Status Quo Institution Bias

New studies show existence and positive purpose biases.  First, we presume that what exists is better that what is not:

People treat the mere existence of something as evidence of its goodness. Studies 1 and 2 demonstrate that an existing state is evaluated more favorably than an alternative. Study 3 shows that imagining an event increases estimates of its likelihood, which in turn leads to favorable evaluation; the more likely that something will be, the more positively it is evaluated. Study 4 shows that the more a form is described as prevalent, the more aesthetically attractive is that form. … Mere existence leads to assumptions of goodness; the status quo is seen as good, right, attractive, tasty, and desirable.

Second, we presume the universe is designed to achieve broad positive purposes:

Children in first, second, and fourth grades were asked whether rocks are pointy because they are composed of small bits of material or in order to keep animals from sitting on them. The children preferred the teleological explanation. … Recent work suggests that it’s not just children: [researchers] found the same tendency to ascribe purpose to phenomena like rocks, sand, and lakes in uneducated Romany adults. They also tested BU undergraduates who had taken an average of three college science classes. When the undergrads had to respond under time pressure, they were likely to agree with nonscientific statements such as “The sun radiates heat because warmth nurtures life.”

For social institutions, these biases combine into a perfect storm: we assume our social institutions are well designed to achieve laudable broad purposes, rather than being more accidental arrangements where we each achieve private purposes holding constant others’ behavior.

Yes things that we have adapted to our needs are probably better than random other things that could be there instead.  I’d rather keep the current parts in my car than replace them with other random objects.  And yes when institutions have varied from place to place the better ones have probably spread further.

But even so we seem far too eager to believe that our current institutions are so well designed that there is little reason to consider alternatives.  This error is encouraged by the above biases, and by the fact that we can show loyalty to our local culture by believing it has superior institutions.  But be warned: it is nevertheless an error.  (And yes, I’ll tediously argue yet again that prediction markets could help correct this error.)

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  • Scott

    I’ve started to think that school, or at the very least primary/elementary/middle school, is such an institution. As much as we may dislike school when we’re young nearly all of us at some level accept it as a necessary institution because it seems reasonable that the traditional method (homework, tests, worksheets) is the only way to learn the subjects. But if we look at the way we learn nearly everything else that is complicated/semi-complicated-the rules of sports, cooking, riding a bike, how to use a computer/navigate the internet-we notice a completely different knowledge acquisition process going on.

    I don’t think that school as we know it is long for this world.

    • michael vassar

      I think it’s long for the world despite not being functional. The point of the post is that people preserve pointless institutions.

      I agree with this post, but generalize it further. People perceive agency everywhere, whether it exists or not. Real agency looks like optimization pressure. When looking at objects that they can’t make themselves, people MASSIVELY overestimate the total optimization pressure that goes into the design of any given object.

    • http://www.abs-usa.com Floccina

      Scott I strongly agree with you on that and further we make excuses for some subjects we need teach Latin or factoring of quadratic equations though very few people will ever use them. People will make the excuse that we must teach Latin because it expands vocabulary. Has it been proven that Latin is a better way to expand vocabulary than teach more vocabulary. Do the Latin teachers even focus on expanding vocabulary or do they teach it as an academic exercise full useless declension and conjugation? People say but factoring quadratic equations teaches thinking skills but I ask could we learn to think skill while leaning something useful?

  • improbable

    Well when evaluating social institutions this isn’t a bad policy. It’s a safeguard against being sold an untried utopia. A mental allowance for unintended consequences.

    It was easy for Marx to point out the flaws in the world of his time, and for his followers to dream up a world without those flaws, which of course sounded like a pretty good idea.

    The environmental movement believes in a very strong version of this, in which we should be much more careful about disturbing an ecosystem. Often too strong I think but I can see why giving the present extra weight when comparing alternatives isn’t stupid.

  • Bill

    Why would predictions markets work if there are biases towards existing states?

    • http://michaelkeenan.blogspot.com Michael Keenan

      Prediction markets reward accuracy. Biased players go broke and exit the market; unbiased (or less biased) players remain, and are richer.

      Prediction markets create a financial incentive to overcome bias.

