The effects of loss aversion when choosing between political candidates

In late 1993, the New York Times published an article about a study done at Fordham University on social well-being. The study's conclusion was that Americans' confidence in their quality of life was "strikingly low" (New York Times, 1993). Two important measures that help make up the quality of life index are purchasing power and leisure. Both have shown steady decreases in the last few years (St. Louis Post, 1995; Atlanta Constitution, 1993). Even though people are working longer and harder for less money, they seem reluctant to get serious about demanding a change in the current state of affairs. One way to demand change is to vote at every election. In spite of this, only 38.7% of the eligible population voted in the 1994 elections (Washington Post, 1994). Moreover, those who did vote did not venture outside the traditional choices of democrat and republican. This despite enduring mistrust of these politicians and the perception that they do not serve the common person. Can the study of decision making comment on these issues? The author thinks so. Specifically, an argument can be made that people's aversion to loss will preclude any radical change in the type of politicians elected to office. It is predicted from this notion that quality of life for a majority of Americans will have to decline significantly more for candidates outside the current choices to be elected.

Kahneman and Tversky define loss aversion as the disutility of giving up an object being greater than the utility associated with acquiring it (Kahneman, Tversky, 1984). This means losing something is felt more than gaining it. Thus, the sum of people's individual decision making preferences will tend keep the electorate within the traditional bounds when choosing between candidates. Although people are not content with the present alternatives, voting for someone outside the political mainstream provides more perceived disutility than the utility gained by trying someone new. In this way, abrupt shifts by the majority along the political spectrum rarely take place. Moreover, a candidate seen as outside the traditional bounds can, at the present, only expect to serve as a spoiler. Ross Perot is an example of this. As a candidate on the right side of the political spectrum, he stole votes from George Bush thereby putting Bill Clinton into the White House.

It is noteworthy that Colin Powell is being considered a serious alternative for president should he decide to run. This speaks to the growing discontentment with the status quo. However, owing to people's loss aversion, the chances of his election are quite low.

Added to the above discussion is the fact that declines in quality

of life happen over time. People thus have a chance to accommodate these changes and incorporate them into their perception of the status quo. This helps to reinforce the disutility of big changes in leadership. Hence, prolonged declines that sum to drastic reductions in the quality of life are needed to fuel the utility of non-traditional political candidates.

So, because people weight loss more heavily than gain, abrupt changes in leadership will not be seen. This loss aversion will force people to suffer a much larger decline in quality of life than would be the case with a more equitable treatment of loss and gain. As the old wisdom goes, things will get worse before they get better.

References

Atlanta Constitution, 1993, April 7, section A, page 11, column 2.

Kahneman, D., & Tversky, A. (1984). Choices, values, and frames. American Psychologist, 39, 341-350.

New York Times, 1993, October 18, section B, page 7, column 4.

St. Louis Post-Dispatch, 1995, February 8, section B, page 7, column 2.

Washingtion Post, 1994, November 12, section A, page 3, column 4.