The stats from England's group stage performances were stark. No England player was in the top 40 for attempted shots in the tournament. Similarly, no England player was in the top 30 for chances created.
By contrast, England and Italy were the only two sides who have three clean sheets in the tournament group stages.
So, how does Loss Aversion apply to the 2021 Euros?
Gareth Southgate and his coaching staff don't see England performances as negative; Southgate's natural instinct is to set his teams up so that they are difficult to beat. In other words, The England teams’ first priority when it comes to important international matches is not to lose. And it has been this way for many years now. The second half of the final (and extra time) against Italy was a perfect example.
My hypothesis is that the entire England international set-up is consumed by Loss-Aversion. Simply put, they fear losing much more than anticipating winning.
Loss aversion is an important concept associated with prospect theory and is encapsulated in the expression “losses loom larger than gains” (Kahneman & Tversky, 1979). It is thought that the pain of losing is psychologically about twice as powerful as the pleasure of gaining.
I suggest that this explains in part the somewhat negative approach England football team exhibits during major tournaments. And what causes this negativity? I agree with Gary Lineker when he said (referring to the British media): "It's unique to this country to attempt to destroy our players' morale before a major tournament. It's weird, unpatriotic and sad."
So, is there any truth in the claim of negativity? To find out, the BBC spent a week monitoring the news media of five countries competing in Russia 2018 that have won the tournament in the past. The English media was found to be the most negative of the sample of worldwide sources that were looked at.
Loss Aversion affects business decisions
This same Loss Aversion based negativity can also be seen in the ways some organisations make key corporate decisions. All too often, nowadays, there is no tangible belief in a potential gain from taking a risk, whereas there is an overwhelming fear of the consequences of possible failure. As a direct result, businesses and their staff often make decisions while being biased by Loss Aversion: As the saying goes: “Nobody gets fired for buying IBM”
Consider how many corporate decisions are made.
A team with an idea puts together a business case for a project, which is then presented to top managers. The champions of the project explain the potential gains. But the committee decides, on the basis of whether it judges the financial models and their underlying assumptions to be plausible. They begin by looking for proof and examples of how the new idea has worked for others: Thus making any new idea difficult to launch if it needs historic proof. As a result, Loss Aversion kicks in and too many ideas never get off the ground, just because the fear of potential loss outweighs the potential gain-related upside.
Here is a simple question to people involved in retail (as well as many other business areas too) - which is more important to you and the organisation you work for; growing market share or NOT losing market share?
How about this more personal question - which is more important to you; getting a promotion or NOT losing your job?
Both of these questions illustrate Loss Aversion in action. And don’t underestimate just how powerful a force Loss Aversion is when it comes to making important business decisions.
Studies of human brain activity have identified that many corporate decisions are not decided solely by the rational parts of our brains. Emotional sectors of our brain also contribute to these decisions, and these more primitive parts of our brain often exhibit a loss aversion bias that was originally hard-wired as an evolutionary tool.
To provide another example, an organisation may buy an unreliable IT system and continually spend money to keep it up and running, when it may make more sense to switch to another system. The unwillingness to concede a loss motivates irrational behaviour.
Retail is a hot spot for using Loss Aversion
As shoppers and consumers, we also allow Loss Aversion to sway our purchase decisions. Our reactions to price increases, free gifts and special offers may be attributed to a host of rational ‘excuses’, but the Loss Aversion principle is among them. When designing a pricing or promotions strategy, consider how loss aversion bias may affect shopping behaviour and buying habits.
As we emerge from some of the darkest times in memory, let’s start to focus more on the excitement of winning; not just football matches, but in many aspects of life. From health, to wealth, to happiness, to careers.
We may not be qualified to help the England football team win, but the tone in which we all communicate with each other in 2021, can reduce not just Loss Aversion, but some may say ‘Loss Paranoia’
England - You have the manager, you have the players, you have the ability. Now you need to address this deeply embedded loss aversion!
Hmm, something to think about!