When I was studying statistics at university I was told about a project that a previous year’s student had conducted on weather forecasting. The story went that, after studying lots of data about the weather, the best way of predicting it was to say that tomorrow’s weather would be the same as todays.

The same is true for predicting almost anything to do with consumers. The best way of seeing into the future is to assume people will buy tomorrow what they have today.

Regrettably, this isn’t a very empowering model to use. Of course, you could change the world with your product launch or marketing plan and render the ‘what happened yesterday’ model obsolete. When this happens it really stands out and we pay considerable attention to it. However, this awareness is a bias that makes us underappreciate the fact that, mostly, things stay more or less the same.

Psychologically-speaking a lot of this has to do with the fact that we are innately resistant to change; we’ll stick with what we’ve done or what is presented as the default option.

• Our minds like to operate on autopilot as much as possible: unconscious processes draw less glucose than conscious thought, so we have a tendency towards the familiar.We seem to prefer to make a decision once and then to stick with it.
• Something new is intrinsically more risky: doing what you’ve done before might not be the best option, but it won’t kill you (unless you’re addicted to a harmful substance).Sticking with a previous decision is also the same as not making a decision: so if something goes wrong it wasn’t as a consequence of your action.
• We’re wired for ‘beliefs’: we’ll accept and act on things on the basis that we believe them to be true, irrespective of the evidence. This is very efficient: for instance, it saves us all learning the hard way that, actually, it is a really bad idea not to look before you cross the road.
• The ‘regular’ choice is the baseline or anchor from which we reference alternatives: consequently our assessment is a relative one based on the current preference rather than an objective one starting from a level playing field.

Fascinating research has been conducted to quantify our preference to avoid making a decision to do something new (often called ‘status quo bias’). Researchers designed questionnaires that asked participants to make risk-based decisions on the basis of two alternative introductions: in one part of the experiment they were given a scenario, for example about funds they had to invest, and four alternative investments with varying degrees of risk and return. In the other version, people were given the same options and scenario but also told that the money was currently invested in one of the listed options.

In another part of the experiment people were given data about water use in an area and asked to make a decision about water allocation between households and farmers. The data was always the same, but different proportions were referenced about the allocation made in a previous drought.

So what did they find?

Firstly, as you would expect, when people had a strong preference from the options available they were far less likely to exhibit bias for status quo aspect (although this preference may be rooted in their own prior decisions).

Secondly, the more options included in the choice set, the greater the likelihood people would stick with the existing option.

Thirdly, if you calculated the results in terms of what difference it would make being the incumbent in an election of two equally matched candidates, in a two-way race the incumbent would win by 18 percentage points. Put another way, a candidate who would, all things being equal, obtain just 39% of the vote, would still get a small majority as the incumbent.

All of which puts the US election later this year into an interesting light.

Source: W. Samuelson, R. Zeckhauser, Journal of Risk and Uncertainty 1, 7-59 (1988).

Image courtesy: Johnathan Kos-Read