--- title: "Meaning & Key Takeaway of: Loss aversion refers to the relative…" description: "\"“Loss aversion refers to the relative strength of two motives: we are driven more strongly to avoid losses than to achieve gains. A reference point is ..." image: "https://sms4smile.com/quotes/i/e37/daniel-kahneman-431_aversion_loss-aversion-refers-to-the-relative-str_3206604.jpg" --- # Loss aversion refers to the relative strength of two… ![“Loss aversion refers to the relative strength of two motives: we are driven more strongly to avoid losses than to achieve gains. A reference point is sometimes the status quo, but it can also be a goal in the future: not achieving a goal is a loss, exceeding the goal is a gain. As we might expect…” quote by Daniel Kahneman](https://sms4smile.com/quotes/i/e37/daniel-kahneman-431_aversion_loss-aversion-refers-to-the-relative-str_3206604.jpg) [Download](https://sms4smile.com/quotes/i/e37/daniel-kahneman-431_aversion_loss-aversion-refers-to-the-relative-str_3206604.jpg) [Open image](https://sms4smile.com/quotes/i/e37/daniel-kahneman-431_aversion_loss-aversion-refers-to-the-relative-str_3206604.jpg) > ““Loss aversion refers to the relative strength of two motives: we are driven more strongly to avoid losses than to achieve gains. A reference point is sometimes the status quo, but it can also be a goal in the future: not achieving a goal is a loss, exceeding the goal is a gain. As we might expect from negativity dominance, the two motives are not equally powerful. The aversion to the failure of not reaching the goal is much stronger than the desire to exceed it. People often adopt short-term goals that they strive to achieve but not necessarily to exceed. They are likely to reduce their efforts when they have reached an immediate goal, with results that sometimes violate economic logic. New York cabdrivers, for example, may have a target income for the month or the year, but the goal that controls their effort is typically a daily target of earnings. Of course, the daily goal is much easier to achieve (and exceed) on some days than on others. On rainy days, a New York cab never remains free for long, and the driver quickly achieves his target; not so in pleasant weather, when cabs often waste time cruising the streets looking for fares. Economic logic implies that cabdrivers should work many hours on rainy days and treat themselves to some leisure on mild days, when they can “buy” leisure at a lower price. The logic of loss aversion suggests the opposite: drivers who have a fixed daily target will work many more hours when the pickings are slim and go home early when rain-drenched customers are begging to be taken somewhere.”” [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Kahneman explains loss aversion: people fear losses more than they value gains, leading to short-term goal focus and inefficient effort allocation, especially under variable conditions. **In simple terms:** Losses feel worse than gains feel good. Key Takeaway Beware of loss‑driven decisions. Themes behavioral economics psychology decision making Mood thoughtful analytical Type educational insightful practical When to use this quote - financial planning - workforce management - personal habit formation Key Concepts loss aversion negativity bias goal setting Questions to Reflect On - How do you balance risk of loss with opportunity for gain? - What daily targets might be limiting your long‑term growth? A Different Perspective Loss aversion can cause over‑work in low‑yield situations. ★ ★ ★ ★ ★ No ratings yet [Achieving A Goal](https://sms4smile.com/quotes/about/achieving-a-goal/) [Aversion](https://sms4smile.com/quotes/about/aversion/) [Aversion Failure](https://sms4smile.com/quotes/about/aversion-failure-359239/) [Aversion Refers](https://sms4smile.com/quotes/about/aversion-refers-5974431/) [Aversion Suggests](https://sms4smile.com/quotes/about/aversion-suggests-5974432/) [Goals](https://sms4smile.com/quotes/about/goals/) [Loss](https://sms4smile.com/quotes/about/loss/) [Loss Aversion](https://sms4smile.com/quotes/about/loss-aversion-1118355/) [Motivation](https://sms4smile.com/quotes/about/motivation/) [Rainy days](https://sms4smile.com/quotes/about/rainy-days/) [Status quo](https://sms4smile.com/quotes/about/status-quo/) [Term Goals](https://sms4smile.com/quotes/about/term-goals/) ## Related quotes > [I have a congenital aversion to failure.](https://sms4smile.com/quotes/abraham-lincoln/i-have-a-congenital-aversion-to-failure/) [Abraham Lincoln](https://sms4smile.com/quotes/author/abraham-lincoln/) > [The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics.](https://sms4smile.com/quotes/daniel-kahneman/the-concept-of-loss-aversion-is-certainly-the-most-significant/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“a single cockroach will completely wreck the appeal of a bowl of cherries, but a cherry will do nothing at all for a bowl…](https://sms4smile.com/quotes/daniel-kahneman/a-single-cockroach-will-completely-wreck-the-appeal-of-a-bowl-of/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“Time and again, we let the fear of loss overpower rational decision-making and often make ourselves worse off just to avoid a potential loss.