Daniel Kahneman presents research from University of Pennsylvania economists Devin Pope and Maurice Schweitzer to demonstrate the power of loss aversion in his book Thinking Fast and Slow. Pope and Schweitzer specifically look at golf, and how professional golfers perform when putting to demonstrate that loss aversion factors into the golfers’ performance, a conclusion that to me feels both obvious and surprising at the same time.
Professional golfers don’t seem like the kind of people who should be subject to loss aversion on the course. Their performance doesn’t seem like it should be subject to the knowledge that a putt will earn them a birdie, or prevent them from scoring a bogie. However, Pope and Schweitzer challenge this thinking. Kahneman writes:
“Pope and Schweitzer reasoned from loss aversion that players would try a little harder when putting for par (to avoid a bogey) than when putting for a birdie. They analyzed more than 2.5 million putts in exquisite detail to tests that prediction.
They were right. Whether the putt was easy or hard, at every distance from the hole, players were more successful when putting for par than for birdie.”
Golfers don’t want to shoot over par. They perform better when they face the possibility of being over par rather than when they have a chance to be under par. Exceeding par is viewed as a loss which the golfers want to avoid while putting for birdie is an achievement to gain. Somewhere along the lines, golfers understand this and their physical performance is altered, decreasing the likelihood of a successful birdie putt, but increasing the likelihood of a successful par putt. Loss aversion is a powerful force, even in places we would not expect, like professional golf putting performance. If even professional golfers, who practice continually and are paid for their performance on the course are not able to avoid loss aversion, then we should recognize that it can play a huge role in our own lives, and we should invest in systems and structures to help us avoid making costly mistakes in our own lives from biases related to loss aversion.
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