The Optimism Bias and 10,000 Boxes of Napkins
A little while back I talked about loss aversion. Loss aversion can cause you to make bad decisions in order to preserve the status quo, which you perceive as a more positive condition than the unknown.
But biases compete. Loss aversion can be crowded out by other biases, among them the dreaded bias for optimism. (Cue ominous chord.) According to psychologist Daniel Kahneman in his 2011 book “Thinking, Fast and Slow,” “people tend to be overly optimistic about their relative standing on any activity in which they do moderately well.”
Otis Fulton, Turnkey’s in-house psychologist, said, “Our unconscious biases make decision-making a much-less-than-rational endeavor. Some make us overly conservative and resistant to change. But then when we do change–say hello to the optimism bias! Simply stated, when people estimate their chances of experiencing a good outcome–with a job, marriage, stock picks, etc.–they believe that their odds will be higher than average. Conversely, they estimate that their odds of experiencing negative outcomes will be lower than that of other people.
“The optimism bias is a universal human trait; it transcends race, gender and nationality,” Otis continued. “Individually, it can both hurt and help. Sometimes people wind up broke (even dead) because they underestimate the probability that bad things will happen to them. But as a society, we should be grateful that people are overly optimistic. It helps them to start new businesses, invent new things–many of which benefit all of us in the long run.”
The optimism bias can help you by crowding out loss aversion, helping you make necessary changes. But optimism bias can hurt you by leading you to make high-risk decisions. The optimism bias whispers in your subconscious ear, “You’ll make budget even though you’re down now. You’ll be able to hire a better person next time. The next special event will make goal.”
The optimism bias manifests at Turnkey as the remainder of a purchase I authorized more than five years ago. I bought 10,000 boxes of American Cancer Society Relay For Life napkins because “everybody needs napkins!” For me, it shows up in the company bathroom, in the company kitchen, in my house and in my car. Thank God they aren’t selfie sticks.
I bought those napkins to support my client at a time when Turnkey still supported a few clients in pure product fulfillment. We left that market because we found that most promotional product purchases were made without a good plan for turning that investment into fundraising dollars. Thank heavens I no longer have to make decisions in conditions where my bias for optimism can flourish. Now I have research, science and 27 years of experience to fight back against my biases. In fact, now I don’t buy napkins at all because other branded products and methods work better to produce fundraising activity.
What guided me that day was the optimism bias and the desire to please a client. While I don’t have to buy hand towels, I would rather have not bought those napkins at all. They remind me each day to consider my own personal biases at work in my decision-making. Those napkins remind me to challenge my intuition.
Otis Fulton, Ph.D., spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising” and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much-sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.
Katrina VanHuss has helped national nonprofits raise funds and friends since 1989 when she founded Turnkey. Her client’s successes and her dedication to research have made her a sought-after speaker, presenting at national conferences for Blackbaud, Peer to Peer Professional Forum, Nonprofit PRO, The Need Help Foundation and her clients’ national meetings. The firm’s work is underpinned by the study and application of behavioral economics and social psychology. Turnkey provides project engagements, coaching, counsel and staffing to nonprofits seeking to improve revenue or create new revenue. Her work extends into organizational alignment efforts and executive coaching.
Katrina also regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” When not writing or researching, Katrina likes to make things — furniture from reclaimed wood, new gardens, food with no recipe. Katrina’s favorite Saturday is spent cleaning out the garage, mowing the grass, making something new, all while listening to loud music by now-deceased black women, throwing in a few sets on the weight bench off and on, then collapsing on the couch with her husband Otis to gang-watch new Netflix series whilst drinking sauvignon blanc.
Katrina grew up on a Virginia beef cattle and tobacco farm with her three brothers. She is accordingly skilled in hand to hand combat and witty repartee — skills gained at the expense of her brothers. Katrina’s claim to fame is having made it to the “American Gladiator” Richmond competition as a finalist in her late 20s, progressing in the competition until a strangely large blonde woman knocked her off a pedestal with an oversized pain-inducing Q-tip. Katrina’s mantra for life is “Be nice. Do good. Embrace embarrassment.” Clearly she’s got No. 3 down.