Sunday, October 13, 2013

Sports fans and loss aversion

Population survey studies have found that 80% of respondents (I think done in the US) have a tendency to cheer for the underdog.  This actually went beyond sports, it included pulling for a small business against a big one, a new artist against a famous one, and other underdog/favorite preferences. 

One hypothesis for how this could have adaptively evolved is one of my favorite topics – loss aversion.  From a purely probabilistic point of view, the brain is wired to only notice rare events.  When things happen just as expected, there is nothing worth learning so we have evolved to pay very little attention or emotion to these common/expected events.  So when the favorite wins, even if we were cheering for the underdog, we don’t experience much of an emotional loss.  It is what was expected to happen.  On the other hand if the underdog wins, your brain registers a rare/unexpected event and your brain takes notice.  You get a big positive rush of dopamine. 

The reverse happens if you cheer for the favorite.  If the favorite wins you feel good, but it is dampened by the fact that is was expected.  But if your team loses it is a rare unexpected (hence learning) event and evokes a large negative emotional reaction. 

So what about the 20% who have a dispositional tendency to cheer for the favorite?  There is no clear evidence but I like Steven Levitt’s (of Freakonomics fame) hypothesis.  He is one of these 20%.  He grew up in a small town and was one of the few people expected to succeed in the modern dog-eat-dog world.  So he grew up with a personal investment in the feeling that the favorite should succeed.  The whole idea that chance can flip this on its head is a risk to his status in life.  So he has a visceral instinct that fairness requires that the favorite should get exactly what he/she deserves.  The underdog winning might be a learning experience, but it is definitely not a positive or happy one.

So think about your dispositional tendency.  Throw out the teams you cheer for because they are your college team or hometown team.  Imagine a mythical Team A v Team B where everyone expects Team A to win.  What does your gut prefer, Team A or Team B.  If it is Team B, you are one of the 80% who is protecting your emotional health by minimizing total future sadness.  But if your gut prefers Team A, you probably have been the favorite at important points of your life and have a personal stake in the favorite winning.