…](https://sms4smile.com/quotes/l-jon-wertheim/time-and-again-we-let-the-fear-of-loss-overpower-rational-decision/) [L. Jon Wertheim](https://sms4smile.com/quotes/author/l-jon-wertheim/) > [“The combination of loss aversion with mindless choosing implies that if an option is designated as the “default,” it will attract a large market…](https://sms4smile.com/quotes/richard-h-thaler/the-combination-of-loss-aversion-with-mindless-choosing-implies-that/) [Richard H. Thaler](https://sms4smile.com/quotes/author/richard-h-thaler/) > [Loss aversion is a really disproportionate anxiety about stuff that doesn't matter very much. So for instance, if you lose $5, you feel really…](https://sms4smile.com/quotes/tim-harford/loss-aversion-is-a-really-disproportionate-anxiety-about-stuff-that/) [Tim Harford](https://sms4smile.com/quotes/author/tim-harford/) > [“Having a long-term plan--and not casting it aside--is the key to dealing with our fear of loss (loss aversion).”](https://sms4smile.com/quotes/ori-brafman/having-a-long-term-plan-and-not-casting-it-aside-is-the-key-to/) [Ori Brafman](https://sms4smile.com/quotes/author/ori-brafman/) > [“we will see, loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when”](https://sms4smile.com/quotes/richard-h-thaler/we-will-see-loss-aversion-operates-as-a-kind-of-cognitive-nudge/) [Richard H. Thaler](https://sms4smile.com/quotes/author/richard-h-thaler/) > [“In trying to make sense of this pessimism, Ridley, like Kahneman, sees a combination of cognitive biases and evolutionary psychology as the core of…](https://sms4smile.com/quotes/peter-h-diamandis/in-trying-to-make-sense-of-this-pessimism-ridley-like-kahneman-sees-a/) [Peter H. Diamandis](https://sms4smile.com/quotes/author/peter-h-diamandis/) > [“to taking an action that could make life even worse. Psychologists call this “loss aversion.” Research in cognitive”](https://sms4smile.com/quotes/jerome-groopman/to-taking-an-action-that-could-make-life-even-worse-psychologists/) [Jerome Groopman](https://sms4smile.com/quotes/author/jerome-groopman/) > [“Loss aversion helps produce inertia, meaning a strong desire to stick with your current holdings.”](https://sms4smile.com/quotes/richard-h-thaler/loss-aversion-helps-produce-inertia-meaning-a-strong-desire-to-stick/) [Richard H. Thaler](https://sms4smile.com/quotes/author/richard-h-thaler/) > [Fun and pleasure are just as delicious as achieving a goal.](https://sms4smile.com/quotes/lara-pulver/fun-and-pleasure-are-just-as-delicious-as-achieving-a-goal/) [Lara Pulver](https://sms4smile.com/quotes/author/lara-pulver/) > [There's nothing wrong with having goals, but obsessing over them is often counterproductive because, in reality, achieving a goal isn't always what it's cracked…](https://sms4smile.com/quotes/mark-manson/there-s-nothing-wrong-with-having-goals-but-obsessing-over-them-is/) [Mark Manson](https://sms4smile.com/quotes/author/mark-manson/) > [I come alive by giving back, seeing my children smile and hearing them laugh, standing up for things I believe in, achieving a goal,…](https://sms4smile.com/quotes/trista-sutter/i-come-alive-by-giving-back-seeing-my-children-smile-and-hearing-them/) [Trista Sutter](https://sms4smile.com/quotes/author/trista-sutter/) > [Futurologists have been multiplying like flies since the day Herman Kahn made Cassandra's profession "scientific," yet somehow not one of them has come out…](https://sms4smile.com/quotes/stanislaw-lem/futurologists-have-been-multiplying-like-flies-since-the-day-herman/) [Stanislaw Lem](https://sms4smile.com/quotes/author/stanislaw-lem/) ## More by Daniel Kahneman > [Economists think about what people ought to do. Psychologists watch what they actually do.](https://sms4smile.com/quotes/daniel-kahneman/economists-think-about-what-people-ought-to-do-psychologists-watch/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“Belief in the Law of Small Numbers.”](https://sms4smile.com/quotes/daniel-kahneman/belief-in-the-law-of-small-numbers/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“People who are poor think like traders, but the dynamics are quite different. Unlike traders, the poor are not indifferent to the differences between…](https://sms4smile.com/quotes/daniel-kahneman/people-who-are-poor-think-like-traders-but-the-dynamics-are-quite/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“Mood