In 1988, William Samuelson (Boston University) and Richard Zeckhauser (Harvard University) published a seminal paper called, Status Quo Bias in Decision Making.
In one of the experiments cited in the paper, two groups of people are given a hypothetical task that involves picking from a selection of different investment opportunities.
In both cases, the groups are told that they are someone who regularly reads the “financial pages”, but that up until recently hasn’t had much money to invest.
Both groups are then told that they have just inherited “a large sum of money” from their great-uncle. This is now where the groups diverge in terms of the information given.
The first group is given a neutral version. They are told they can invest in any of the following portfolios: a moderate-risk company, a high-risk company, treasury bills, or municipal bonds.
The second group is given the same selection of portfolios, but is also given a “status quo selection.” They are told that a significant portion of their great-uncle’s portfolio is currently invested in a moderate risk company.
(They are also told that the fees associated with an investment change are insignificant and should not be a consideration for this decision.)
What do you think happened?
A number of different scenarios were tested, but as soon as one of the options was presented as the status quo, it became “significantly more popular”.
This status quo advantage also tended to increase as the number of investment options increased. Perhaps people just got overwhelmed by the options and went with the “safe bet”.
This phenomenon has become known as the status quo bias.
It is one of the reasons why some political offices have term limits. The incumbent bias can make for an uneven playing field. People vote for the name they recognize on the ballot.
And it is one of the reasons why change, in general, can be so unsettling. The countless studies suggest we have an inherent bias towards the status quo irrespective of its objective merits.
P.S. This is what came to mind as soon as I heard people calling the King Street Transit Pilot a “disaster” before the first weekday of its run was even over.
Daniel Ibañez, Clare Lyster, Charles Waldheim, and Mason White have just published a book analyzing the Great Lakes and the Saint Lawrence River. It’s called, Third Coast Atlas: Prelude to a Plan.
The Great Lakes represent the world’s largest collection of freshwater; a feature that is likely to become only more valuable. Their coastline is longer than the Atlantic and the Pacific coastlines of the US, combined. Hence the name “Third Coast.”
The reason the book is called a “prelude to a plan” is that it doesn’t propose a plan or a path forward. Instead, it is focused on analyzing the current state. Here is an excerpt about the book taken from the Daniels Faculty:
Third Coast Atlas: Prelude to a Plan describes the conditions for urbanization across the Great Lakes region. It assembles a multi-layered, empirical description of urbanization processes within the drainage basins of the five Great Lakes and the Saint Lawrence River. This thick description encompasses a range of representational forms including maps, plans, diagrams, timelines, and photographs, as well as speculative design research projects and critical texts.
I find this topic fascinating and I suspect that many of you might as well. It’s also an important one. So I wanted to get it on your radar. If you happen to be in Toronto next week, the launch/book signing is happening this Tuesday, October 24, 2017.
Jackson Hole has been on the top of my list of places to visit for a number of years now. And having just snowboarded it for the first time, I can honestly say that it lives up to the hype. It’s by far the most aggressive mountain I’ve ever had the pleasure of riding on. We also got lucky with 9” of fresh powder.
But in addition to some great riding, I also learned of something new today: the “powder clause”. And from what we’ve heard from the locals, lots of employers in the region offer it. What it means is that if there’s a fresh dumping of snow, you’re allowed to take the morning off work so that you can go ski “the pow.” I think this is brilliant.
If you’re from a big city (or you don’t ski), this may seem a bit absurd. But I think the “powder clause” underscores a growing trend happening in a lot of cities around the world. We’re seeing the rise of the consumer city. Historically, cities were all about agglomeration economies. But today, amenities matter. People choose first where they want to live and then look for a job (or start their own company).
Some places are blessed with natural amenities. But for the rest of us, we have to work at creating our own. That’s where city building comes into play.