Loss Trumps Optimism in “Inside Out”

Posted by A.J. Drexler on 7/2/15 12:27 PM, Last updated 04/29/2017
A.J. Drexler

In my first post, I went head-first into discussing what a magnificent job I think Pixar did providing us with vivid and personified examples of some of the key principles of behavioral economics in the new movie “Inside Out.”

Given the preference we all have to stay in our “Automatic” zone, it is probably not surprising that I instinctively (if unconsciously) began this series with how well the movie personifies the Optimism Bias—the tendency that we humans have to err on the side of Optimism, even in the face of other overwhelming emotions that should likely be ruling the day. The fact of the matter is that the role of Joy in the movie is to protect Riley (and me) from feeling other, less pleasant emotions.

In truth, however, I actually found the movie to be incredibly poignant. It just took me time (in my “Reflective” zone) and two viewings to sort out the “why” of that. And here it is: the significant degree of sadness in this film results directly from a second key principle of behavioral economics: Loss Aversion.

On the face of it, Loss Aversion is one of the most perplexing dimensions of behavioral economics. In both economics and decision theory, loss aversion refers to our tendency as Humans (vs the Econs of traditional economics) to strongly prefer avoiding losses over the potential of acquiring gains—even when it’s an unreasonable choice. Most studies, in fact, suggest that losses are twice as powerful, psychologically, as gains. And "Inside Out" may be an even stronger demonstration of why we humans have ended up with Loss Aversion as a driving influence than it is of the Optimism Bias.

While it is often buried under layers of humor, "Inside Out" is premised on a series of truly traumatic losses for young Riley: a move across country away from home, school, friends; the loss of Dad’s time to an intense start-up business; temporary loss of material possessions via a lost moving van, and, ultimately, a loss for Riley of her very essence—her core memories—which eventually led to the near loss of her ability to feel any emotions at all.

But the most heart-wrenching moments of the film are reserved not for Riley, but for the times when Joy herself is forced to confront loss. "Inside Out" gets it right: the only thing that can actually undo Joy (the Optimism Bias) is Loss. 

So it is little wonder that we Humans will avoid loss at all costs; the emotional toll is great. But what IS surprising is the difficulty that we have acknowledging that. In the 1970s, when Daniel Kahneman and Amos Tversky first published their seminal work in what is now called behavioral economics, there was considerable angst over this issue.

Even today, when we know what a significant role loss plays in motivation, as marketers we often don’t embrace it. If we know that presenting our case as a “loss” will have twice the impact of presenting it as a “gain,” why do we hesitate? Very likely it is because no one wants to associate their brands with the negative emotions that engender the loss aversion in the first place—emotional pain—even if the results would ultimately be worth it.

It is simply much easier to align with the Joy than to face the hard realities and emotions that loss represents, no matter the outcome. 

Download our brief:  5 Reasons to be Aware of OPTIMISM BIAS in Your Business and Your Life



image: disney wikia

Topics: Market Research

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