Gain and loss framing

Overview

Often, advertisers are not certain of how to construct their message. For example, they might need to decide whether to focus on potential gains, such as "This product enhances your health", or the problems that can be solved, such as "This product reduces health problems". Whether gains or losses are emphasized, called framing, can significantly affect the credibility and utility of messages.

Prospect theory

The concept of gain and loss framing was first examined in the context of prospect theory, an account that was disseminated by Kahneman and Tversky (1979;; see also Tversky & Kahneman, 1992, for a more advanced variant called cumulative prospect theory). Some changes or initiatives are conceptualized as attempts to facilitate gains or improvements. Other changes or initiatives are conceptualized as attempts to minimize losses or costs. In general, according to prospect theory, when the prospect of gains is emphasized, individuals reject risky behaviors, called risk averse. When the attempt to curb losses is highlighted, individuals tend to prefer risky behaviors, called risk seeking.

In a typical study, conducted by Kahneman and Tversky (1979), some individuals were instructed to imagine they had been granted $1000. Next, they were asked to choose between two alternatives. If they chose the first option, they would definitely be granted an additional $500. If they chose the second option--the risky, uncertain alternative--the likelihood they would be granted an additional $1000 was 50% and the likelihood they would be granted no additional money was also 50%. Participants in this scenario, who were contemplating possible gains, tended to prefer the safe rather than risky option.

In another condition, however, other participants were instructed to imagine they had been granted $2000. Next, they were also asked to choose between two alternatives. In this instance, if they chose the first option, they would definitely lose $500. If they chose the uncertain or risky alternative, the likelihood they would lose $1000 was 50% and the likelihood they would be lose no money was also 50%. Participants in this scenario, who were contemplating the prospect of losses, often preferred the risky alternative. The different reactions to gain and loss frames is often called the reflection effect (Kahneman & Tversky, 1979).

Although a focus on gains and losses generates different preferences, some inclinations of individuals are manifested in both scenarios. For instance, as Kahneman and Tversky (1979) showed, individuals tend to prefer certain to uncertain alternatives in general--a tendency called the certainty effect.

To explain this set of results, Kahneman and Tversky (1979) maintained that individuals complete two phases when they need to decide between alternatives in which the outcomes are uncertain. The first phase is called editing. In this phase, individuals reformulate the available options to clarify the choices. Specifically, individuals convert all the possible outcomes to gains or losses relative to some reference. If granted $1000, and then informed the likelihood this amount will increase to $1500 is 50% if they choose a specific alternative, they might represent this possibility as a gain of $500 rather than an overall value of $1500.

In addition, during the editing phase, any certainty is segregated. To illustrate, if informed the probability of gaining $300 is 80% and the probability of gaining $200 is 20%, they might reconfigure these likelihoods to a 100% likelihood of receiving at least $200 and a 80% likelihood of receiving an additional $100.

Once these operations and other facets of editing are completed, participants complete the evaluation phase. For each alternative, individuals estimate the expected utility. In classical economics, the expected utility is merely the sum of each outcome, such as $100 gain or a $0 gain, multiplied the probability of each outcome, such as 80% and 20%. In this instance, the expected utility would be 100 x .8 + 0 x .2 = $80.

According to prospect theory, however, individuals apply a complex variant of this formula. First, the perceived value of every possible outcome, such as $100 gain, is not equivalent to the actual monetary value. For example, the difference between $0 and $5000 in subjective value is very large;; the difference between $5000 and $10 000 in subjective value is smaller, and so forth. Furthermore, the subjective difference between a $5000 and $10 000 gain is less than is the subjective difference between a $5000 and $10 000 loss. Individuals, thus, are more sensitive to modest differences in losses than modest differences in gains.

Furthermore, the probabilities in this formula tend to be adjusted. Although the prescribed probability of a $100 gain might be 80%, the adjusted probability might be only 75%. Similarly, altough the prescribed probability of a $0 gain might be 20%, the adjusted probability might be 30%. These adjustments are included because individuals tend to overrate the likelihood of events in which the actual probability is low and underrate the likelihood of events in which the actual probability is moderate or high.

Applications to health

Meyerowitz and Chaiken (1987) applied these basic tenets of prospect theory to the domain of health behaviors. In particular, they reflected upon whether health messages, championing self examination of breasts, should focus on the maximization of gains or the minimization of losses. According to prospect theory, when individuals direct their attention to the minimization of losses, they tend to select the uncertain, and thus riskier, alternative. In this context, breast examination is uncertain and thus riskier, at least at the outset. Hence, messages that emphasize the minimization of losses should be more likely to encourage breast examinations--a hypothesis they supported empirically (for related findings, see Banks, Salovey, Greener, Rothman, Moyer, Beauvais, et al., 1995).

A variety of other studies have demonstrated similar results in the health domain. Messages that focus on minimization of losses, called loss frame messages, have been shown to promote behaviors to detect skin cancer, at least in women (Rothman, Salovey, Antone, Keough, & Martin, 1993), and screening of prostate cancer in men (Cherubini, Rumiati, Rossi, Nigro, & Calabro, 2005).

Nevertheless, some controversies over these findings abound. First, these arguments assume that abstaining from healthy behaviors, such as breast self examination, offers more certainty. Nevertheless, participants might recognize that failure to engage in these behaviors might evolve into complications. As a consequence, the abstention from these behaviors might not represent the more certain alternative (Levin, Schneider, & Gaeth, 1998).

