Marketing and Evolution – Are We Hard-Wired to Avoid Loss?

Monkey Businessman

What motivates us to make economic decisions? Lynn Serafinn looks at the damaging impact of Scarcity marketing and challenges marketers to change their approach.

Back in the summer of 1974, when I was 19 years old, I took my first psychology course in college. This was where I learned about the type of psychological treatment known as ‘aversion therapy’. Aversion therapy is the practice of ‘correcting’ undesirable behaviour by exposing the patient to a physically uncomfortable stimulus. Over time, the person unconsciously comes to associate the behaviour (or even thoughts about the behaviour) with unpleasant physical sensations. Supposedly, this eventually influences the person to give up the unwanted behaviour.

I found the idea of aversion therapy utterly revolting. It reminded me of Stanley Kubrick’s iconic film from 1971, A Clockwork Orange (I had seen it for the first time just a few months earlier). In that film, the teenage character named Alex, played by Malcolm MacDowell, was given an experimental treatment for his violent anti-social behaviour. The treatment entailed being forced to watch films of horrific violence while being injected with a substance that make him feel like he needed to vomit. He was physically retrained in his chair, and his eyelids were pinned up so he could not close them or look away from the screen. The treatment ‘worked’ (for a while) but Alex, who was now powerless when faced with any kind of violence, was now vulnerable to violent attacks from other thugs on the street. Naturally, the film raised the question: Who is actually more violent–Alex or the doctors?

As repugnant as aversion therapy might sound, we humans have always tried to ‘correct’ unacceptable social behaviour through some form of ‘aversion’. From imprisonment and capital punishment to grounding our children or issuing after-school detention, we are exceptionally good at thinking up ways to penalise others who don’t do what we want them to do.

But here’s the interesting (and perhaps scary) thing about aversion therapy: marketers use it too. Loss aversion is one of the earmarks of what I call ‘The Deadly Sin of Scarcity’ in marketing. Here are some cliché examples:

‘Get this $5000 product for only $3000 if you buy within the next 20 minutes.’

‘The first 5 people to buy today will save $2000. Everyone else will pay $5000’

I’m sure many of you have seen such adverts, especially in Internet marketing. These kinds of marketers are creating a sense of urgency by instilling a desire to avert a loss. They use the Deadly Sin of Scarcity to achieve this:

  • A perceived Scarcity of time to make a decision
  • A perceived Scarcity of the number of people who will benefit
  • A perceived Scarcity (or ‘loss’) of money by having to pay $2000 more if they don’t ‘act now’

Using Scarcity to create an aversion-loss response is a cornerstone of ‘old-school’ marketing, and is taught by nearly every traditional marketer on the planet. And while you might share my personal feeling that it is highly unethical, the problem is that it works…or rather, much as in the case of Alex from A Clockwork Orange, it works in the short-term.

But WHY does it work? Are we humans hard-wired to avert a loss? In other words, are we more naturally motivated to avoid pain than we are to gain delight? And if so, can we not rise above this inclination?

Maslow’s Hierarchy of Needs

Moving ahead a few decades from my psychology class, when I did my M.A. in adult education in 2002, we studied a psychological theory first devised by Abraham Maslow in the 1940s known as ‘Maslow’s Hierarchy of Needs’ or ‘Maslow’s Pyramid of Needs’:

Maslow's Hierarchy of Needs Pyramid

In a nutshell, Maslow claimed that human motivation was driven by 5 categories of ‘needs’, each one more ‘evolved’ than the one preceding it:

  1. Physiological needs – air, food, water, sex, sleep, etc.
  2. Safety needs – shelter, clothing, health, money, possessions, etc.
  3. Love and belonging – friends, family, contact, community, etc.
  4. Esteem – respect, social purpose, skill, achievement, confidence, etc.
  5. Self-actualisation – personal spirituality/philosophy, empowerment, creativity, higher purpose, living up to your potential, fulfilment, etc.

Maslow’s idea of a ‘hierarchy’ of needs is reflected in the various layers of the pyramid. He said the lower layers of the pyramid must be met before a person is driven to pursue the higher ones. For example:

  • A person who is dying of starvation (Layer 1) is UNLIKELY to be motivated by the promise of self-actualisation (Layer 5, which is several layers higher).
  • A person who has the comforts of home and community (Layer 3) is LIKELY to be motivated by the idea of increasing their social purpose, confidence and achievement (Layer 4, which is the next layer up).

