Why we should all fear failure

Martha Gill's Irrational Animals column.

At one point in Ben Ainslie’s first heat he dropped to 11th place. As other boats sped past him, the on-board camera showed him looking more and more put out. But then the sailors changed direction, moving against the wind, and Ainslie began to recover ground. He worked his way up the stretch through sheer strength, moving from tenth to ninth to eighth (although his expression didn’t vary), and finishing the heat in second place.

After winning a gold medal overall (his fourth in four Olympics), he wrote in the Telegraph: “The pressure on me in the build-up was intense. For months – years – I kept getting told I was going to win. No matter how many times I said it wasn’t a foregone conclusion, people kept building me up. That begins to have an effect on you no matter how focused you try to remain.”

As a defending champion, you're in the unpleasant position of trying not to lose, rather than simply trying to win. Yet the effect might not be a bad one. Economists talk about the principle of “loss aversion” – the theory that we care much more about losing than making an equivalent gain. The indignity of being in 11th place at the first mark prompted Ainslie to find a sudden source of strength, and it seems the pressure to defend a title generally might give sports champions an extra motivational nudge.

The economists Devin Pope and Maurice Schweitzer studied this in golf – a sport that will incidentally make a return to the Olympics in 2016. In golf, it is fairly easy to see how you’re doing at each stage of the game, as the number of strokes needed to make a par is fixed for each hole. When a player approaches a hole, he might either be putting to avoid a stroke over par (a bogey) or putting to gain a stroke under par (a birdie).

The researchers looked at 2.5 million near-identical putts by 421 professional golfers (no mean feat) and found that players performed better when trying to avoid a bogey, or a loss, even though the motion of the club was exactly the same.  They calculated that if Tiger Woods had performed equally well for birdies as he did bogeys, he would have improved his earnings by $1m per season. Players fight harder, they concluded, to avoid losses than they do to make gains.

Odd thinking

This strange, asymmetrical thinking is evident in other areas, too, but it isn’t always a good thing. A 2003 study by Ernst Fehr and Lorenz Goette showed how bicycle messengers make silly economic choices just to avoid the feeling of missing their daily target. On days when they are paid more commission per hour, they reach their target earnings quickly and knock off early. On days when pay is low they stay out much later. This isn’t logical. They should stay out longer on days when business is good, and take time off on the slow days. They can’t help themselves, though – they are programmed to focus on losses.

One final example: as Chris Adams of the Financial Times has noticed, Twitter’s attention to the markets seems to rise in inverse proportion to the markets themselves. Bad news is always more interesting than good.

Ben Ainslie. Photograph, Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

This article first appeared in the 13 August 2012 issue of the New Statesman, The New Patriotism

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Why Theresa May won't exclude students from the net migration target

The Prime Minister believes the public would view the move as "a fix". 

In a letter to David Cameron shortly after the last general election, Philip Hammond demanded that students be excluded from the net migration target. The then foreign secretary, who was backed by George Osborne and Sajid Javid, wrote: "From a foreign policy point of view, Britain's role as a world class destination for international students is a highly significant element of our soft power offer. It's an issue that's consistently raised with me by our foreign counterparts." Universities and businesses have long argued that it is economically harmful to limit student numbers. But David Cameron, supported by Theresa May, refused to relent. 

Appearing before the Treasury select committee yesterday, Hammond reignited the issue. "As we approach the challenge of getting net migration figures down, it is in my view essential that we look at how we do this in a way that protects the vital interests of our economy," he said. He added that "It's not whether politicians think one thing or another, it's what the public believe and I think it would be useful to explore that quesrtion." A YouGov poll published earlier this year found that 57 per cent of the public support excluding students from the "tens of thousands" target.

Amber Rudd, the Home Secretary, has also pressured May to do so. But the Prime Minister not only rejected the proposal - she demanded a stricter regime. Rudd later announced in her conference speech that there would be "tougher rules for students on lower quality courses". 

The economic case for reform is that students aid growth. The political case is that it would make the net migration target (which has been missed for six years) easier to meet (long-term immigration for study was 164,000 in the most recent period). But in May's view, excluding students from the target would be regarded by the public as a "fix" and would harm the drive to reduce numbers. If an exemption is made for one group, others will inevitably demand similar treatment. 

Universities complain that their lobbying power has been reduced by the decision to transfer ministerial responsibility from the business department to education. Bill Rammell, the former higher education minister and the vice-chancellor of Bedfordshire, said in July: “We shouldn’t assume that Theresa May as prime minister will have the same restrictive view on overseas students that Theresa May the home secretary had”. Some Tory MPs hoped that the net migration target would be abolished altogether in a "Nixon goes to China" moment.

But rather than retreating, May has doubled-down. The Prime Minister regards permanently reduced migration as essential to her vision of a more ordered society. She believes the economic benefits of high immigration are both too negligible and too narrow. 

Her ambition is a forbidding one. Net migration has not been in the "tens of thousands" since 1997: when the EU had just 15 member states and the term "BRICS" had not even been coined. But as prime minister, May is determined to achieve what she could not as home secretary. 

George Eaton is political editor of the New Statesman.