The Framing Effect

In this video I introduce Tversky and Kahneman’s work on the framing effect and how consideration of benefits or losses can influence the choices that people make and their willingness to take risks. I consider a few everyday examples of this, then consider how the framing of default options may also influences the choices we make, as demonstrated in Eric Johnson and Daniel Goldstein’s work looking at opt-in and opt-out organ donation programs in different countries.

Daniel Kahneman – Thinking, Fast and Slow (Amazon) http://amzn.to/2nAWnop

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Video Transcript:

Hi, I’m Michael Corayer and this is Psych Exam Review. In this video we’re going to look at another effect that was studied by Amos Tversky and Daniel Kahneman. So for this I’d like you to imagine a hypothetical situation that we have a rare virus outbreak and it’s going to affect this 600 person village. So what you have to do is decide one of two programs in order to confront this situation. If you choose program A then 200 people will be saved. If you choose program B then there’s a one-third chance that everyone will be saved and a two-thirds chance that no one will be saved. So which of these programs would you adopt?

Now half of the participants in Tversky and Kahneman’s study received the same question about this rare virus outbreak in a village of 600 people but the program options that they received were slightly different. What they received said okay if you choose program A 400 people will die. If you choose program B then there’s a one-third chance that no one will die and a two-thirds chance that everyone will die. Which program would you like to choose?

Now you can think about your own answer when I first framed this question. Of course the participants didn’t know that there were different versions of these forms. You can think about which program sounds better in either case. What Tversky and Kahneman found is that in the first situation Program A was popular. People liked saving the 200 lives.

In the second version, same question and mathematically identical answers, right, you can probably notice that, you know, program A is the same thing here, program B is the same thing but in the second case program B was more popular. So what’s going on?

Well, what’s the difference between these framings here? How are they, how are the programs framed in different ways? Well, the first framing is all about people being saved and the second is about people dying. So based on this Tversky and Kahneman suggested that when it comes to thinking about benefits people like to be certain. They like certainty. They’d like to know that this is what I’m getting, this is the benefit of this program: 200 people are going to be saved. That sounds good.

But when it comes to thinking about losses, people want to avoid losses and they’re willing to take risks to avoid losses. So we start thinking about the people that are going to die, you’re thinking about the losses and as a result you’re willing to take riskier options. That’s why program B is suddenly more popular because people like, you know, I don’t like to think about 400 people dying, I will take a chance to try to save everyone. I will risk it, I’ll roll the dice and see what happens. Maybe we can save everyone, maybe we can avoid these losses altogether.

Ok so this shows how the way that we frame choices, the way we describe them, the words that we choose, and whether we’re thinking about the benefits or the losses influences our decision making. We see this all the time in daily life. You see medications, for instance, focus on their benefits. They tell you that they have a you that they have a 30% failure rate. Or when you go to a gas station would you rather see a sign that there’s a cash discount if you pay with cash or that there’s a credit card fee? Do we think of this as a reward for using cash, a benefit, or do we think of it as a loss, as a penalty for using a credit card? Maybe that will influence which people prefer.

We also see this in politics. We see that the way that certain programs are described will influence whether people like them or not. Do we decide that a program should be described as helping the needy or is it providing welfare, which is a term that has negative connotations? People want to avoid a welfare state and so they may find that they like a program that provides assistance to the needy and they don’t like a program that’s providing welfare, even though the program may be exactly the same thing.

So how we frame things matters. It influences the choices that people make and how we frame the default options also matters. So now we’ll look at a study by Eric Johnson and Daniel Goldstein and what Johnson and Goldstein did was they looked at organ donation programs and they looked at whether the program was an opt-in program or an opt-out program.

So what that means is in an opt-in program you have to choose to be a part of the organ donation program. In other words, you’re not in the program until you check that little box that says I want to join the organ donation program. In an opt-out program it says you’re in the organ donation program. If you don’t want to be in the organ donation program then you have to check this box that says I do not want to be in the organ donation program.

So the question is, how does this influence what people choose? The answer seems to be that if it’s an opt-in program, enrollment rates are lower. Countries that have an opt-in program tend to have lower rates of enrollment in their organ donation programs. Countries that have an opt-out situation where you’re part of the program unless you choose not to be tend to have much higher rates of enrollment in their organ donation programs.

So what this demonstrates is that how things are framed, how we see things as a default option of being in this program or not, has an influence on the decision we make. This is a decision that, you know, is tough to make. Perhaps I mean there’s, you know, philosophical and religious implications of thinking about what’s going to happen to your body after you die. I mean that might be a hard question to try to even begin to think about and so rather than think about it the easier choice is just let this form decide. The people who designed it, let’s just go with whatever happens and then I don’t have to think about it. Then I don’t have to consider all the implications of this.

Now this also means that we’re sort of sacrificing our free will a bit to the people who design the forms, right? We tend to just go with however things are framed and we tend not to think about you know whether or not we really want to be a part of this program or not. Now of course you can say for yourself “well that’s how other people behave and not me. I would think about it and I would have my choice of whether I’m in the organ donation program or not” but if we look at the average you’re probably like most people and you probably won’t actually do that.

You’ll tend to go with the crowd just like many other people do. Ok, so this shows how framing really does matter and if you think about how we design questions, how we design possible programs, whether we focus on the benefits or the losses and that’s going to influence the decisions that people make and how risky people might want to be in making those decisions. I hope you found this helpful, if so, please like the video and subscribe to the channel for more.

Thanks for watching!