3 – Loss Aversion & Framing Effects

When a Glass Half Empty Is More Persuasive Than a Glass Half Full

« Previous Chapter – The Negative-Positive Asymmetry Effect

Imagine the following scenario:

Suppose that you are the mayor of a small town with a population of 600. The town is facing an outbreak of a deadly virus that is likely to kill many. You are presented with two different solutions. The first will save a guaranteed 200 people. The second program will save all 600 with one-thirds probability. Which one would you choose?

If you are like most people, you would have chosen the first program. You would take a sure thing over a risky gamble.

Now imagine the following scenario:

Suppose that you are the mayor of a small town with a population of 600. The town is facing an outbreak of a deadly virus that is likely to kill many. You are presented with two different solutions. The first will allow 400 people to die. The second will let all 600 live with one-thirds probability. Which one would you choose?

This time you probably went with the second program. Yet both  scenarios are exactly the same. Saving a guaranteed 200 people out of 600 is the same as losing a guaranteed 400 people out of 600. So why the reversal in choice ? Is it because you are not an expert medical practitioner and trained in evaluating medical programs?

No, because when the question was put to a large sample of physicians, they too overwhelmingly chose the first program in scenario one (72%) and then reversed their choice to the second program in scenario 2 (78%).

Framing Effects: Why a Glass Half Empty is More Persuasive than a Glass Half Full

The difference is in what psychologists call framing. Since bad experiences are stronger than good experiences, losses are felt more strongly than gains. As the Nobel Prize winning psychologists who first discovered this effect, Amos Tversky and Daniel Kahneman, famously put it, ‘losses loom larger than gains’.

This means people are more motivated to avoid a loss than to seek a gain. Thus in the example above, the medical practitioners were more likely take the risky gamble when it was framed in terms of avoiding a loss of 400 people, than when it was framed in terms of saving the lives of 400 people.

What this means for you as a marketer or a salesperson is that if you want to persuade someone to do something, tell them not what they will gain but what they will lose. Consider the experiment undertaken by the psychologists, Yoav Ganzach and Nili Karsahi of the Hebrew University of Jerusalem, Israel.

Collaborating with a national credit card company, they randomly selected two hundred and forty-six credit card holders who had not used their cards for the previous three months. Then they sent them all a message in the form of a phone call followed by a letter highlighting the benefits of using their credit cards over cash or cheque.

The Catch Was

The only catch was, not all the customers received the same message.

Half the customers received a negatively framed message (the loss of not using their credit card) while the other half received a positively framed message (the benefit of using their credit card).

The customers in the negative framing condition received the following message:

“… I understand. It is worthwhile for you to know that there are many disadvantages in using cash instead of ZionCard. One is that in using cash there is a danger that money will be lost or stolen; but if someone used your card, we are responsible, and the money will be returned to you. This means that paying by cash is not only less convenient, but also much less secure. (Emphasis added)

In comparison those in the positive framing condition received the following message:

“… I understand. It is worthwhile for you to know that there are many advantages in using ZionCard instead of cash. One is that in using ZionCard there is no danger that money will be lost or stolen; that is if someone used your card, we are responsible, and the money will be returned to you. This means that paying by ZionCard is not only more convenient, but also much more secure. (Emphasis added)

Similarly they were also informed of other reasons for using the credit card but with different framing:

Loss Framed Gain Framed
Additional disadvantages in using cash
- No free credit for up to one month.
- No continuous tracking of your expenses.
- Inconvenience in daily use.
Additional advantages in using ZionCard
- Free credit for up to one month.
- Continuous tracking of your expenses.
- Convenience in daily use.

As you can see both the messages were the same. The only difference was in the way they were framed. What the experimenters wanted to see was whether framing a message in terms of a loss or a gain would have an impact on the number of customers who would subsequently start using their credit card.

The results were clear-cut and decisive. Loss framing had a stronger effect on customer behaviour. It wasn’t a small difference either; those who had received the loss framed message doubled their use of the credit card compared to those who had received a positively framed message. Also, when questioned six months later, 66% of the customers in the negative framing condition recalled the message compared to a 43% recall rate for those in the positively framed condition. Sometimes it pays to pitch the glass as half empty.

Caution should be exercised in interpreting these results. While loss framing is more persuasive than gain framing in most cases, there are exceptions. For example, prevention sells better using gain framed messages. In a study on skin cancer prevention, for example, the researchers found that a positively framed message (‘Regular use of sunscreen can protect you against the sun’s harmful rays’) was more effective at persuading people to request sunscreen (71%) compared to a loss framed message (‘If you don’t use sunscreen products regularly, you won’t be protected against the sun’s harmful rays’) which only managed a compliance rate of 46%.

The only way around this problem is testing. You should test the message on a small scale before going all out.

With that said, loss framing has a robust effect and can lead to significantly higher compliance – as is evidenced by the credit card study.

Using Loss Aversion and Framing Effects in Copywriting

Entrepreneurs / copywriters / marketers / sales people generally tend to write about what is to be gained by buying. But as bad experiences are stronger, there is much to be gained by also pointing out what can be avoided by buying a product or service.

For example, in addition to:

-          Buy that dream house.
-          Have more energy to play with your kids.
-          Fit into that bikini.
-          Free credit for up to one month.

Also point out:

-          Escape the drudgery of mortgage payments.
-          Avoid the embarrassment of not being able to run around with your kids.
-          Avoid not fitting into that bikini.
-          No free credit for up to one month.

So take a look at your sales letters / web pages and if you notice that they are primarily focused on moving towards pleasure, then rewrite them to incorporate what your product allows the customer to escape from.

Loss Aversion in Auto-responders

You can also incorporate this into your auto-responder message sequence. Rather than having 10 messages focused on moving towards pleasure -  looking great in a bikini, or buying that Mercedes you’ve had your eye on – you can also have several messages pushing the ‘avoid pain’ button – escape the embarrassment of not fitting into your clothes, escape the job that you hate.

That way you (a) have more messages for your auto-responder (especially useful for people who find it hard to come up with content) and (b) hit a variety of user emotion buttons and tap into all the user motivations, thus maximising your chances of making a sale.

Like the credit card users and the medical practitioners, you may find that your customers too are more persuaded and motivated by what they can lose than by what they can gain.

Next Chapter - Risk Aversion »

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