Status Quo Bias and the Coin Flip

I have had the same haircut forever (a simple, A-line bob if you really wanted to know). When I go to cut my hair, I think: “I’m going to do something different!” but then I go do the exact same thing. This is an example of status quo bias. We like things to be the same and any deviation from that point is considered a loss. What if I hate my hair? What if the guy who is running against the incumbent is going to be worse than that guy? What if I quit my job and regret it? It’s easier to stay the same. 

Flashback 12 years ago: I’m on a study abroad in London and the Vidal Sassoon Salon is offering free haircuts if you’re willing to get anything. YES! This is my chance to be crazy! I walk in. Every single person has crazy hair. My own guy has a tight Afro with ringlets hanging off of it like a disco ball. It was amazing. I wonder what I’ll get!

Making decisions is hard, especially when they lead to change. What if, for every decision, we used a basic coin flip?

• Heads, I’ll go to the salon and get a crazy haircut.
• Tails, I’ll stick to the a-line bob.

Simple, right? But what about big choices? 

• Heads, I’ll quit my job.
• Tails, I’ll stick it out.
• Heads, I’ll move at least 500 miles away.
• Tails, I’ll stay right here.

Would you actually be willing to let the coin decide for you?

Luckily, economist Steven Levitt (co-author of Freakonomics, Think Like a Freak, and When to Rob a Bank) ran an experiment testing this very thing. He set up an online quiz where participants decided what heads would mean and what tails would mean and then followed up to see if A) they actually followed the coin flip and B) how happy they were with the decision.

Over 20,000 coins were flipped. What did they discover?

• “The coin toss only influenced decisions made within the first two months of the coin toss; later changes were unrelated to the outcome of the toss.” LESSON: If you’re going to force yourself to make drastic changes, it’s better to do it now rather than later. You might chicken out!
• “[T]hose who report making a change in follow-up surveys are substantially happier than those who do not make a change. This is true for virtually every question asked both two months and six months later. This correlation does not, of course, necessarily imply causality. Those who make a change differ from those who do not make a change on many dimensions.” LESSON: We think we’ll be happier maintaining the status quo, but change makes us happier!
• “[W]hen it comes to “important” decisions (e.g. job quitting, separating from your husband or wife), making a change appears to be not only correlated with increased self-reported happiness, but also causally related, especially six months after the coin toss. Those who were instructed by the coin toss to make a change were both more likely to make the change (as noted above) and, on average, report greater happiness on the follow-up surveys.” LESSON: Forcing ourselves to make big changes CAUSES self-reported happiness!

Now, there’s a caveat here. Let’s return back to my story in London:

My hairdresser washes my hair and then spends a solid five minutes examining it from all angles. Yes! He’s going to buzz the right side, and give me an edgy, uneven Mohawk! He picks up the scissors and declares: “Your head and hair are absolutely PERFECT for an A-line bob.” *deflate*

True story. I walked out of there with a free haircut and my usual A-line bob.* Was I disappointed? YES! This is the point:

The people that assigned that coin flip were ready for a change. They wanted an excuse to change so badly that they typed in: “Quit My Job” and flipped the coin. When the coin told them to NOT make the change, they were disappointed, just as I was when I didn’t get my crazy haircut!

So there is definitely bias in the sample, but the point is still good: Sometimes we think we’ll be happier staying where we are, when we’d really be happier taking the leap we’ve been thinking about.

You are the ideal candidate for a coin flip if:

1. You immediately knew what you would type in for your coin flip.
2. You’ve been thinking about it for awhile.
3. You want an excuse to do it and the only thing holding you back is fear.

Ready? Go FLIP A COIN! (You even get to choose which type of coin you want to flip!)

Better yet, if you fit all of the criteria listed above, JUST DO IT!

*I’ve used this as a declaration that I will forever have A-line bobs and Mr. T has gotten pretty good at them, despite hating the job of cutting my hair.