To investigate these issues, in a study conducted by Chang (2007), participants were granted the opportunity to select mosquito repellent cream, with no adverse side effects, or antimalarial tablets, with potential side effects, some of which can be acute. As a manipulation check confirmed, the antimalarial tablets were perceived as riskier. Consistent with prospect theory, loss frame was more likely to promote the riskier behavior (for similar findings, see Toll, Salovey, O'Malley, Mazure, Latimer, & McKee, 2008).

Second, contrary to prospect theory, some studies have shown that messages emphasizing gains rather than losses can be more effective in some health domains. Messages that focused on the gains of some healthy behavior, instead of the losses of unhealthy behavior, were more likely to encourage safe driving (Millar & Millar, 2000), smoking cessation (Schneider, Salovey, Pallonen, Mundorf, Smith, &Steward, 2001), and sunscreen use (Detweiler, Bedell, Salovey, Pronin, & Rothman, 1999).

To reconcile some of these findings, Rothman and Salovey (1997) maintained that behaviors that are intended to detect a problem can be regarded as risky, because the outcome is uncertain and a disease could be uncovered. Hence, a loss frame, which elicits a receptivity to risk, should promote these detection behaviors. In contrast, behaviors that are intended to preclude some problem, such as the application of sun screen, are not regarded as risky, because the outcome is more certain--in this instance, the prevention of skin cancer. Thus, consistent with many previous findings, a gain frame, which fosters an aversion to risk, should promote these prevention behaviors.

To assess this possibility, Rothman, Martino, Bedell, Detweiler and Salovey (1999) undertook a study in which participants were encouraged to undertake a behavior, such as use mouth rinse, that either detected a problem, such as teeth plaque, or prevented the problem. If the behavior was conceptualized as a means to detect a problem, a loss frame was more effective. Conversely, if the behavior was conceptualized as a means to prevent a problem, the gain frame was more effective.

Previous findings, however, are not always consistent with this argument. Some of these effects of frame dissipate when need for cognition is low (Rothman, Martino, Bedell, Detweiler & Salovey, 1999), although this issue has generated mixed results. Furthermore, as a meta-analysis by O'Keefe and Jensen (2007) showed, these effects seem to vanish when studies that examine dental hygiene are excluded.

Alternative frameworks

Regulatory focus theory

Many of the findings that differentiate loss and gain frames could, potentially be ascribed to regulatory focus. Specifically, according to Rothman, Wlaschin, Bartels, Latimer and Salovey (2008), detection behaviors, such as breast self examinations, are usually guided by the motivation to avoid problems. This motivation corresponds to a prevention focus, in which individuals strive to minimize shortfalls and problems in the immediate environment rather than maximize gains and progress in the future (Higgins, 1997, 2000). When individuals adopt a prevention focus, information that relates to the minimization of losses is perceived as more valuable (Higgins, 2000) and thus should be more inclined to influence behavior.

In contrast, according to Rothman, Wlaschin, Bartels, Latimer and Salovey (2008), prevention behaviors, such as the application of skin care, are usually guided by the motivation to facilitate progress. This motivation corresponds to a promotion focus, in which individuals strive to maximize gains and progress in the future (Higgins, 1997, 2000). When individuals espouse a promotion focus, information that relates to the maximization of gains is perceived as more valuable (Higgins, 2000). Hence, many previous findings in the realm of gain and loss frames can be ascribed to regulatory focus theory.

The limitation of this argument, however, is that most behaviors can be construed as either a promotion or prevention focus (Spiegel, Grant-Pillow, & Higgins, 2004). Breast examination could be regarded as a means to promote future health rather than prevent potential complications.

Nevertheless, the interaction between regulatory focus and message framing has been explored in several studies. Cesario, Grant, and Higgins (2004), for example, primed either a promotion or prevention focus in participants. Messages that emphasized the health benefits of exemplary fruit and vegetable consumption were more compelling when a promotion focus was adopted. Conversely, messages that emphasized the health complications of deficient fruit and vegetable consumption were more compelling when a prevention focus was adopted (see also Lee & Aaker, 2004).

Furthermore, as Lee and Aaker (2004) showed, when individuals adopt a promotion focus, not only are messages that emphasize gains more compelling;; the content of these messages is more likely to be remembered as well. Similarly, when individuals adopt a prevention focus, they are more likely to remember the contents of messages that emphasize losses rather than gains.

The message frame itself can also shape the regulatory focus of individuals. In a study, conducted by Shah, Higgins and Friedman (1998), participants were instructed to memorize several letter strings. The instructions emphasized either the money they could receive if they performed proficiently, representing a gain frame, of the money they would not receive if they did not perform proficiently, representing a loss frame. If participants were later informed they performed well, they experienced positive emotions. More importantly, if the message emphasized gains, they experienced cheerful emotions--emotions that correspond to a promotion focus (Higgins, 1987, 1997). If the message emphasized losses, the participants experienced calmness--an emotion that corresponds to a prevention focus (Higgins, 1987, 1997).

Reinforcement sensitivity theory

Sherman, Mann, and Updegraff (2006) showed the behavioral activation system, which might often coincide with a promotion focus, also increases receptivity to messages that emphasize gain, whereas the behavioral inhibition system, which often coincides with a prevention focus, increases receptivity to messages that emphasize loss. Specifically, participants completed a measure that gauges behavioral activation, which represents the extent to which individuals crave excitement, demonstrate remarkable persistence, and feel especially elated when they attain rewards (see reinforcement sensitivity theory), manifesting as a sensitivity to gains rather than losses. Another scale gauged behavioral inhibition, which represented the extent to which individuals worry about potential problems, such as whether or not they will commit an error, corresponding to a sensitivity to losses. Behavioral activation, but not behavioral inhibition, coincided with a preference towards a gain frame.

References

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Created by Dr Simon Moss on 13/10/2009

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