evidently affects the operation of System 1: when we are uncomfortable and unhappy, we lose touch with our intuition.”](https://sms4smile.com/quotes/daniel-kahneman/mood-evidently-affects-the-operation-of-system-1-when-we-are/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [The confidence that individuals have in their beliefs depends mostly on the quality of the story they can tell about what they see, even…](https://sms4smile.com/quotes/daniel-kahneman/the-confidence-that-individuals-have-in-their-beliefs-depends-mostly/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“So this is my aim for watercooler conversations: improve the ability to identify and understand errors of judgment and choice, in others and eventually…](https://sms4smile.com/quotes/daniel-kahneman/so-this-is-my-aim-for-watercooler-conversations-improve-the-ability/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“For example, I recently came to doubt my long-held impression that adultery is more common among politicians than among physicians or lawyers.”](https://sms4smile.com/quotes/daniel-kahneman/for-example-i-recently-came-to-doubt-my-long-held-impression-that/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [Survival prospects are poor for an animal that is not suspicious of novelty.](https://sms4smile.com/quotes/daniel-kahneman/survival-prospects-are-poor-for-an-animal-that-is-not-suspicious-of/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“the idea of money primes individualism: a reluctance to be involved with others, to depend on others, or to accept demands from others.”](https://sms4smile.com/quotes/daniel-kahneman/the-idea-of-money-primes-individualism-a-reluctance-to-be-involved/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [Most of the moments of our life - and I calculated, you know, the psychological present is said to be about three seconds long;…](https://sms4smile.com/quotes/daniel-kahneman/most-of-the-moments-of-our-life-and-i-calculated-you-know-the/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“knowing little makes it easier to fit everything you know into a coherent pattern.”](https://sms4smile.com/quotes/daniel-kahneman/knowing-little-makes-it-easier-to-fit-everything-you-know-into-a/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [Experts don't know exactly where the boundaries of their expertise are.](https://sms4smile.com/quotes/daniel-kahneman/experts-don-t-know-exactly-where-the-boundaries-of-their-expertise-are/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [All of us would be better investors if we just made fewer decisions.](https://sms4smile.com/quotes/daniel-kahneman/all-of-us-would-be-better-investors-if-we-just-made-fewer-decisions/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes…](https://sms4smile.com/quotes/daniel-kahneman/the-best-we-can-do-is-a-compromise-learn-to-recognize-situations-in/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) > [“A happy mood loosens the control of System 2 over performance: when in a good mood, people become more intuitive and more creative but…](https://sms4smile.com/quotes/daniel-kahneman/a-happy-mood-loosens-the-control-of-system-2-over-performance-when-in/) [Daniel Kahneman](https://sms4smile.com/quotes/author/daniel-kahneman/) [Explore all 560 Daniel Kahneman quotes ](https://sms4smile.com/quotes/author/daniel-kahneman/) ## More Aversion quotes > [And indeed nothing but the most determined scepticism, along with a great degree of indolence, can justify this aversion to metaphysics. For if truth…](https://sms4smile.com/quotes/david-hume/and-indeed-nothing-but-the-most-determined-scepticism-along-with-a/) [David Hume](https://sms4smile.com/quotes/author/david-hume/) > [Society everywhere is in conspiracy against the manhood of every one of its members. The virtue in most request is conformity. Self-reliance is its…](https://sms4smile.com/quotes/ralph-waldo-emerson/society-everywhere-is-in-conspiracy-against-the-manhood-of-every-one/) [Ralph Waldo Emerson](https://sms4smile.com/quotes/author/ralph-waldo-emerson/) > [The scorn men express for a male who does housework is exceeded only by their aversion to a woman who doesn't](https://sms4smile.com/quotes/penny-kome/the-scorn-men-express-for-a-male-who-does-housework-is-exceeded-only/) [Penny Kome](https://sms4smile.com/quotes/author/penny-kome/) > [One of the greatest inhibitions to the development of human potential is the aversion to effective practice.](https://sms4smile.com/quotes/douglas-b-reeves/one-of-the-greatest-inhibitions-to-the-development-of-human-potential/) [Douglas B. Reeves](https://sms4smile.com/quotes/author/douglas-b-reeves/) > [Value investing is risk