Study: Unhappiness intensifies the avoidance of frequent losses

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Our level of happiness can affect our willingness to withstand frequent monetary losses, according to new research published in Frontiers in Psychology.

The two-part study of 250 college students used the Iowa gambling task to uncover that unhappy individuals tended to avoid choices that resulted in frequent but minor losses. Instead, unhappy individuals tended to opt for choices that resulted in larger but rarer losses. Happier individuals, on the other hand, tended to be more willing to tolerate frequent losses if they led to positive net outcomes.

PsyPost interviewed the study’s corresponding author, Eldad Yechiam of the Israel Institute of Technology. Read his responses below:

PsyPost: Why were you interested in this topic?

Yechiam: I guess my interest was aroused by a rather weird finding in decision science that people who are induced to have negative affect (e.g., by seeing a sad movie) tend to take more risk. To me, this was non-intuitive, as I felt that when a person is sad or upset she would tend to shy away from the possibility of getting more negative repercussions by taking additional risk — being more sensitized due to her current negative feeling.

Indeed, in pain research it has been repeatedly observed that those in a negative mood avoid pain and have higher pain thresholds.

What should the average person take away from your study?

Turns out people do prefer to avoid frequent negative events when they are upset. So they avoid risks with frequent negative penalties. But they don’t mind being exposed to risk when it’s the kind that most of the time gives positive rewards. Therefore, negative mood does not lead to more sensitivity to the overall negative penalty but to its frequency – with frequent penalties being avoided more.

This is also consistent with the findings that negative mood is sometimes associated with drug use and binging — these can be risky alternatives, but most of the time these activities provide positive rewards. Hence, these activities are not avoided by those with a negative mood.

Another interesting finding of the current study concerns the well known phenomena that people are generally over-sensitive to frequent small losses. For instance, in behavioral experiments people don’t like gambling machines of the type that give a loss of $1 with 90% and a gain of $10 with 10%. Even though this machine is profitable on average, the common bad outcomes wash out the rarer positive ones. As it turns out, for individuals who report very high positive affectivity this tendency does not emerge: they are not over-sensitive to frequent negative penalty. By contrast, in individuals with low affectivity this tendency is aggravated.

Are there any major caveats? What questions still need to be addressed?

The findings used a laboratory study with small monetary penalties. It would be interesting to examine whether these findings also bear on people’s behavior in naturally occurring settings. For instance, do happier people explore more – and is this the result of being able to tolerate the very frequent hurdles that exploration may bring with it?

The study, “Unhappiness Intensifies the Avoidance of Frequent Losses While Happiness Overcomes It“, was also co-authored by Ariel Telpaz, Stas Krupenia, and Anat Rafaeli.