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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There's nothing Luddite about banning zero-hours contracts

The TUC general secretary responds to the Taylor Review. 

Unions have been criticised over the past week for our lukewarm response to the Taylor Review. According to the report’s author we were wrong to expect “quick fixes”, when “gradual change” is the order of the day. “Why aren’t you celebrating the new ‘flexibility’ the gig economy has unleashed?” others have complained.

Our response to these arguments is clear. Unions are not Luddites, and we recognise that the world of work is changing. But to understand these changes, we need to recognise that we’ve seen shifts in the balance of power in the workplace that go well beyond the replacement of a paper schedule with an app.

Years of attacks on trade unions have reduced workers’ bargaining power. This is key to understanding today’s world of work. Economic theory says that the near full employment rates should enable workers to ask for higher pay – but we’re still in the middle of the longest pay squeeze for 150 years.

And while fears of mass unemployment didn’t materialise after the economic crisis, we saw working people increasingly forced to accept jobs with less security, be it zero-hours contracts, agency work, or low-paid self-employment.

The key test for us is not whether new laws respond to new technology. It’s whether they harness it to make the world of work better, and give working people the confidence they need to negotiate better rights.

Don’t get me wrong. Matthew Taylor’s review is not without merit. We support his call for the abolishment of the Swedish Derogation – a loophole that has allowed employers to get away with paying agency workers less, even when they are doing the same job as their permanent colleagues.

Guaranteeing all workers the right to sick pay would make a real difference, as would asking employers to pay a higher rate for non-contracted hours. Payment for when shifts are cancelled at the last minute, as is now increasingly the case in the United States, was a key ask in our submission to the review.

But where the report falls short is not taking power seriously. 

The proposed new "dependent contractor status" carries real risks of downgrading people’s ability to receive a fair day’s pay for a fair day’s work. Here new technology isn’t creating new risks – it’s exacerbating old ones that we have fought to eradicate.

It’s no surprise that we are nervous about the return of "piece rates" or payment for tasks completed, rather than hours worked. Our experience of these has been in sectors like contract cleaning and hotels, where they’re used to set unreasonable targets, and drive down pay. Forgive us for being sceptical about Uber’s record of following the letter of the law.

Taylor’s proposals on zero-hours contracts also miss the point. Those on zero hours contracts – working in low paid sectors like hospitality, caring, and retail - are dependent on their boss for the hours they need to pay their bills. A "right to request" guaranteed hours from an exploitative boss is no right at all for many workers. Those in insecure jobs are in constant fear of having their hours cut if they speak up at work. Will the "right to request" really change this?

Tilting the balance of power back towards workers is what the trade union movement exists for. But it’s also vital to delivering the better productivity and growth Britain so sorely needs.

There is plenty of evidence from across the UK and the wider world that workplaces with good terms and conditions, pay and worker voice are more productive. That’s why the OECD (hardly a left-wing mouth piece) has called for a new debate about how collective bargaining can deliver more equality, more inclusion and better jobs all round.

We know as a union movement that we have to up our game. And part of that thinking must include how trade unions can take advantage of new technologies to organise workers.

We are ready for this challenge. Our role isn’t to stop changes in technology. It’s to make sure technology is used to make working people’s lives better, and to make sure any gains are fairly shared.

Frances O'Grady is the General Secretary of the TUC.