And, especially relevant to our current discussion:

  • A person whose financial situation is being threatened (Layer 2), is UNLIKELY to make empowered decisions (Layer 5).

In other words, if person feels threatened by loss, their motivation is less likely to come from personal empowerment than it is to come from a desire to protect whatever is being threatened.

Old-school marketers know about this motivational tendency in human beings. In fact, they’re banking on it. This is way they use Scarcity in their marketing; they WANT to evoke a loss-aversion response so people will act quickly rather than have time to access their higher brain functions or higher-level motivators.

But how true is Maslow’s hierarchy? Are our motivations in life really so easily reduced? Is it part of our humanness to avoid loss rather than seek positive gain? Is there any way to transcend this?

Are We Humans Slaves to Monkey Economics?

One of my favourite TED Talks was delivered by cognitive psychologist Laurie Santos in 2010. It’s called ‘A monkey economy as irrational as ours’.

If you cannot see this video, you can view it at

In this talk, Santos talks about an experiment she did where monkeys were introduced to the concept of ‘money’ and economics by teaching them how to use tokens to trade for food. One of the major discoveries they made during this experiment was that, when faced with ‘economic’ decision making, monkeys were less apt to take risks when it came to increasing their ‘profits’ (which were usually grapes), but surprisingly more apt to take risks when it came to averting a possible loss of their profits. Furthermore, the monkeys tended to exhibit increasingly riskier behaviour as the possibility of loss became greater. In other words, the more the monkeys had to lose, the less they played it safe.

What is so fascinating about Santos’ study is that human beings, she said, behave pretty much the same way. We treat potential losses differently from how we treat potential gains. In fact, we tend to be more motivated by averting loss than we are to pursue gains. Moreover, the greater the perceived loss, the riskier we tend to become. Santos gave the example of how investors will watch stocks values plummet, or homeowners will hold onto their properties as property values fall lower and lower, simply because they didn’t want to sell at a loss. For many during the economic crisis of recent years, such ‘risky’ loss-aversion decisions ultimately caused them to lose everything.

From my perspective, ‘loss aversion’ is also something we humans voluntarily SPEND money on every day. It’s called ‘insurance’. Car insurance, home insurance, life insurance, health insurance, travel insurance, disability insurance–we have fabricated an entire industry based upon our FEAR OF LOSS. Heck, until the practice of PPI (payment protection insurance) was outlawed, we even bought loan insurance to protect us from not being able to pay back money we borrowed. We cannot even get a mortgage or drive a car without insurance, even though the odds of our ‘losing’ are always far less than what we pay out. Yet, we are much more likely to shell out a few hundred every month on insurance (and never see it again) than we are to put that same amount of money into a savings account (where we can get it any time).

It’s madness, really.

It would seem, for all our intelligence, when it comes to economic decision making, we humans are no more highly evolved than monkeys. Santos goes so far as to propose that our biases may be due to ‘a deeper part of our nature’ that is 35 million years old. In other words, perhaps ‘loss aversion’ is programmed into our genetic memory.

‘And,’ she says, ‘old strategies tend to be really hard to overcome.’

Our Dangerous Weapon of Influence

Marketing is not so very different from psychology in that its aim is to influence behaviour. But our behaviour is based upon beliefs and belief systems, whether we are aware of them or not. When the monkeys in Santos’ experiment behaved the way they did, it was because they believed their decision would bring them the best–or rather, the ‘least bad’–result. We will only ever change our behaviour when the beliefs that underpin them change first. Thus, like psychologists, marketers have always sought ways to influence beliefs that will, in term, influence behaviour.

Since the days of Edward Bernays, the grandfather of modern marketing, marketers have manipulated our unconscious beliefs around the need for loss aversion. This is why the ‘Deadly Sin of Scarcity’ has been so prevalent in modern marketing, pretty much from the get-go. Marketers use Scarcity because they KNOW it works with most people at a seminal level. In fact, in his 1984 book Influence, Robert Cialdini calls Scarcity one of the ‘six weapons (or principles) of influence’.

Personally, I find it incredibly sad that we humans tend to attribute a higher value on things that are limited rather than abundant. We might rush to pay thousands for a ‘limited time offer’ but we scarcely notice that we are surrounded by a sea of air filling our lungs with life at every moment. But I am quite sure that if that same air were to be cut off from us, we would suddenly consider it to be the most precious thing in the Universe.

