What is status quo bias?
Kahneman's Thinking, Fast and Slow derives status quo bias from loss aversion. Three other lines of research give it a different cause, or none.
Answer to the question
What is status quo bias?
Status quo bias is the tendency to keep the current option more often than its merits justify. Samuelson and Zeckhauser named it in 1988 after decision experiments and data on faculty choices of health plans and retirement programs. Researchers still dispute the cause: loss aversion, a bias toward inaction, or a general preference for the status quo.
Key takeaways
- Samuelson and Zeckhauser (1988) reported decision experiments, and data on faculty choices of health plans and retirement programs, showing that individuals disproportionately stick with the status quo.
- Kahneman (2011) explains the bias through loss aversion, with the status quo as the reference point against which a change is judged.
- Ritov and Baron (1992) found that a matching task requiring no action showed no status quo bias, and concluded the bias is at least partly a bias toward omission.
- Gal (2006) argues the order runs the other way: a general preference for the status quo is enough to account for the effects attributed to loss aversion.
- Xiao, Feldman and colleagues (2021) replicated the bias in three of four scenarios from the 1988 paper, with 311 and 316 participants, and did not find it in the wagon-colour scenario.
Status quo bias is a name for a pattern, and the pattern has more than one explanation. People keep the current arrangement more often than the merits of the alternatives would predict. Nearly four decades after the term appeared, researchers still disagree about why. The label describes a comparison. Staying with the current option is often the right call, so a person who keeps an arrangement has not shown the bias by doing so. It shows when an option is chosen more because it is the current one than it would be as one choice among equals.
A Pattern Named in 1988
William Samuelson and Richard Zeckhauser introduced the term in a 1988 paper in the Journal of Risk and Uncertainty. Their abstract reports a series of decision experiments in which individuals disproportionately stuck with the status quo. It also reports data on faculty choices of health plans and retirement programs, where the bias was substantial in real decisions with real stakes. They note that economics, psychology and decision theory each offer possible explanations.
Daniel Kahneman gives the idea a home in Thinking, Fast and Slow, in the chapter on the endowment effect. His account is that the drawbacks of a change weigh more heavily than its benefits, which builds in a bias towards the status quo. The status quo works as the reference point against which gains and losses are counted, so every alternative is judged by what it takes away as well as by what it adds. Kahneman, Jack Knetsch and Richard Thaler had set the three ideas side by side in a 1991 column in the Journal of Economic Perspectives, which reviewed the evidence for the endowment effect and status quo bias and discussed how they relate to loss aversion.
A change feels costly because its drawbacks outweigh its gains in the mind, which tilts people toward leaving things as they are.
Three of Four Scenarios Held Up
In 2021 Qinyu Xiao, Gilad Feldman and colleagues ran two preregistered experiments, with 311 and 316 US participants recruited through Amazon Mechanical Turk, to replicate four decision scenarios from the 1988 paper. Their report in Meta-Psychology says the bias held in three of them: budget allocation, investment portfolios and college jobs. It did not hold in the fourth, a choice of wagon colour. The abstract says the authors discuss their results using multiple accounts put forward in the status quo bias literature. The replication supports the pattern. It does not test the explanations against one another, and none of the three accounts is ruled out by it.
Is It the Status Quo or Inaction?
The loss account has a rival that pulls apart two things earlier work had mixed together: preferring the status quo and preferring not to act. In a 1992 paper in the same journal, Ilana Ritov and Jonathan Baron built scenarios in which change happens unless someone acts, so that doing nothing no longer meant keeping things as they were.
Participants reacted more strongly to bad outcomes caused by action, whether or not the action preserved the status quo. They also chose inaction even when inaction still led to change. A matching task that required no action showed no status quo bias at all. The authors concluded that the bias is at least partly driven by a bias toward omission.
In daily life the two coincide, because leaving things alone is both a way of keeping them and a way of not acting. A person who never reviews a pension fund or a phone plan is doing both at once, and the ordinary case cannot say which one matters.
David Gal turned the loss account around in 2006, in Judgment and Decision Making. He argued that a general preference for the status quo is enough to account for the risky bet premium, the endowment effect and status quo bias itself, so that a separate loss aversion principle is unnecessary for them. His argument rests on two basic principles, that motives drive behaviour and that preferences are often fuzzy and ill defined, which he says imply a tendency to stay with the status quo.
Defaults are a related but separate matter. A pre-selected option is taken more often partly because people read it as advice, a point set out in Why You Never Change the Setting, and firms can build on that persistence, as The Sludge That Keeps You Subscribed shows. Loss Aversion and the Bet You Turn Down covers the mechanism Kahneman proposes.
The term is safe as a description and weak as an explanation. To say that status quo bias made someone keep a plan restates the observation as a cause, and the three accounts here would each fill in that cause differently: a loss weighed too heavily, an act avoided, or a preference that was never strong enough to move the person.
Kahneman's chapter derives the bias from loss aversion. Gal derives the apparent effects of loss aversion from the bias. On my reading, the two accounts predict much the same behaviour in the settings where both have been applied. That is why the argument has outlasted the first experiments.
Common questions
What is status quo bias?
Status quo bias is the tendency to keep the current option more often than its merits justify. Samuelson and Zeckhauser named it in 1988 after decision experiments and data on faculty choices of health plans and retirement programs. Researchers disagree about the cause, whether loss aversion, a bias toward inaction, or a general preference for the status quo.
Who discovered status quo bias?
William Samuelson and Richard Zeckhauser introduced the term in a 1988 paper in the Journal of Risk and Uncertainty on status quo bias in decision making. Kahneman, Knetsch and Thaler linked it to the endowment effect and loss aversion in 1991, and Xiao and colleagues replicated three of its four tested scenarios in 2021.
Is status quo bias the same as loss aversion?
No. Kahneman's account in Thinking, Fast and Slow derives the bias from loss aversion, but Gal (2006) argues the reverse, and Ritov and Baron (1992) found that a bias toward omission explains part of it. The terms describe related patterns, and which one causes the other is still disputed.
Sources
Kahneman, D. (2011). Thinking, Fast and Slow. New York: Farrar, Straus and Giroux. Seed book; vault hub Books/Thinking Fast and Slow.
Samuelson, W., & Zeckhauser, R. (1988). “Status quo bias in decision making.” Journal of Risk and Uncertainty, 1(1), 7-59. doi:10.1007/BF00055564 https://doi.org/10.1007/BF00055564
Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). “Anomalies: The endowment effect, loss aversion, and status quo bias.” Journal of Economic Perspectives, 5(1), 193-206. doi:10.1257/jep.5.1.193 https://doi.org/10.1257/jep.5.1.193
Ritov, I., & Baron, J. (1992). “Status-quo and omission biases.” Journal of Risk and Uncertainty, 5(1), 49-61. doi:10.1007/BF00208786 https://doi.org/10.1007/BF00208786
Gal, D. (2006). “A psychological law of inertia and the illusion of loss aversion.” Judgment and Decision Making, 1(1), 23-32. doi:10.1017/S1930297500000322 https://doi.org/10.1017/S1930297500000322
Xiao, Q., Lam, C. S., Piara, M., & Feldman, G. (2021). “Revisiting status quo bias: Replication of Samuelson and Zeckhauser (1988).” Meta-Psychology, 5. doi:10.15626/mp.2020.2470 https://doi.org/10.15626/mp.2020.2470