists Edward Deci and Richard Ryan. A former teacher myself (and a very amateur psychologist), I plan to tattoo their 2000 study on my brain and heart if I ever return to the classroom. Here’s a snippet I find very compelling:

    Although motivation is often treated as a singular construct, even superficial reflection suggests that people are moved to act by very different types of factors, with highly varied experiences and consequences. People can be motivated because they value an activity or because there is strong external coercion. They can be urged into action by an abiding interest or by a bribe. They can behave from a sense of personal commitment to excel or from fear of being surveilled. (…)

    Comparisons between people whose motivation is authentic (literally, self-authored or endorsed) and those who are merely externally controlled for an action typically reveal that the former, relative to the latter, have more interest, excitement, and confidence, which in turn is manifest both as enhanced performance, persistence, and creativity, and as heightened vitality, self-esteem, and general well-being.

    How you develop intrinsic motivation in the classroom is a subject of a lot of debate. I’m in favor of helping students pursue and develop “curriculum relevance” in their own ways and according to their own needs, and building in discovery/creativity/self-expression/making as forms of meaning-making and relevance-builders. I acknowledge that that is easier said than done!

    Hope this is of some interest to you. Cheers.

    • jhurd,

      Thank you for reading and commenting so thoughtfully! I look forward to reading the Deci & Ryan study you provided. I agree that the contextual difference between a game like golf and a rewards-based, compulsory activity like school is important to note, especially in terms of motivation. I suppose, however, that this idea is meant to help trigger a kind of intrinsic motivation by using a variation on the traditional numeric grading system. Since loss aversion appears to be in our psychological wiring, it could be argued that we are “internally motivated” to avoid losses in a way that we aren’t so motivated to achieve gains. Ideally, this system might provide students (especially those who struggle in certain subjects) with hope–and the motivation that comes with it. That is, if they start off with a high grade that they have to “defend,” they might be more motivated to work with greater effort. By trying especially hard, they might discover a greater interest in a subject they had previously dismissed because they weren’t “good” at it. Hard to say whether it would work, but it may be worth a try.

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