This article is an excerpt from the Shortform summary of "Thinking, Fast and Slow" by Daniel Kahneman. Shortform has the world's best summaries of books you should be reading.
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What are framing effects in psychology? How do framing effects affect decision making?
The framing effect is a cognitive bias in which people make decisions based on whether the options are “framed,” or presented, as losses or gains. An outcome presented as a gain is much more favorable as the same outcome framed as a loss.
We’ll cover how framing effects impact your decision making and look at framing effect examples.
The Power of Framing Effects
The context in which a decision is made makes a big difference in the emotions that are invoked and the ultimate decision. In particular, even though a gain can be logically equivalently defined as a loss, because losses are so much more painful, the decisions may be contradictory.
Consider how enthusiastic you are about each opportunity:
- A 10% chance to win $100, and a 90% chance to lose $5.
- Buying a $5 raffle ticket that gives you a 10% chance to win $105 and a 90% chance of winning nothing.
These are logically identical situations – yet the latter opportunity is much more attractive! Loss aversion is at play here again. Losses are more painful than uncaptured gains. This is the framing effect.
Even though framing makes a large difference, most of us accept problems as they are framed, without considering alternative framings. We succumb to the framing effect.
Framing Effect Example: Vaccines
Consider two framings of two vaccine programs that can save 600 people affected by a virus:
- Program A will save 200 people. Program B has ⅓ chance of saving 600 and ⅔ chance of saving none.
- Program A will leave 400 people dead. Program B has ⅓ chance that nobody will die, and ⅔ chance that 600 will die.
Per prospect theory and framing effect in psychology, you can predict that people prefer A in the first set and B in the second set. But again, these framings are logically equivalent.
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- Why we get easily fooled when we're stressed and preoccupied
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Framing Effect Example: Gas Mileage. Adam,Barry, but where does Beth suddenly appear from, and by anyone’s logic 400mpg is better than 2mpg.