      • Bill

        Some prediction markets reward with money; others do not. If you have a fixed budget you can lose, point taken.

  • Different Bill

    People treat the mere existence of something as evidence of its goodness.

    To demonstrate that this is a bias, you have to combine it with proof (or at least evidence) that the existence of a social institution is not evidence of its goodness.

    Will that be the subject of the next post?

    • vanveen

      it is weak evidence that it is better than some of the available alternatives. it is not strong evidence that it is better than every possible alternative. what robin is saying is that we mistakenly believe that which exists is almost definitely better than everything that could possibly exist, and that’s undoubtedly wrong.

      • Different Bill

        Every possible alternative?

        To believe that current institutions are better than an institution you suggest to me, I only have to believe that current institutions are better, on average, than institutions people like you go around suggesting to people like me (to be a little careful, enough worse that it is not worth my time to figure out if this is an exception). For most values of you and me, this strikes me as not only a reasonable belief but almost a mandatory one. Describing this utterly reasonable belief as a bias (and meaning something derogatory by it) is unhinged. Most ideas suck. Original ideas especially.

  • http://cob.jmu.edu/rosserjb Barkley Rosser

    Hayek, among others, has argued that institutions reflect evolutionary processes, something Robin and some others may deny (drawing on Dawkins or somebody), but if he is at all right, then there may be some basis for at least some status quo bias, especially if the status quo is clearly not awful. There is risk in the unknown and efforts to change it may simply bring something worse, which we have certainly seen happen on quite a few occasions, as has been pointed out by others already. That said, there is certainly no reason to take a Panglossian position that we are always living in “the best of all possible worlds.” This is clearly ridiculous.

    • Steven Hales

      Institutions do arise from complexity. As relationships grow more interconnected in a market or markets regulators might seek to regulate risk of harm. For example size favors health insurers in the PPO market because of bargaining power with providers, the larger they are, the more patients they bring to the provider, the stronger their bargaining power on price. The sheer size of the insurer might lead to monopsony behavior so a minimum loss ratio is mandated by regulators to protect consumers from what might be popularly termed predatory pricing of health insurance policies. Since I am aware of this pattern of regulatory behavior would I be in favor or against a change in the way an insurance regulator operates if it would losen or tighten regulatory requirements. Again it would depend on which special interest I leaned towards. I don’t think that one could say goodness perception is a universal it is a nuance at best.

      I might have a favorable opinion of the anti-trust division of the justice department prior to the Microsoft case but after the Microsoft case I might have a less favorable opinion. Is my change in opinion about the charter of the division being violated or am I biased about an admired company? If I on the other hand was a Linux user I might applaud the action.

      Isn’t perceived goodness dependent on the behavior of the institution in relation to the perceiver’s point of view? You might have a favorable opinion of Medicare and Social Security if you are over 65 but a less favorable one if you are under 65. If you are under 65 and face supporting a parent in their retirement you might have a good perception of Social Security and Medicare.

      This all boils down to context of observer and observed.

  • http://www.rationalmechanisms.com richard silliker

    Bias arises from the symmetry of experience that a person abstracts in order to be comfortable. Those with the knowledge of the difference between the rational and the surreal have an advantage and are better off dealing with the asymmetry that arises in everyday life. As for existing states, when it is realized that states are an illusion and those conditions only persist, then change becomes easier.

    “But even so we seem far too eager to believe that our current institutions are so well designed that there is little reason to consider alternatives. This error is encouraged by the above biases, and by the fact that we can show loyalty to our local culture by believing it has superior institutions. But be warned: it is nevertheless an error. (And yes, I’ll tediously argue yet again that prediction markets could help correct this error.)”

    Yes, yes and yes to the above. However,the argument;
    ‘prediction markets could help correct this error.” Blow your brains out trying. I feel this is the wrong direction; we should move closer to the machine and I would suggest some study in the field of Ontology

  • http://akinokure.blogspot.com agnostic

    If we remember what social and institutional life was like before the transition to open and competitive political / economic orders, then overstating the downside of alternative-dreaming makes sense.

    He who thinks, might do.

