Productivity and GTD

Loss Aversion as Motivation

AUTHOR: Francisco Sáez

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In 2010, a group of economists carried out a study in order to find a way to encourage teachers of the American educational system to make greater efforts, deliver more and better knowledge and, therefore, make students reach a higher level of academic performance.

The incentive was nothing new, since it was about giving the teachers an additional bonus based on the performance of their students. But the way to get that bonus was different, for at least half of the teachers on which the study was done. Half of the teachers received the full bonus early in the course, and so, in the end, they would have to return the part that did not belong to them. The other half, in the traditional manner, would receive the bonus at the end of the course depending on a job well done.

At the end of the course it became evident that students whose teachers received the premium in advance scored better than students whose teachers received the premium in the traditional way, at the end.

This type of behavior is known by economists and psychologists as loss aversion and it basically means that people prefer not to lose something that they already have over having to win something that they do not yet have, even though both things have exactly the same value.

There is no decisive conclusion that this form of behavior always works this way, nor that it is, of course, equal for all people and situations, but it seems common in certain contexts. For example, it is widely used in marketing issues, both in framing prices with discounts or penalties, and also in allowing the consumer to freely use the product for a period of time (a sense of “ownership” is generated that favors the realization of the final purchase).

In case you feel that your aversion to loss is higher than your enthusiasm for profit, you can use your natural instincts to your advantage in terms of personal productivity. Rather than rewarding yourself to finish something, you can impose some kind of penalty if you don’t reach a goal or don’t finish a given task at a given time (such as removing time of enjoyment for one of your hobbies, donating some money to charity, etc.)

You can use your aversion to loss as a strategy to be motivated to complete the projects and tasks which are the hardest to get done. Do not eliminate the reward you had in mind, but add a disincentive in case you fail. Make the possibility of failure be indeed unpleasant. And tell it to someone you trust, someone who will be accountable to make you pay if you fail.

2 comments

08227f6c63356ac65e049c3aed72a570
Commented about 4 years ago Mac Bartine

Great post, Francisco. One of the things I really enjoy about this type of post is that it's based on peer-reviewed research instead of just someone's opinion. Thanks for sharing, and for providing an awesome product to your customers.

08227f6c63356ac65e049c3aed72a570 Mac Bartine

Great post, Francisco. One of the things I really enjoy about this type of post is that it's based on peer-reviewed research instead of just someone's opinion. Thanks for sharing, and for providing an awesome product to your customers.

Fcb879f1bc70aa0f661b842011f280fb
Commented about 4 years ago Francisco Sáez

Thanks Mac! So glad you like it :)

Fcb879f1bc70aa0f661b842011f280fb Francisco Sáez

Thanks Mac! So glad you like it :)

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