Brexit and the psychology of loss

21 March 2017 -

Brexit divided politicians, friends, family and colleagues. But how can the psychology of loss explain our reactions towards this outcome?

Adrian Furnham

The psychology of loss has been very relevant to the Brexit debate in two ways.

The first concerns what is technically called Loss Aversion. This concept was expressed in prospect theory, which won the Nobel Prize in economics for a psychologist (Daniel Kahneman) and was the midwife of behavioural economics.

The idea is that people are seriously loss averse. The same amount of pain and the same amount of pleasure have very different impacts. Most studies suggest that fear of losses (and consequent behaviours) are twice as powerful, psychologically, as gains.

We treat losses and gains quite differently. People’s decisions are powerfully influenced by how options are framed and situations described. They are much more willing to take risks to avoid losses and much more conservative when it comes to opportunities for gain. This leads to risk aversion.

So the marketers say, talk of what your prospective client will lose if they don’t buy, rather than what they would gain by buying. The message is: doing nothing is costly.

There are many studies that confirm the tendency to loss aversion. A very simple one concerned a bank that tried to persuade its clients to use their credit cards more often. Half the customers were told about the benefits of card use: the usual sort of thing…air-miles, discounts, prestige. The other half were given the very clear “use it or lose it” dictum. The second approach worked much better than the first and was much cheaper and easier to put in place.

Perhaps Cameron’s Nudge Unit gave advice about loss aversion in their Remain campaign. But they seemed to have rather overdone it. All we heard was loss, fear and pain. There seemed precious few political (as opposed to economic) arguments for staying. Indeed it became Project Fear and the Brexiteers made fun of this aspect of the campaign. Perhaps the prognosticators of doom protested too much.

The findings about attitudes to loss appear to be robust and are not included in the concern about poor replication of results in psychological research. Maybe the lesson should be moderation and balance: carrot and stick, reward and punishment, loss and gain. Loss aversion is powerful but it is not enough on its own to persuade people.

The second loss phenomenon illustrated by the Brexit debate comes from a very different area: the psychology of death and dying. It was manifest by the particularly acrimonious debate, not among politicians in the media, but among family, colleagues and friends. People reported that no issue in their memory had caused so much anger and fury as the referendum. Old friends broke up, happy relations were severed. Some offices even banned mention of the topic. Polite British “if you say so” indicators of disagreement translated into furious name-calling screaming matches.

Many people are familiar with the famous ‘stages of grief’ model. The idea is that we all go through a series of reactions to the pain of loss, whether it is in anticipation of our own death or a reaction to the death of others. Indeed these stages have been shown to apply to all sorts of loss: job loss; divorce; emigration.

There are various versions of the idea and various names given to the stages: denial, anger, bargaining, depression and acceptance.

Of course the academics have disputed the number of stages, their labels and most of all whether all or even most of us go through this pattern in reaction to loss. Do some people “skip a stage”, or become “stuck”, unable or unwilling to move on?

However the theory seemed to come alive after the Brexit vote was announced. Certainly there was the first stage, denial, especially among the metropolitan elite. This cannot be true. There seems to be some mistake. We simply cannot have voted to leave!”

Denial is soon replaced by fear. Fear of the unknown; fear of being able to cope with less. Anxiety is manifest in moodiness and sickness; in gossip and rumour.

But then there was, and is, the anger. Always a difficult emotion for the dying and the grieving; common and expected in divorce; well known in the workplace. It’s not difficult to find targets who become, as the psychoanalysts say, “bad objects”. Think of Nigel Farage and the now surprisingly camera-shy Boris Johnson.

Anger is easier to express in groups and it mobilizes people. Anger is alive and well in the social media. The Brexiteers have kept rather quiet, perhaps because of all those issues around “virtue signalling”, meaning that it is OK to be a Remainer because of the supposed moral justness of their cause as opposed to the “basket of deplorables” who voted to leave.

The anger is manifest and will no doubt continue. But whereas it once seemed to characterise debate among politicians, it is now much more obvious in the pub.

The theory says the next stage is bargaining and, with announcements in Birmingham, that has just begun. This is not only Mrs May against the European forces of darkness and therefore is likely to last a long time. And after that, according to the theory, will come depression followed by, happily, acceptance.