Negativity Bias and Loss Aversion

Today we are digging in on negativity bias, which is featured in chapter 9 of my book, What Your Employees Need and Can’t Tell You. I also talked about this when Adam Hansen was on the show back in episode 176 and have planned to give it a dedicated episode for a long time, yet it has continued to hang out waiting for its moment in the sunshine – until today! It’s funny, because I think it really says something about my personality that optimism bias was episode 34 and we aren’t getting to negativity bias until nearly 200 weeks later.

I’m ok with that, and, I’m so glad that this is finally becoming an episode because it really is a fascinating concept and super important for everyone in life and business. As with all the biases and heuristics you hear about on this show, I’m confident this will be one of those things that really changes your whole life and perspective once you realize it is there and impacting you. It’s shocking how rampant this can be running in our lives and businesses. Today we will cover the four aspects of negativity bias (plus a “bonus” one) as well as ways to think about this in your life and work.

• [00:41] Today we are digging in on negativity bias, which is featured in chapter 9 of my book, What Your Employees Need and Can’t Tell You.
• [03:13] In its most basic form, negativity bias is our tendency to put more emphasis on negative information than positive.
• [03:57] Negativity bias, putting more weight on the bad than the good. Being on high alert and paying attention to potential threats was key for our survival. This is a good thing and it still serves us well a lot in our life. Sometimes, the negativity bias goes a bit far and can result in phobias or other avoidances that don’t serve us well.
• [06:20] This is one aspect of negativity bias, where we put way, way, way more weight on the negative input than the positive. Our being a herding species is part of this as well. Being on the outskirts with the herd was something else that greatly threatened our survival back in the day.
• [06:53] In today’s world, this overweighting of negatives can be problematic and cause a real negative spiral that keeps you stuck; focused on the bad in a way that causes you to ignore all the good stuff. You can choose to focus on the good stuff and, while still learning from the bad, don’t let it have so much more impact on you than the good.
• [07:46] There are four aspects of negativity bias (as outlined in the original paper). The first is negative potency. It says that even if the two incidents were of the same type and size, they won’t necessarily be felt or remembered the same way. We tend to have longer memories of these negative items than the positive ones and feel them more strongly when they occur.
• [08:09] The second aspect is of steeper negative gradients. This says that as we get closer to a negative event, its felt more and more – and at an intensity that is more than a positive event.
• [10:10] Negativity bias is definitely related to loss aversion and they are similar (but not the same). Negativity bias is when people pay more attention to bad news than good news. Loss aversion is when people are more worried about losing something they have than getting something new.
• [10:42] Now, we move on to negativity dominance. This was sort of covered in the negative potency section, but it is more about how when there is an event, the negative events will make it so our whole impression skews toward the negative.
• [11:35] It is important to think about the overall experience people are having with you. Even one negative element can drag an otherwise good thing down.
• [14:22] Knowing that people are going to have this negativity bias – both those presenting the change and those receiving it – is important as you consider how you introduce anything to anyone.
• [16:42] Our final aspect is negative differentiation, which is about the effort it takes to process an event. The negative stuff is more difficult to process, so it uses up more energy and cognitive resources. That makes us remember it more and for longer.
• [18:54] Knowing that the negativity bias exists and taking a step back to get out of your own way is important as you look at your own behaviors and actions.
• [19:54] We are also biased to give people like us the benefit of the doubt and not give that to people who are outside our circle of empathy.
• [22:02] Contagion is such an important piece and it has one of my all-time favorite examples and lines because it is very memorable and you instantly get the problem and how this can be applied in other areas. “A single cockroach can ruin a bowl of cherries, but an individual cherry will do nothing for a bowl of cockroaches.”
• [23:53] When you think of reputation, that one negative can contaminate everything else and color your entire perspective of them and everything they touch.
• [24:35] It is important to realize when negativity bias, and specifically contagion, could be coloring a lot more than it should.
• [26:44] As we wrap up today’s episode, I want you to think about the negativity bias and how it is impacting you in your life and at work.
• [28:30] Learn from the negatives and let them sink in, but don’t let them control you and take over everything.
• [30:25] Make sure to clear out the cockroaches before you work on finding better cherries. 
• [32:02] Because of the negativity bias, we really love avoiding bad things. If we avoid all the things that have risks associated with them, we will not grow and change, and for both people and companies, that is a problem.
• [33:58] Pointing out flaws in ideas isn’t always saving you from a mistake. It might be saving you from the thing that could change everything for the better if you gave it a chance. What can you take a chance on today?

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Get the Books Mentioned on (or related to) this Episode:

• Outsmart Your Instincts, by Adam Hansen
• Power of Regret, by Dan Pink
• What Your Employees Need and Can't Tell You, by Melina Palmer
• A More Beautiful Question, by Warren Berger
• Evolutionary Ideas, by Sam Tatam

Top Recommended Next Episode: Optimism Bias (episode 34)

Already Heard That One? Try These: 

• Reframing Annoying Disruptions to Support Innovation, with Adam Hansen, coauthor of Outsmart Your Instincts (episode 176)
• Priming (episode 18)
• Reciprocity (episode 23)
• Loss Aversion (episode 9)
• Herding (episode 19)
• Focusing Illusion (episode 89)
• Confirmation Bias (episode 75)
• Fundamental Attribution Error (episode 92)
• Counterfactual Thinking  (episode 68)
• Peak-End Rule (episode 97)

Other Important Links: 

• Brainy Bites - Melina’s LinkedIn Newsletter 
• The Negativity Bias in User Experience
• Negativity Bias, Negativity Dominance, and Contagion
• Why is the news always so depressing?
• What Is Negativity Bias and How Can It Be Overcome?