Why Do I Make These Decisions?
Last week I wrote about loss aversion, a human bias that often results in people shying away from taking action or changing a behavior. Simply stated, loss aversion means that the pain of a loss is roughly twice the pleasure of a gain. The effect of this bias can be seen in all walks of life, even sports.
In football, statistics show that on fourth down it is far better to go for the first down than to punt. Yet coaches rarely do so—why? Because the benefit of gaining a first down is perceived as being outweighed by the loss of the yardage if a team fails to convert.
The movie Moneyball shows us a situation in which Oakland A’s Major League general manager Billy Beane, due to enormous pressure to perform, casts aside his natural bias (using visual attributes about players to make decisions) and instead turned to a non-natural way to make decisions—using statistics.
Who but a crazy person would rely almost totally on statistics to make decisions, throwing aside the wisdom of baseball sages giving advice? Billy Beane was in a desperate situation regarding his career, and he superseded his own biases to make counter-intuitive decisions.
For those of us in fundraising, the baseball sage who said “he’s got an ugly girlfriend ... he’s not confident ... probably can’t hit” can look like a boss who, in spite of clear indications of declining revenue, stays the course on marketing and fundraising techniques. The baseball sage can look like a staff person who, in spite of your perfect clarity on required changes in their methods, just won’t change. The baseball sage can look like an organizational chart that no longer matches reality, but won’t change because the humans in that organizational chart can’t conceive of a different structure.
Per Otis Fulton, my psychologist buddy, “We have evolved with many biases like loss aversion baked into our DNA. They kick in automatically and subtly nudge us this way or that way all the time as we experience our surroundings. Biases affect us physically, releasing hormones and adrenalin; we experience them emotionally as feelings of unease, happiness, anxiety, etc. We have lots of these psychological shortcuts; in this regard humans are no different from other animals. Dogs chase cars because cars move kind of like prey, and over the eons chasing down prey has been very good for dogs. In animals we call that kind of behavior instinctual, whereas we prefer to call our human reactions to biases intuitions, hunches—even wisdom.”
What can we do to get rid of biases like loss aversion, which can keep us from making good decisions? “Unfortunately, nothing," Otis said. "Biases are completely unconscious and automatic, totally inaccessible to us. That said, we are not doomed to chase the school bus in meetings and on conference calls. What we can do is be aware of biases and the effect they have on how we operate."
Billy Beane had to find a way to go against his natural bias because of a threat to his livelihood. We can do it before then, simply by knowing we have a bias, even though we can’t impact those biases.
Acknowledging our bias makes us more likely to change course when a revenue program is going south, or go for the first down when it’s fourth and one with the ball on our own 30 yard line, or hire a player who throws funny, but has great pitching statistics. We will still have sweaty palms (evidence of our bias at work) but our self-awareness, developed along with our opposable thumb, helps us make counter-intuitive, yet more productive decisions.
Katrina VanHuss is the CEO of Turnkey, a U.S.-based strategy and execution firm for nonprofit fundraising campaigns. Katrina has been instilling passion in volunteer fundraisers since 1989 when she founded the company. Turnkey’s clients include most of the top 30 U.S. peer-to-peer campaigns — Susan G. Komen, the Cystic Fibrosis Foundation, the ALS Association, the Leukemia & Lymphoma Society, as well as some international organizations, like UNICEF.
Otis Fulton is a psychologist who joined Turnkey in 2013 as its consumer behavior expert. He works with clients to apply psychological principles to fundraising. He is a much-sought-after copywriter for nonprofit messaging. He has written campaigns for St. Jude’s Children’s Research Hospital, the March of Dimes, the USO and dozens of other organizations.
Now as a married couple, Katrina and Otis almost never stop talking about fundraising, volunteerism, and human decision-making — much to the chagrin of most dinner companions. They live in Richmond, Virginia.
Katrina and Otis present regularly at clients’ national conferences, as well as at bbcon, NonProfit POWER, P2P Forum and others. They write a monthly column for NonProfit PRO and are the co-authors of the 2017 book, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising." Click here to download the first chapter.