How Status Quo Bias Affects Your Decisions (2022)

Status quo bias refers to the phenomenon of preferring that one's environment and situation remain as they already are. The phenomenon is most impactful in the realm of decision-making: when we make decisions, we tend to prefer the more familiar choice over the less familiar, but potentially more beneficial, options.

Key Takeaways: Status Quo Bias

  • Status quo bias refers to the phenomenon of preferring that one's environment and/or situation remains as it already is.
  • The term was first introduced in 1988 by Samuelson and Zeckhauser, who demonstrated status quo bias through a series of decision-making experiments.
  • Status quo bias has been explained through a number of psychological principles, including loss aversion, sunk costs, cognitive dissonance, and mere exposure. These principles are considered irrational reasons for preferring the status quo.
  • Status quo bias is considered rational when the transition cost is greater than the potential gains of making a change.

Status quo bias affects all kinds of decisions, from relatively trivial choices (e.g. which soda to purchase) to very significant choices (e.g. which health insurance plan to select).

Early Research

The term "status quo bias" was first used by researchers William Samuelson and Richard Zeckhauser in a1988 article called "Status quo bias in decision-making." In the article, Samuelson and Zeckhauser described several decision-making experiments that demonstrated the existence of the bias.

In one of the experiments, participants were given a hypothetical scenario:inheriting a large sum of money. They were theninstructed to decide how to invest the money by making a selection from a series of fixed options. However, some participants were given a neutral version of the scenario, while others were given a status quo bias version.

In the neutral version, the participants were only told that they inherited money and that they needed to choose from a series of investment options. In this version, all the choices were equally valid; the preference for things to remain as they are was not a factor because there was no prior experience to draw upon.

(Video) Status Quo Bias: Why You Always Choose the Default Option

In the status quo version, the participants were told they inherited money and the money was already invested in a specific way. They were then presented with a set of investment options. One of the options retained the portfolio’s current investment strategy (and thus occupied the status quo position). All of the other options on the list represented alternatives to the status quo.

Samuelson and Zeckhauser found that, when presented with the status quo version of the scenario, participants tended to choose the status quo over the other options. That strong preference held across a number of different hypothetical scenarios. In addition, the more choices presented to participants, the greater their preference for the status quo.

Explanations for Status Quo Bias

The psychology behind status quo bias has been explained through several different principles, including cognitive misperceptions and psychological commitments. The following explanations are some of the most common. Importantly, all of these explanations are considered irrational reasons for preferring the status quo.

Loss Aversion

Studies have shown that when individuals make decisions, theyweigh the potential for loss more heavily than the potential for gain. Thus, when looking at a set of choices, they focus more on what they could lose by abandoning the status quo than on what they could gain by trying something new.

Sunk Costs

The sunk cost fallacy refers to the fact that an individual will often continue to invest resources (time, money, or effort) into a specific endeavor simply because they have already invested resources in that endeavor, even if that endeavor has not proven beneficial. Sunk costs lead individuals to continue along a specific course of action, even if it is failing.Sunk costs contribute to status quo biasbecause the more that an individual invests in the status quo, the more likely he or she is to continue to invest in the status quo.

Cognitive Dissonance

When individuals are faced with inconsistent thoughts, they experience cognitive dissonance; an uncomfortable feeling that most people wish to minimize. Sometimes, individuals will avoid thoughts that make them uncomfortable in order to maintain cognitive consistency.

In decision-making, individuals tend to see an option as more valuable once they have chosen it. Even simply considering an alternative to the status quo can cause cognitive dissonance, as it puts the value of two potential options in conflict with one another. As a result, individuals may stick with the status quo in order to reduce that dissonance.

(Video) What is Status Quo Bias? Ask the Economics Speaker

Mere Exposure Effect

Themere exposure effectstates that people tend to prefer something they’ve been exposed to before. By definition, we are exposed to the status quo more than we are exposed to anything that is not the status quo. According to the mere exposure effect, that exposure itself creates a preference for the status quo.

Rationality vs. Irrationality

Status quo bias is sometimes the component of a rational choice. For example, an individual may choose to retain their current situation because of the potential transition cost of switching to an alternative. When the cost of the transition is greater than the gains brought about by switching to the alternative, it is rational to stick with the status quo.

Status quo bias becomes irrationalwhen an individual ignores choices that can improve their situation simply because they want to maintain the status quo.

