Status Quo Bias

Posted in Principles

“There’s no place like home.”

This memorable quote from The Wizard of Oz sums up how many of us feel about home – it’s comfortable and familiar. But beyond the physical place, we often unconsciously consider other things “home” too, such as beliefs, previous choices, and set routines. These things form an individual’s status quo, which we tend to prefer to stick to. As a result, we often “choose” pre-set options even when many other options are available.

Even arbitrary options that set the status quo – for example, default settings – play incredibly important roles in decision-making, and can influence what people choose and what eventually happens. One of the many studies on these effects gave people a hypothetical inheritance from a great-uncle and asked them whether they would like to invest in a moderate-risk company, a high risk company, treasury bills or municipal bonds. For different groups researchers told people that a significant portion of the inheritance was already invested in one of the options, effectively setting an arbitrary status quo. Even though there were no costs to switching away from the randomly set status quo option, it increased in popularity well beyond the personal preferences of the individuals.

If we want people to be able to make unbiased choices, we must be careful not to set one option as the status quo. If there is already a status quo, we need to recognize that people will be less likely to switch to an alternative even if they would have chosen it in the absence of the status quo.

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