The point I am trying to make is this:

So what if we humans ARE programmed to be more motivated by loss aversion than by the positive things in life? So what if we marketers CAN land the deal by making people afraid of loss–of money, of opportunity, of health, of whatever? Just because we human beings have our limitations, does it mean it’s OK to exploit them? By keeping society in a permanent state of lack and fear, are we not crushing humankind down to the bottom-most layer of Maslow’s pyramid and preventing humanity from ascending to self-actualisation?

Just because we CAN, do we really WANT to hold the human race hostage within a ‘monkey economics’ point of view?

The Next Stage in the Evolution of Marketing

When watching the film A Clockwork Orange I asked myself: Who is the more violent here: the hoodlum Alex or the doctors engineering his behaviour through aversion therapy?

And so now, it is also time we ask ourselves: what kind of violence are we inflicting upon the world by trying to engineer the behaviour of our fellow human beings through Scarcity marketing that exploits our tendency towards loss aversion?

Scarcity may well be a ‘weapon’ of influence and as such it is very powerful. But with great power there MUST also be great responsibility. When marketers makes a conscious choice to try to influence the beliefs and behaviours of the public, they must also take responsibility for the impact they create as a result of that influence. Really, it’s very simple:

If we continue to use Scarcity and loss-aversion in marketing, we will be responsible for keeping people in fear. We will encourage impulse-spending and debt. We will repress society at a low-level consciousness, where survival is at the forefront of our minds and self-actualisation seems very far away. In short, we will probably win the sale, but we will definitely lose the (human) race.

But if, as Santos says, we start to recognise our human limitations, we might actually start to overcome them. If we STOP Scarcity/loss-aversion marketing altogether, we will begin to create a space for our customers to THINK and consider what they are buying. Yes, sales might be lower, but so will inflation and debt. We might have fewer customers, but those who do purchase from us will be more satisfied and more likely to buy from us again because they have made a conscious, empowered choice, rather than responded to a short-term, fear-based trigger.

Then, by creating this kind of space in our marketing, we must just open the doorway for people to start to climb the hierarchy of needs and, as Santos says, ‘achieve our own human potential and really be the noble species we hope to all be.’

Let the dialogue continue. Please leave you comments below.

Lynn Serafinn
17 September 2013

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Lynn Serafinn author of The 7 Graces of Marketing

LYNN SERAFINN, MAED, CPCC is a certified, award-winning coach, teacher, marketer, social media expert, radio host, speaker and author of the number one bestseller The 7 Graces of Marketing — How to Heal Humanity and the Planet by Changing the Way We Sell and Tweep-e-licious! 158 Twitter Tips & Strategies for Writers, Social Entrepreneurs & Changemakers Who Want to Market their Business Ethically. She is listed in the Top 20 of the Top Marketing Authors on Twitter by Social Media Magazine and was a finalist for the prestigious Brit Writers Awards. She also received the eLit Book Awards Silver Medal in Humanitarian and Ecological Social Affairs, as well as the Bronze Medal in Business and Sales.

Lynn’s eclectic approach to marketing incorporates her vast professional experience in the music industry and the educational sector along with more than two decades of study and practice of the spirituality of India. Her innovative marketing campaigns have produced a long list of bestselling non-fiction authors through her company Spirit Authors. Lynn is also the Founder of the 7 Graces Project CIC, a not-for-profit social enterprise created to train, support, mentor and inspire independent business owners to market their business ethically, serve society and planet, and restore all that is best about humanity.

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2 Responses to Marketing and Evolution – Are We Hard-Wired to Avoid Loss?

  1. Dina says:

    Thank you, Lynn! Great post and I agree 100%. As an entrepreneur I prefer my clients to purchase coaching packages from me because they’re inspired to and excited about it, not out of any kind of fear and lack. I know it’s not likely I’ll be as wealthy as these supposed 6 to 7 figure people, but I need to be able to sleep at night. A few months back I attended a free Client Attraction weekend led by a couple (who I won’t name) and the amount of fear and manipulation they used made me literally ill – I actually got sick for weeks for the first time in about 20 years. Since then I’ve talked to two women who purchased one of their $3000 programs at the weekend and regretted doing so, but couldn’t get a refund unless they went through the whole program. It was soon after that weekend that I found you, Lynn, and the 7 Graces Marketing. Thank you for the message you’re spreading!

  2. Unitha says:

    This is so good. I totally agree with this. But, there must be a community of people making this shift to allow the greater good. Thanks for being used to help us make the shift.

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