Hedonic impacts of gains versus losses of time: are we loss averse?


Faculty: Sumitava Mukherjee

Summary

The road navigation app suggests a route and you go for it. Imagine that you expect or know that the drive is going to take 15 minutes, but due to different road / traffic conditions, you reach earlier within 10 minutes or later in 20 minutes. What would have more effect on your feeling / emotions? a gain or a loss of 5 minutes. What if the gain or loss is of 30 minutes? According to Prospect Theory, losses loom larger than gains. However, we find, just like money; loss aversion for time is also dependent on magnitudes. There is virtually no loss aversion for lower time periods and some inking of loss aversion only at higher magnitudes. This calls in question the near tautological claim that losses loom larger than gains.

Abstract

A large part of our daily activities involves judging the psychological value of time. This study tested a previously less explored aspect about whether people are loss averse for time – i.e. do losses of time loom larger than corresponding gains? Using comparative hedonic judgments, the impact of prospective gains versus losses of time was examined for common contexts like waiting and local travel based on suggestions by typical navigation apps. The magnitude of time was varied without an explicit reference point (experiment 1) and with a clear reference without any overt consequence (experiment 2). The contextual nature of outcome along with magnitude was also manipulated (experiment 3). Prospective gains loomed as larger or equal to losses for low magnitudes while there was a trend of losses to loom larger than gains only for high magnitudes of time. These results weaken the empirical evidence for loss aversion and highlight its magnitude-dependent nature thus presenting a nuanced perspective to the affective psychology of time.

Mukherjee, S., & Srinivasan, N. (in press). Hedonic impacts of gains versus losses of time: Are we loss averse? Cognition and Emotion doi:10.1080/02699931.2021.1907741