Growthink Blog

Entrepreneurship and Overstating Fear of Loss


Great article in the Washington Post today by Shankar Vedantam entitled "The Pain is Never as Bad as We Fear." Basic premise is that studies have shown that human beings greatly over-estimate the pain they think they will feel regarding a prospective future loss. For example, when it comes to money, people are much more able to emotionally "connect" with the pain of a hypothetical loss of a sum of money than they are to to connect with the pleasure/joy associated with a hypothetical gain. This "pessimism prejudice" makes people be far more conservative and risk-averse than is warranted by the evidence from psychological studies. Because we unnecessarily over-fear prospective losses, our decisions, especially our economic decisions, are overly conservative.

For entrepreneurs, the lesson is to TAKE MORE RISK. Take calculated, well-thought out risks, but beware the trap of over-conservatism in your strategic planning and thinking. If things go badly (as unfortunaely they often do), the consequences, emotional and otherwise, of the loss (or losses) are far less than we think they will be. In other words, if things don't work out with a new business initiative, you will both be ok and often learn very valuable life and business lessons that will serve you well in your next business undertaking or initiative. So go for it!

You can see the article (registration required) at:

Share this article:

Most Popular
New Videos

"Business Plan

If you want to raise capital, then you need a professional business plan. This video shows you how to finish your business plan in 1 day.

to watch the video.

"The TRUTH About
Venture Capital"

Most entrepreneurs fail to raise venture capital because they make a really BIG mistake when approaching investors. And on the other hand, the entrepreneurs who get funding all have one thing in common. What makes the difference?

to watch the video.

"Brand NEW
Money Source?"

The Internet has created great opportunities for entrepreneurs. Most recently, a new online funding phenomenon allows you to quickly raise money to start your business.

to watch the video.

"Old-School Leadership
is DEAD"

"Barking orders" and other forms of intimidating followers to get things done just doesn't work any more. So how do you lead your company to success in the 21st century?

to watch the video.