    You couldn’t form limited liability corporations at will until the mid-19th C. in a handful of Western countries. Everywhere else at the time — and *everywhere* before then — imagining other ways of doing things and trying them out was not allowed. Well, you could try, but because that would’ve threatened the stability of a primitive social order (like in H-G’s) or a natural state (in agricultural societies), it would’ve been squashed — by violence.

    In that world, the benefit of imagining and experimenting with alternative social institutions would have been minuscule compared to the costs — the certain move by a broad coalition to crush the outside-the-boxers violently if it got too far, or even “milder” things like cutting off access to necessities even in the early stages, just to let the experimenters know who’s boss.

    It’s even worse because the costs are paid immediately (close to it anyway), while the benefits would have to be heavily discounted because they’d only materialize far into the future.

    If I were a curious, experimental person in that world, I too would tell myself that the status quo may not be perfect, but that it’s good enough.

  • http://retiredurologist.com retired urologist

    we presume the universe is designed to achieve broad positive purposes

    Richard Dawkins: “The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil and no good; nothing but blind, pitiless indifference.”

  • Drewfus

    The studies are similar to the way i think about motivation. The status quo bias exists due to the manner i believe benefit-cost is processed by the brain.

    We normally think of behaviour as occuring when benefit minus cost is positive, but i think a threshold has to be reached before behaviour is likely to occur.

    A behavioural event will occur thus:

    Benefit – (Cost + Threshold) > 0

    In a market transaction, the Aristotilean premise is that exchange will occur when the value of the exchange is equal to the cost for both partites. This is wrong, i believe. The value has to be greater than the cost for both parties. If party A offers $2 to party B in a $10 ultimatum game, perhaps the equation above is not positive for player B.

    Simply put, the status quo is prefered to a marginally superior alternative. The alternative has to be substantially superior to the status quo to be prefered.

    Benefit-cost threshold differentials are possibly per individual, and might account for differences in motivation, mood, optimism, depression, etc.

  • http://www.2blowhards.com Zdeno

    Case in point: If a fence existed along the Mexican/American border, how many would support tearing it down? I don’t get the impression that money is a major factor in the anti-fence camp. Besides, with legions of unemployed American unskilled labourers, and Krugman-reading bureaucrats aching to “stimulate” the economy, the actual cost of constructing it seems trivial.

    Cheers,

    Zdeno

  • Unnamed

    Robin, don’t you show a similar teleology bias in assuming that things (human behaviors & institutions) serve a purpose, rather than being being byproducts of various psychological and social mechanisms? The difference is that you don’t assume that these purposes are laudable; instead they are typically some signaling or evolutionary purpose.

  • Pietro Poggi-Corradini

    Barkley Rosser,

    Status-quo bias is so strong in favor of the present that it also discounts the evolution, or complicated history, that generated the present. So it works against Hayek’s main point as well, i.e., that we often forget the trial-and-error of the past.

  • Jimmy

    Since existing institutions are much better than most possible institutions, it makes sense to prefer the status quo to most alternatives. If your impressions about other very different institutions aren’t very strong evidence, then even the institutions that appear great should be expected to do poorly. If you’re better at evaluating institutions, existence is less evidence.

    The “regression towards the mean” argument doesn’t apply to small perturbations (assuming something like continuity), and it should be easier to evaluate small perturbations, so it should be easier to walk the gradient towards a local maximum than to find a distant point of higher utility.

    • anon

      Yes, of course to the extent that the current status quo has “stood the test of time” while alternatives have not, a status-quo bias is entirely reasonable. Even the assertion that the purpose of the sun is to nurture life makes a lot of sense as an application of the anthropic principle; just try living in interstellar space without a readily available energy source nearby!

  • Catfish

    I think one important point being ignored here is the fact that a person’s choice/final decision varies relative to the context at which he is being asked the question.

    So lets say for example, the question is, who would be a better president? Person Y might vote McCain, but declare (verbally) someone else to a pollster. Because, as you know, due to the Bradley effect.

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  • Bill

    You see this a lot whenever people try to explain a type of behavior or trait. An evolutionary explanation is immediately sought, when in fact it could just be the behavior is not than important or advantageous one way or the other.