Examples of Status Quo Bias in Action

Status quo bias is a pervasive part of human behavior. In their 1988 article, Samuelson and Zeckhauserprovided a number of real-world examples of status quo bias that reflect the wide-ranging impact of the bias.

  1. A strip-mining project forced the citizens of a town in West Germany to be relocated to a similar area nearby. They were offered several options for the plan of their new town. The citizens chose the option most similar to their old town, even though the layout was inefficient and confusing.
  2. When offered several sandwich options for lunch, individuals often choose a sandwich they have eaten before. This phenomenon is called regret avoidance: in seeking to avoid a potential regrettable experience (choosing a new sandwich and disliking it), individuals opt to stick with the status quo (the sandwich with which they are already familiar).
  3. In 1985, Coca Cola unveiled "New Coke," a reformulation of the original Coke flavor. Blind taste tests found that many consumers preferred New Coke to Coke Classic. However, when consumers were given the opportunity to choose which Coke to buy, they chose Coke Classic. New Coke was ultimately discontinued in 1992.
  4. In political elections, the incumbent candidate is more likely to win than the challenger. The more candidates are in the race, the greater the incumbent's advantage.
  5. When a company added new insurance plans to the list of insurance options, existing employees chose the old plans much more frequently than new employees did. New employees tended to select new plans.
  6. Participants in a retirement plan were given the option of changing the distribution of their investments every year at no cost. Yet, despite varying rates of return among different options, only 2.5% of participants changed their distribution in any given year. When asked why they never changed their plan distribution, participants often couldn’t justify their preference for the status quo.

Sources

(Video) The Status Quo Bias Is Holding You Back
(Video) Status Quo Bias: If It Ain’t Broke, Why Fix It? - Cognitive Biases Series | Academy 4 Social Change
(Video) Lesson 14 Status Quo Bias Loss Aversion and the Endowment Effect

FAQs

How Status Quo Bias Affects Your Decisions? ›

A status quo bias minimizes the risks associated with change, but it also causes people to miss out on potential benefits that might even outweigh the risks.

How does status quo bias affect health insurance decisions? ›

That is, if status quo bias holds for decisions over health insurance policies, subjects are expected to make their choices for higher or lower co-insurance based not only on their risk preferences, but also on their decision environment, in this case the status quo default policy.

How biases affect decision-making examples? ›

Cognitive bias – also known as psychological bias – is the tendency to make decisions or to take action in an unknowingly irrational way. For example, you might subconsciously make selective use of data, or you might feel pressured to make a decision by powerful colleagues.

Which of the following is an example of status quo bias? ›

Sticking with established brands is an example of status quo bias. In blind testing, preference for strong brands like Coca Cola or Budweiser is much lower than when people chose brand they recognise.

What causes status quo bias? ›

Status quo bias has been explained through a number of psychological principles, including loss aversion, sunk costs, cognitive dissonance, and mere exposure. These principles are considered irrational reasons for preferring the status quo.

How does status quo affect decision making? ›

When making an important choice, people are more likely to pick the option that maintains things as they are currently. A status quo bias minimizes the risks associated with change, but it also causes people to miss out on potential benefits that might even outweigh the risks.

What is an example of status quo? ›

The phrase “Status quo” means the 'existing state of affairs'. It is the short form of the Latin phrase “in statu quo” . Example in use: “Jenna wanted to proceed with the next step, but then she decided it would be better to keep the status quo.”

What is the effect of bias in your life as a person? ›

Biased tendencies can also affect our professional lives. They can influence actions and decisions such as whom we hire or promote, how we interact with persons of a particular group, what advice we consider, and how we conduct performance evaluations.

How do you overcome bias in decision-making? ›

10 tips to overcome cognitive biases
  1. Be aware. ...
  2. Consider current factors that may be influencing your decision. ...
  3. Reflect on the past. ...
  4. Be curious. ...
  5. Strive for a growth mindset. ...
  6. Identify what makes you uncomfortable. ...
  7. Embrace the opposite. ...
  8. Seek multiple perspectives.
Jul 6, 2021

How does bias affect people's opinions and views? ›

This error in perception may cause us to believe that other people agree with our decisions and actions–even when they don't. Since people have a tendency to associate with other people with similar opinions and views, we also think those people see things the same way we do.

How do you overcome status quo? ›

To prevent them from engaging in status quo bias, you should use framing to your advantage. This can be done by framing the default option as a loss. Remember, according to loss aversion, we assign greater weight to losses than to gains, so this is more effective than framing the alternative option as a gain.

