Are you having problems getting motivated? Not meeting your goals? Struggling to get that habit started?
How would you enjoy getting familiar with loss aversion? A strategy that can help you achieve your habits and goals.
Loss aversion is thought to be twice as powerful as a positive rewards system. The fear that you have something and might lose it will get you motivated.
How to Create a Mindset That Gets Results
The first time I applied the loss aversion strategy to my own life was when I attended college. I was not the greatest college student. I just wanted the little sheet of paper that said I graduated college. I was not unwilling to study for hours, I just did not have the mindset and motivation to seek a 4.0 grade point average. In one of my classes the instructor was giving their opening remarks on the first day of class. She stated, “Today, everyone in this class has an A. It depends on you to keep that A. I deduct points from your maximum allowable score.”. She then turned towards the board and wrote 1000. Then with subtraction, she showed the class how quickly you could drop a letter grade in the next couple of weeks. That was the first class in college I got an A in. The fear of losing something concerned me even more than earning it.
As children we remember playing a game with a parent or a friend. Winning was always fun, but what happened when you lost? Do you recall asking your opponent, “How about the best of 3?”. Then another loss would bring about the best of 5 and eventually the best of 7.
Both these examples are due to loss aversion when losing something is twice as powerful psychologically as gaining something.
If anything, you know, I think losing makes me even more motivated. -Serena Williams
Why Loss Aversion Beats Any Rewards System
Positive rewards are common among those who have a desire to build a habit. You use positive rewards in creating good behavior in your children and your pets. The reward can be in the form of money, candy, or treats. You probably give yourself a reward when you accomplish a goal. Some go on a vacation when they become debt free, others permit themselves to have a treat at the end of the week for accomplishing nutrition or exercise goals. So, what do you do if that is not working?
Loss aversion has been around for many years. It is a financial concept that is being applied to the productivity. Amos Tversky and Daniel Kahneman demonstrated how loss aversion works and were credited with its concept. Kahneman won a Nobel Prize award in economics for the work with Tversky on loss aversion. Put simply, it is the fear of losing something you already have. Loss aversion can be a powerful form of motivation. You probably do not like losing or failing, but worse than that, losing something you already have. Look at your own life. Do you make decisions that favor caution or risk with the opportunity to lose more?
Here’s an example on how this works. You have a goal to get up every morning at 5 am and settle on a consequence that every morning when you do not get up on time, you will donate a dollar to your favorite charity. You don’t have to stick to just money, but you can be creative. Maybe, you donate your time or a favorite possession. This can be applied to your business. Employees are guaranteed a bonus at the end of the year if they meet certain goals. If they do not, they lose the bonus or it gets reduced. The toughest part is not choosing the consequence, but rather being held responsible for the goal. You must find someone that can hold you to your commitment if you fail. To apply this concept to your life is easy. All you need to do is reverse the rewards strategy and turn it into a loss startegy.
3 Simple Steps to Achieve More Motivation!
To create a loss aversion strategy:
- Set a goal.
- Choose a consequence if you fail.
- Ask someone to hold you accountable.