Posts Tagged: Loss Aversion



Loss Aversion in Public Transportation

When a public transit line is put out of service for a period of time for upgrades we lose the ability to use that line. It doesn’t matter how much better the line will perform in the future, we still get angry and frustrated because we value the loss of our line more than we value the increased service in the future.

Or when we consider congestion pricing on roads, we enrage drivers who lose the privilege of free access to roads. Doesn’t matter that the roads will be clearer, thus creating substantial time savings. Drivers will still resist the change because they value the perceived right to free roads (and the tolls they avoid) more than than the value of decreased commuting times in the future.

Or when we claim a traffic lane for public transportation, widened sidewalks or bike lanes we further anger drivers who’ve lost precious road space. And again, it doesn’t matter that those concessions will make urban mobility generally better for everyone – including the drivers. Ironically, even if the loss of road space will ultimately lead to increased mobility, those drivers will lament the loss of geography far more than the increased mobility.

And when we remove or change locations of a bus or streetcar stop we often find our plans scuttled by a vocal group of residents who are forced by our policy to walk an additional two minutes from their house to their stop. Doesn’t matter that such a shift will decrease travel times for everyone along the route significantly. Doesn’t even matter that the policy decreases travel times for the wronged residents because these residents value those two minutes in the present they know far more than the imagined time savings in an uncertain future.

The phenomenon described above is known in economics circles as loss aversion and refers quite simply to people’s preference of avoiding losses over acquiring gains. Doesn’t matter if the gain is greater than the loss, people will still opt to avoid the loss.

It’s a phenomenon we don’t tend to apply to the field of public transportation planning all that often. But maybe we should.

In transport planning we sometimes ignore the human component of what we’re trying to accomplish. We get angry when what appears to be a completely logical and beneficial plan gets derailed (sorry) by a vocal minority who just can’t seem to understand the multitude of benefits our plan provides.

And that’s our mistake in thinking, not theirs’. You can always spot the frustrated policy-maker or transport planner, done-in by his own misunderstanding of the human condition, when they complain about people “just not understanding.

It’s not that people don’t understand your plans, it’s that you don’t understand people.

It’s not that people don’t understand – it’s that they don’t care. Or maybe it’s not that they don’t care, it’s that they don’t value what you value. Quite simply, people value whatever they’re about to lose far more than what they’re about to gain. This isn’t about nimbyism or short-sightedness or the ignorant, unwashed masses; this is simply a case of human beings behaving like human beings.

It may seem illogical, but that’s they way it is.

Logical or not, that’s people. Deal with it.

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