Sharpe's Opinion
Wednesday, 10th Dec, 2008
Daniel Finkelstein Urges Brown to Call an Election
The idea of loss aversion has become an important one in economics. People’s attitude to an offer depends strongly on how they view the status quo. And most commercial outfits realise this instinctively. A retailer, for instance, understands that they are better off marketing a product as “£5 off, if you bring in this coupon”, than they are telling customers without a coupon that they will be fined £5. It is all about framing the question.
Which is why Mr Brown should hold a general election. Now. Or as soon as Chanukkah is out of the way. (It’s eight nights incidentally, but it will be over before the new year starts)
Because people are loss averse, they are least inclined to take risks when a loss is in prospect. When a loss has already been incurred, they are more willing to take risks in the hope of making a gain. So if you want to run an election campaign arguing that it is no time for a novice, no time to take risks, you want to hold it while losses are still in prospect.
More of this, please.
Via A. Tory