Status Quo Bias: What It Is, How It Affects Us, And Examples
There are many mental shortcuts that we routinely fall into. Some we are more aware of than others.
This time we are going to focus on one that is relatively unknown, but that affects us with a high frequency. It’s about status quo bias Below we will discover what it consists of and what the most common effects are when we use it.
The status quo bias is an innate preference of the human being not to see the situation in which he finds himself modified That is, it acts by generating an inclination towards the current state as opposed to other options in which it would experience changes of some kind that would therefore modify its situation in some direction. Therefore, it is a psychological effect by which the person tends to decide to stay as they are instead of changing.
The status quo bias is an emotional bias, that is, a bias in which our emotions generate distortions when reasoning and making judgments about a specific aspect. In this case, it specifically affects those decisions that contrast an option in which the subject would remain as he is and another in which he would have to experience some modification of that base state, making him tend to opt for the first of them. .
The concept of status quo bias was coined by authors William Samuelson and Richard Zeckhauser, in 1988. The expression uses the word bias, which is a thinking error that pushes us in a certain direction without us being aware of it on many occasions. The other part of the name is the Latin expression status quo, which means the current state of a certain element, in this case, the person.
Status quo bias should not be confused with another phenomenon called psychological inertia Although both have similarities, they are not exactly the same. The difference lies in the activity or passivity of the subject to maintain their current situation. In the case of status quo bias, the person will take an active part to prevent a certain event from generating changes.
But in the case of psychological inertia, he will be passive in the development of events. Therefore, he would not take part to change his status quo, but he would not act to prevent certain events from affecting the situation of stability in which he finds himself.
Status Quo Bias Explained
We already know what the status quo bias is. Now we will try to understand the psychological phenomena behind it and that underlie this curious mechanism in our way of thinking and making decisions. According to some researchers, This phenomenon would be formed by the mixture of other psychological biases that affect us routinely
Let’s review several of these effects.
1. Loss aversion
One of them is loss aversion. It is an effect by which a subject will tend to prefer to avoid losing a certain amount or a certain good, than to gain that same amount or achieve a product of equivalent value In other words, losses weigh more heavily on us than not earning exactly the same amount, even though in economic terms it is a comparable situation.
The difference is that we prefer that our situation not change for the worse before the situation changes for the better. This effect feeds, in part, on the status quo bias.
2. Endowment effect
Another curious phenomenon that also has to do with psychology and behavioral economics is the endowment effect. This is another bias by which we tend to perceive a certain good as more valuable as long as it is our property Therefore, we will experience a tendency to consider that it is worth more money when we try to sell it than when we are willing to buy it, even though the good is exactly the same.
Suppose a person puts his car up for sale. He will mentally value it at a certain value. However, if that same person did not have a car and instead of selling he went to buy one exactly like the one in the previous case, he would always be willing to pay a price below the one he had considered in the first case.
In this case, the status quo bias has to do with the endowment effect because the subject is only willing to change his current situation when he considers that the benefit is greater than the possible risk.
3. Avoidance of regret
Another interesting psychological concept that would be helping to generate the status quo bias would simply be the avoidance of regret. That is to say, the person will show a tendency to prefer not to have to regret the consequences of a decision Therefore, you will prefer to stay as you are, although paradoxically you may also regret not having made the decision and therefore have lost possible benefits.
But, as we saw in the previous effects, not taking risks will prevail over the possibility of obtaining equivalent benefits.
4. Mere exposure effect
Another phenomenon underlying the status quo bias is the mere exposure effect. This is another mental shortcut through which a person will tend to show a preference for those stimuli that he knows, simply because he knows them. That is to say, The fact of having been exposed to a certain element will help the person feel comfortable with it and prefer it over other equivalent stimuli
This mechanism is also called the familiarity principle.
Examples of status quo bias
After a first introduction in which we have been able to get a general idea of what the status quo bias entails, and a second part in which we have tried to better understand the psychological mechanisms involved in its operation, now we are going to try to visualize it through a series of examples.
1. Investments
We can visualize the bias of the status quo when we face situations in which a person has the option of investing a sum of money between different possibilities, with less or greater risk Depending on the person’s starting situation (whether they have already invested before and in what type of fund), there will be a greater chance that they will take risks or, on the contrary, they will prefer to stay as they are and give up possible benefits.
2. Insurance
One of the classic examples of status quo bias was accidentally carried out by an automobile insurance company in the US In the 90s, this organization contacted its clients to give them a choice between two different types of insurance. In option A, they had to pay a higher amount, but in exchange they would have a full right to make claims. Option B was cheaper, but significantly limited the options in potential lawsuits.
This campaign was carried out in two different States, New Jersey and Pennsylvania. In New Jersey, the majority decided on option B, while in Pennsylvania, the bulk of clients opted for A. How is it possible that there was such an obvious difference between the two groups? Precisely because in New Jersey, option B was the default option for customers, while in Pennsylvania option A was the standard option.
What was shown is that in reality the people who participated in this study did not make a calculated and rational decision, but rather they let themselves be carried away by the status quo bias, that is, they preferred to stay as they were rather than explore other possibilities. although there were some potential benefits in exchange.
3. Hiring
Status quo bias too It has been observed in the organizational world and specifically in the Human Resources department A study showed that throughout a selection process, the predominant characteristics of the candidates who reached the last phase would determine who would be chosen, or rather, who would not be chosen.
In this case, the study talked about the possibility that all but one candidate shared characteristics such as sex or race. In that case, the remaining candidate would have virtually every chance of being automatically rejected, and it would be because of status quo bias.
However, this study also found that If instead of one candidate, there are two who share these minority traits, their chances grow almost 80 times higher than the previous assumption A truly striking effect that, if not known by recruiters, can significantly bias their judgment when selecting candidates.