Is status quo good or bad? ›

Status quo is Latin for "existing state." When we talk about the status quo, however, we often mean it in a slightly bad way. When people want to maintain the status quo, they are often resistant to progress. If you run for mayor of your town and come in to office with all sorts of new ideas, watch out!

Why is status quo important? ›

Challenging the status quo is important because it can allow a company's leaders to evaluate the way the organization operates and consider new ideas. This can promote creativity in the workplace and encourage others to share their own ideas for innovations.

What is status quo in society? ›

Status quo is a Latin phrase meaning the existing state of affairs, particularly with regard to social or political issues. In the sociological sense, it generally applies to maintain or change existing social structure and values.

What does belief in the status quo mean? ›

Definition of the status quo

: the current situation : the way things are now He's content with the status quo and isn't looking for change. She wants to maintain the status quo.

What are the factors that you considered in making your decision? ›

During the decision making process, there are four behavioral factors that influence the decisions we make. These behavioral factors are our values, our personality, the propensity for risk, and the potential for dissonance of the decision.

What's another word for status quo? ›

In this page you can discover 13 synonyms, antonyms, idiomatic expressions, and related words for status quo, like: existing condition, no change, status in quo, current situation, state-of-affairs, status, situation, how things stand, present state of affairs, usual and standing.

What does it mean to go against the status quo? ›

To behave or do something in a way contrary to that which is generally accepted or expected.

How do you say status quo? ›

How to pronounce STATUS QUO in British English - YouTube

How does bias affect ethical decision-making? ›

Decisions can be made that are at odds with logic and rational judgement. Decisions are made without careful evaluation. Certain cognitive biases can result in perceptual blindness or distortion, illogical interpretation – even of statistics, and put simply: bad decision-making.

Why is it important to be aware of your own biases? ›

Why does this matter? Conscious and unconscious bias impact the way we interact with the world. If we don't confront our biases, we miss the opportunity to learn, connect, and grow. If our biases go unchecked, we find ourselves in a vacuum of people who think, look, and navigate the world the same way we do.

How does unconscious bias affect decision-making? ›

Our unconscious mind uses embedded, unconscious beliefs formed from our cultural environment and personal experiences to make immediate decisions about everything around us. The problem is that these shortcuts result in wrong decisions much of the time – especially when rational, logical thinking is required.

How can you prevent personal bias? ›

Avoiding Bias
  1. Use Third Person Point of View. ...
  2. Choose Words Carefully When Making Comparisons. ...
  3. Be Specific When Writing About People. ...
  4. Use People First Language. ...
  5. Use Gender Neutral Phrases. ...
  6. Use Inclusive or Preferred Personal Pronouns. ...
  7. Check for Gender Assumptions.

What is the importance of status quo? ›

Challenging the status quo is important because it can allow a company's leaders to evaluate the way the organization operates and consider new ideas. This can promote creativity in the workplace and encourage others to share their own ideas for innovations.

Is status quo good or bad? ›

Status quo is Latin for "existing state." When we talk about the status quo, however, we often mean it in a slightly bad way. When people want to maintain the status quo, they are often resistant to progress. If you run for mayor of your town and come in to office with all sorts of new ideas, watch out!

How do you mitigate status quo bias? ›

To prevent them from engaging in status quo bias, you should use framing to your advantage. This can be done by framing the default option as a loss. Remember, according to loss aversion, we assign greater weight to losses than to gains, so this is more effective than framing the alternative option as a gain.

When it comes to enacting policy changes loss aversion often leads to status quo bias because? ›

When it comes to enacting policy changes, loss aversion often leads to status quo bias because: the resistance from those who stand to lose from the policy often overwhelms the support from those who stand to gain.

Videos

1. The Influence of Status Quo Bias on Novice Users' Security Decisions: An Empirical Analysis
(The Human-Centric Cybersecurity Partnership (HC2P))
2. Status quo bias - Leader decisions from psychology perspectives
(How Can Leaders Make Better Decisions)
3. Status Quo Bias
(Fascinating Psychology)
4. Impact of Two Financial Biases: Status Quo and Anchoring
(Nevada State Bank)
5. Q Behavioral Thinking - Status Quo Bias
(Q Behavioral Thinking)
6. Learning Behavioral Finance Biases: Status Quo Bias Example
(Graeme Newell)

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