Why are we afraid to change? A scientific perspective.

If you are reading this, it means that you watch motivational speakers say a lot on why people are not able to change. The most common answer that I hear is — “because we are too attached to who we are!” This is totally correct, and I have no reason to doubt it. What I am interested, is in the quantity by which we are afraid to change.

I watched the movie Rocketman a week ago. In it, Wilson says to Elton John — “You gotta kill the person who you were born to be, in order to become the person, you wanna be.” Powerful lines, which reiterates that it’s difficult for us to change. In retrospective, Elton John might have pushed this idea farther than he should have.

Artist know this very well, for they are always trying to reinvent themselves and trying to find their own style which can be recognised just by looking or hearing it once. A great example is Picasso; I don’t like his work, but strongly believe that he has his own unique style.

If it was easier to change than to stay where you are, every artist would become a Picasso or a Mozart.

So how difficult is it to change?

Assumption: -

I must assume that change is a risk of losing something and gaining something less in value. Next we would need to find out that value and quantify it.

Of all the sciences, Economics is very deeply concerned with choices and how we value them relative to one another.

Economics defines value in terms of ‘utility’. Utility sounds like a cold word, probably one of the reasons Economics is called a ‘Dismal Science’.

A better word for utility is ‘satisfaction’ which is kind of neutral. An even better word is happiness. So, when an economist says, that for him Choice A and Choice B have utility of 10 and 5 respectively, it means that picking Choice A makes him twice as happy as Choice B.

So, whenever I say ‘utility’ think ‘happiness.’ Easy-peasy!

As it turns out when Bernoulli was thinking about all this in 1738, he thought about the ‘happiness’ of selecting one choice over others.

Another thing that Economist assume is that, every person is a utility maximiser, which means that given a certain no of choices, we choose the ones that make us most happy. Sounds reasonable doesn’t it?

Well it turns out that this assumption is not totally correct and that most people do not make choices all the time that are best for them. But that is a totally different topic of discussion and it is a separate field of study.

Inspiration: -

I was reading the book ‘Misbehaving’ by Richard Thaler when the idea behind this blog hit me.

In the 1700’s, Bernoulli was trying to think about why people stop gathering wealth eventually. He was thinking of a different problem, but his overall idea was similar to what we discuss next.

As an example, let us suppose that the utility(happiness) of getting a million dollars to me is 10. The utility of getting another million $’s would be 9 and it will keep decreasing till it becomes close to zero. Following this, most people would be satisfied with a certain amount of wealth because the change in utility after a certain amount of wealth is nearly zero.

For Bill Gates a million dollars would not increase his utility by much, but for a poor (compared to Gates) guy like me, getting a million $’s would increase my utility by a lot i.e. make me very happy.

So, Bernoulli proposed a curve like this: -

If you look closely, when income increased from zero to $10k per month, utility increased by 45. When income doubled to $ 20k pm, utility changed by 20(65–45). Even when the income tripled to 30k $ pm, utility increased by 30(75–45)

In other words, the higher our income is, the more risk averse we become. That is, if given $10k or a 50 % chance to win $20k, we would choose the first one.

Economists like to call this the “diminishing marginal utility of wealth”, which means that the more wealthy you are, the more satisfied or risk averse you become.

What this curve also means is that we are 20(65–45) units happy to double out income from $10k to $20k and 20 units sad if we half our income from $20k to $10k.

For centuries economists agreed that this is the case. Then came two great scientists Daniel Kahneman and Amos Taversky.

By doing a lot of experiments on people they found out that the utility curve is different.

It looks like this: -

If you look at it closely, people hate losses more than they love wins. So, if someone is 20 units happy if their income is doubled, they are ~40 units unhappy if their income is halved. This isn’t like what Bernoulli thought.

Can it be extended to any other choice?

I think it can, because ultimately, we are choosing according to change in utilities. So it does not matter if it is increasing your wealth or travelling to a distant land or leaving the job you don’t like. They are all choices and each of them can be assigned utilities.

So, think about any one of the choices mentioned above. Suppose you want to quit your job and start a business of your own. You have 2 choices, 1st is to stay where you are comfortable i.e. getting a monthly income or quit and start a business. Note, if you quit not getting the monthly income will feel almost twice as bad as getting it.

Hence you don’t change because loss is twice as demotivating as gain is motivating.

Solution: -

The only solution is to take the risk and know that it will hurt twice as bad if the risk doesn’t pay off. Most people don’t find success in their 1st attempt. I was talking about Picasso and Mozart earlier. Both them were highly underappreciated and underrated during their lifetimes and became famous only after their death.

If you want to change you need to feel pain and comfort yourself by remembering that this is the only way. Easy-peasy!

Sounds stoic, doesn’t it ?

I do hope that you become what you want and people appreciate you for it. But even if people fail to appreciate, it is still worth it!

References: -

1. Kahneman, Daniel, and Amos Tversky. “Prospect Theory: An Analysis of Decision under Risk.” Econometrica, vol. 47, no. 2, 1979, pp. 263–291. JSTOR, www.jstor.org/stable/1914185. Accessed 4 Oct. 2020.
2. Thaler, R. H. (2015). Misbehaving: The making of behavioral economics. W W Norton & Co.
3. Kahneman, D. (2011). Thinking, fast and slow. Farrar, Straus and Giroux.