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Loss Aversion & Trains: The Psychology of Gaining and Losing an Aisle

I recently took the train from Chicago to New York. It was long, uneventful and fairly dull. I got lucky though. A few hours before we arrived in New York’s Penn Station, the person who had been sitting next to me since Chicago got off the train; I suddenly had the whole aisle to myself. There was so much space I might as well been in first class. This got me thinking: what if I began my trip with all that space, and gained an aisle mate a few hours after Chicago? Would I have had the same reaction if the opposite happened?

I think it’s obvious – absolutely not. I would’ve been much worse the other way around. But why?

As humans, we have a deep psychological tendency to handle equivalent gains and losses differently. Almost always, a loss feels more detrimental than an equivalent gain. For example, most people find that losing a $50 bill is more agitating than finding a $50 bill is gratifying. Psychologists call this tendency loss aversion, and it helps explain a lot of irrational economic behavior. Bad investors exemplify this. Often times when an investment goes down, they tell themselves that they will sell it as soon as it goes back up. But when it continues to drop, their loss aversion kicks in and causes them to hold onto the investment even longer, which ultimately results in losing a lot of money. This is referred to as “chasing a loss,” and it typifies our tendency to assess equivalent gains and losses differently.

Loss aversion is connected to another psychological tendency called framing, which anyone familiar with the psychology of decision-making should know. Here are a few examples: would you rather buy meat that is 85% lean, or 15% fat? Would you rather opt for an operation that has a 90% survival rate, or a 10% mortality rate? Would you rather get a $5 discount, or avoid a $5 surcharge? You get the idea. We don’t assess equivalent losses and gains equally.

Back to my train ride. The question that kept me up was not if I would have reacted differently to my seatmate leaving late versus arriving early, it was why I would have reacted differently. I think the answer rests in my loss aversion. The reason I felt such a sense of joy when he left rests in the fact that I gained something – the aisle. On the other hand, I would have been annoyed if he would have sat down a few hours after we left Chicago because I would’ve felt as if I lost something – the aisle. Here’s the key, in both scenarios I would have experienced the same amount of time with the aisle to myself. The only difference is that in one case I gained something and in the other case I lost something.

The other question is whether or not loss aversion is an “irrational” behavior. If our standard for rational behavior is the Adam Smith version, then yes, loss aversion would be irrational. However, in the hunter-gatherer lifestyle to which our genetics evolved for, loss aversion seems perfectly rational. For example, let’s say you are on the African savannah and you have a stash of food you’re trying to protect. As one author says, “having twice as much food is not necessarily twice as valuable; food is perishable and one can only eat so much of it.” In this case, it would be a good idea to treat equivalent gains and losses differently; it is ecologically rational as some have said. In other words, “the brain’s built-in loss aversion bias is probably a carryover from the days our primate ancestors made decisions that involved resources that didn’t obey the tidy linear relationships of monetary wealth or the simple maxim, the more, the better.”

Clearly, loss aversion has its pros and cons, and whether it is rational or irrational depends on what your standards are. But it does help to explain a lot of things that aren’t necessarily related to economics, like my experience on the train.


Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk Econometrica, 47 (2) DOI: 10.2307/1914185

3 Comments Post a comment
  1. Human beings are very strange about the way they look at things (85% lean vs 15% fat actually mean the same thing). In addition of loss aversion, this is a game of semantics that advertising executives understand quite well.

    September 19, 2011
  2. Loss aversion is a great topic to study and know about; in fact, I just posted about it on my own blog. Check it out and let me know what you think! http://moolamom.com/2016/04/25/its-junk-but-its-my-junk/

    April 25, 2016

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