Status quo bias: what it is, how it affects us, and examples

There are many mental shortcuts that we routinely fall into. We are more aware of some than of others.

This time we are going to focus on a relatively unknown one, but which affects us with a high frequency. It's about the status quo bias. Next we will discover what it consists of and what are the most common effects when we use it.

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What is the status quo bias?

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 those that would experience changes of some kind that would therefore modify their situation in some direction. Therefore, it is a psychological effect by which the person tends to decide to stay as he is 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 oppose an option in which the subject would stay as he is. and another in which he would have to undergo some modification of that base state, making him tend to opt for the first of they.

The status quo bias concept 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 our 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.

The status quo bias should not be confused with another phenomenon called psychological inertia. Although they both have similarities, they are not exactly the same. The difference lies in the activity or passivity of the subject to maintain his current situation. In the case of the bias of the status quo, 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 course of events. Therefore, he would not take part to change his status quo, but he would not act to prevent certain events from affecting that situation of stability in which he finds himself.

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Explanation of the status quo bias

We already know what the status quo bias consists of. Now we will try to understand the psychological phenomena behind and that base 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.

We are going to 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 figure or to achieve a product of equivalent value. In other words, we lose more weight than not earning exactly the same amount, although in economic terms it is a comparable situation.

The difference is that we prefer that our situation does not change for the worse before the situation changes for the better. This effect is partly fueled by 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 whereby we tend to perceive a certain asset as more valuable as long as it is our property. Therefore, we are going to 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 if 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 they were to buy one exactly like the previous assumption, he would always be willing to pay a price below what he had considered in the first case.

In this case, the status quo bias has to do with the endowment effect because the subject only he is 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 bias of the status quo would be simply the avoidance of regret. Namely, 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 some possible benefits.

But, as we saw in the previous effects, not taking risks will prevail over the possibility of obtaining equivalent benefits.

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4. Effect of mere exposure

Another phenomenon underlying the status quo bias is the mere exposure effect. It is another mental shortcut by which a person will tend to show a preference for those stimuli that he knows, simply because he knows them. Namely, the fact of having been exposed to a certain element will favor that the person is comfortable with it and prefers it before 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 implies, 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 status quo bias when we are faced with 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 starting situation of the person (if he has already invested previously and in what type of fund), there will be more likely to take risks or, on the contrary, he will prefer to stay as he is and give up possible Benefits.

2. Insurance

One of the classic examples of the status quo bias was accidentally carried out by a car 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 return 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 chose option B, while in Pennsylvania, the bulk of customers 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 one that customers had by default while in Pennsylvania option A was the standard.

What was shown is that in reality the people who participated in this study did not make a calculated and rational decision, but were carried away by the bias of the status quo, that is, they preferred to stay as it was before exploring other possibilities, even if there were potential benefits to change.

3. Hiring

The status quo bias also 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 were going to determine who would be chosen, or rather, who was not going to be chosen one.

In this case, the study spoke of the possibility that all but one candidate shared characteristics such as gender or race. In that case, the remaining candidate would have virtually all the options to be automatically rejected, and it would be because of the bias of the status quo.

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 over the previous assumption. A really striking effect that, if not known to recruiters, can significantly skew their judgment when selecting candidates.

Bibliographic references:

• Kahneman, D., Knetsch, J.L., Thaler, R.H. (1991). Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic Perspectives.
• Johnson, S.K., Hekman, D.R., Chan, E.T. (2016). If There’s Only One Woman in Your Candidate Pool, There’s Statistically No Chance She’ll Be Hired. Harvard Business Review.
• Samuelson, W., Zeckhauser, R. (1988). Status quo bias in decision making. Journal of risk and uncertainty. Springer.