What Makes Unlikely Decisions Difficult?

This is a guest post from Billy Ulmer, author of the Life in a Tiny House ebook.

This might look familiar, but does that mean it's desirable?
This might look familiar, but does that mean it’s desirable?

What can a tiny house enthusiast learn from a book written for a business audience? If you ask me: plenty.

Before I started interviewing tiny house owners, I was reading books on anthropology, business, philosophy, urban planning, career counseling, and psychology, and constantly finding overlaps in unexpected places. It’s hard for me to read anything at all these days without thinking, “You know who would love this passage, and learn so much from it? A friend of mine who would never, ever pick up a book like this.”

Dan and Chip Heath come from the business world, but write common-sense, non-jargony books that anyone can learn from. I’m a big fan of all their work, but their latest book “Decisive” has been on my mind as I’ve been wrapping up work on my Life in a Tiny House ebook.

“Decisive” is about how to make better decisions. It explains the common places we make mistakes, and suggests simple exercises we can use to make more informed choices. One section that rang especially true to me was on why we feel a natural preference for what we already have, even if we know it’s not really what we want. Why is it hard to choose something really different? Like, say, to choose a tiny home over a conventional one?

“Mere Exposure”: The Case for 2,500 Square Foot Homes

The Heath brothers describe two different psychological principles that work perfectly in tandem to make unlikely choices hard. One explains why just experiencing something more often makes us like it more:

“For decades, psychologists have been studying this phenomenon, called the “mere exposure” principle, which says that people develop a preference for things that are more familiar (i.e., merely being exposed to something makes us view it more positively)…

In one experiment participants were presented with unfamiliar statements, such as “The zipper was invented in Norway”, and told explicitly that the statements might or might not be true. When the participants were exposed to a particular statement three times during the experiment, rather than just once, they rated it as more truthful. Repetition sparked trust.”

According to the Heaths, “A preference for familiar things is necessarily a preference for the status quo.” In other words, one of the barriers to viewing a tiny house as a viable option is merely that you haven’t seen very many. How many conventional homes did you see today, and how many tiny homes? Just because they’re new and rare, tiny homes are operating at an exposure disadvantage.

“Mere exposure” also resonates with something I learned from my tiny home interviewees: many of them had lived in small rooms or studio apartments and found that they actually loved the size. By trying out a small space temporarily or out of economic necessity, they gained familiarity with small spaces, which made it easier for them to entertain moving into an even smaller space like a tiny house.

“Loss Aversion”: Why We Hesitate to Change

The second important factor that makes unlikely choices hard is “loss aversion”:

“We find losses more painful than gains are pleasant. Imagine that we offer you the chance to play a game. We’ll flip a coin; if it turns up heads, you’ll win $100, and if it lands on tails you owe us $50. Would you play? Most people wouldn’t, because they are loss averse: Losing $50 is so painful that even a potential gain twice as large doesn’t seem sufficient to compensate.”

When someone is thinking about making a big change in their life, then, their internal process sounds something like this:

Ack, that feels unfamiliar (and thus more uncomfortable.) Also: Ack, we’re going to lose what we have today. When you put these two forces together – the mere exposure principle and loss aversion – what you get is a powerful bias for the way things work today.”

Loss aversion in the world of housing means that even though we may strongly suspect that we don’t need the extra bedroom or the two car garage, we feel naturally afraid to give them up. And although we believe we’d enjoy the extra time and money we’d have living in a smaller and cheaper space, the potential of that feeling isn’t as visceral as the reality of what we have now, that we risk losing.

John's housetruck
Since John Labovitz had bought a conventional house and disliked it, he had less to “lose” by moving into his housetruck.

My tiny home interviewees avoided succumbing to loss aversion through different perspectives. Many didn’t really feel they valued living in large spaces in the first place. John Wells and John Labovitz came to actively dislike their experience in conventional houses, so they were immune to the sting of loss aversion because they didn’t like what they had to start with. Those who had lived in small spaces temporarily had the opportunity to dip a toe into that potential “loss” without fully committing to it, and could then compare reality to reality, instead of comparing reality to risky potential.

Validation and Action

The mere exposure principle and loss aversion resonated with me immediately. Does this one-two punch of psychological principles hit home for anyone else? Personally, I feel some relief when I see my struggles validated by science or broader human experience. They’re still struggles, but I feel better when I can name why exactly they feel so challenging.

But we don’t have to stop at talking about why things are tough – we can make them better. Next I’ll explore a couple of my favorite decision rescue techniques from “Decisive”, which have practical applications for unlikely decision makers of all kinds.

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