aversion.](https://sms4smile.com/quotes/seth-klarman/value-investing-is-risk-aversion/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [In my schoolboy days I had no aversion to slavery. I was not aware there was anything wrong about it. No-one arraigned it in…](https://sms4smile.com/quotes/mark-twain/in-my-schoolboy-days-i-had-no-aversion-to-slavery-i-was-not-aware/) [Mark Twain](https://sms4smile.com/quotes/author/mark-twain/) > [We must each learn to feel comfortable in our own uniqueness by rising above the fear of being wrong and the aversion to being…](https://sms4smile.com/quotes/iyanla-vanzant/we-must-each-learn-to-feel-comfortable-in-our-own-uniqueness-by/) [Iyanla Vanzant](https://sms4smile.com/quotes/author/iyanla-vanzant/) > [The unattractive thing about chauvinism is not so much the aversion to other nations as the love of one's own.](https://sms4smile.com/quotes/karl-kraus/the-unattractive-thing-about-chauvinism-is-not-so-much-the-aversion/) [Karl Kraus](https://sms4smile.com/quotes/author/karl-kraus/) > [Most people have an aversion to risk, my college economics professor told me. Which means they have to be rewarded to take on that…](https://sms4smile.com/quotes/michael-arrington/most-people-have-an-aversion-to-risk-my-college-economics-professor/) [Michael Arrington](https://sms4smile.com/quotes/author/michael-arrington/) > [Some people have a very strange idea that material success does not coincide harmoniously with self-realization, which is absurd. The aversion to material success,…](https://sms4smile.com/quotes/frederick-lenz/some-people-have-a-very-strange-idea-that-material-success-does-not/) [Frederick Lenz](https://sms4smile.com/quotes/author/frederick-lenz/) > [Usually I just let my songs do the talking. As a matter of fact I have long had an aversion to celebrities endorsing politics,…](https://sms4smile.com/quotes/john-fogerty/usually-i-just-let-my-songs-do-the-talking-as-a-matter-of-fact-i-have/) [John Fogerty](https://sms4smile.com/quotes/author/john-fogerty/) > [Once we're willing to confront our emotional suffering, we begin making choices based on attraction instead of aversion, love instead of fear. Where we…](https://sms4smile.com/quotes/martha-beck/once-we-re-willing-to-confront-our-emotional-suffering-we-begin/) [Martha Beck](https://sms4smile.com/quotes/author/martha-beck/) > [It is a happy thing that time quells the longings of vengeance and hushes the promptings of rage and aversion. I had left this…](https://sms4smile.com/quotes/charlotte-bronte/it-is-a-happy-thing-that-time-quells-the-longings-of-vengeance-and/) [Charlotte Bronte](https://sms4smile.com/quotes/author/charlotte-bronte/) > [“For a long time now a hint of aversion had lain on everything he did and experienced, a shadow of impotence and loneliness, an…](https://sms4smile.com/quotes/robert-musil/for-a-long-time-now-a-hint-of-aversion-had-lain-on-everything-he-did/) [Robert Musil](https://sms4smile.com/quotes/author/robert-musil/) > [In Tantric Buddhism our feeling is that there is no problem with the sensual world unless you have a tremendous attraction or aversion to…](https://sms4smile.com/quotes/frederick-lenz/in-tantric-buddhism-our-feeling-is-that-there-is-no-problem-with-the/) [Frederick Lenz](https://sms4smile.com/quotes/author/frederick-lenz/) [Browse all 266 Aversion quotes ](https://sms4smile.com/quotes/about/aversion/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "“Loss aversion refers to the relative strength of two motives: we are driven more strongly to avoid losses than to achieve gains. A reference point is sometimes the status quo, but it can also be a goal in the future: not achieving a goal is a loss, exceeding the goal is a gain. As we might expect from negativity dominance, the two motives are not equally powerful. The aversion to the failure of not reaching the goal is much stronger than the desire to exceed it. People often adopt short-term goals that they strive to achieve but not necessarily to exceed. They are likely to reduce their efforts when they have reached an immediate goal, with results that sometimes violate economic logic. New York cabdrivers, for example, may have a target income for the month or the year, but the goal that controls their effort is typically a daily target of earnings. Of course, the daily goal is much easier to achieve (and exceed) on some days than on others. On rainy days, a New York cab never remains free for long, and the driver quickly achieves his target; not so in pleasant weather, when cabs often waste time cruising the streets looking for fares. Economic logic implies that cabdrivers should work many hours on rainy days and treat themselves to some leisure on mild days, when they can “buy” leisure at a lower price. 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