loss aversion

Loss aversion and the rough road for health care reform

ddobbs | July 2, 2009

An article from the Standard ponders why, despite widespread recognition that the country needs health care reform, we may not get it. The relatively new field of behavioral economics--a blending of psychology and economics--helps makes sense of these clashing views. One major tenets of this sub-discipline is that people value a "loss" about twice as much as they value a "gain." And as a result, people are more risk averse than might be suggested by traditional, rational economic theory. In other words, instead of "rationally" weighing risks and rewards equally and then forming a judgment,…