No. 27 Loss Aversion

Loss aversion refers to shoppers' tendency to prefer avoiding losses to acquiring equivalent gains: it is better to not lose £5 than to find £5

Loss aversion refers to shoppers' tendency to prefer avoiding losses to acquiring equivalent gains: it is better to not lose £5 than to find £5

Shoppers are more sensitive to price increases than to decreases.   For example, from July 1981 to July 1983, a 10 percent increase in the price of eggs led to a 8% decrease in demand, whereas a 10% decrease in the price led to a 3% increase in demand (Putler, 1992).

In another study, consumers were asked to either build up a basic pizza by adding ingredients (e.g., sausage and pepperoni), or scale down from a fully loaded pizza by removing ingredients. Consistent with loss aversion, consumers in the subtractive condition ended up with pizzas that had significantly more ingredients than those in the additive condition (Levin et al., 2002).

There are numerous ways in which loss aversion can be applied in-store and online. This bias can make it better for your brand and better for shoppers too.

  1. Frame your offers – ‘Save’ messages of twice as appealing as ‘Extra free’ offers. Shoppers want to hang on to what they already have more than get some more.
  2. Focus on what’s left – When shoppers consider your brand, remind them of what they won’t lone, more than what they’ll gain. For example, refill packs, retain the original container and give more product whilst helping shoppers retain more of their money.
  3. Hurry, hurry – provide shoppers with an indication of not just how much can be gained, but also importantly, how much can be ‘lost’ if they do not choose to buy it now (‘only 3 left in stock’, for example).

In summary, loss aversion is an important aspect of everyday economic life. The idea suggests that people have a tendency to stick with what they have unless there is a good reason to switch.

About Phillip Adcock

My name is Phillip Adcock: I have more than 30 years of human behavioural research and analysis, and have developed a unique ability to identify what it is that makes people psychologically and physiologically 'tick'.

Would you like to know more about how shoppers and consumers think? Download my FREE guide now. Alternatively, check out, where there are more FREE downloads available there. Or why not simply email me with what's on your mind?

If you think there is value in this article then please, please share it, thank you.

Phillip Adcock
Psychology & Behaviour
Change Consultant

Are you fascinated by how shoppers think?

If you’re as fascinated by how shoppers think as I am, check out my books on Amazon for more insightful, provocative and stimulating information.

More from Brainsights

Shopper and Consumer Psychology Towards Sustainability

If building a sustainable business was a fashionable trend five years ago, today it is a business imperative. Leading brands & retailers have figured out that focusing on environmental & social factors is a necessity in today’s marketplace. And if done well, it is a true competitive advantage. But what does sustainability really mean to shoppers, in-store, or online at the moment they make their purchasing decisions?

Read Story

The Psychological Benefits of a Secondary Display In-store

Have you ever stopped to think about how many sales and how much share you might be losing, simply because your brand isn’t as psychologically effective in-store as those of the competition?

Read Story

Path to Purchase - Which is more effective in-store, on shelf?

Is the in-store performance of your brand suffering because it isn’t aligned with the minds of shoppers? Would you like to make retailing better for shoppers, better for your brand and better for your business?

Read Story

Learn about the
mind of the consumer

A guide to discovering what consumers really want

Download FREE now!

Get the latest brainsights straight to your email box

We will never share your email address with third parties.