I often read reviews of products I already own. Apparently I’m not alone: a lot of people, after a big purchase, hunt for favorable reviews. It makes us feel better and leaves us more convinced than ever that we made the right decision.
This kind of post-hoc thinking does not hurt if you just bought an iPhone, but in congregational planning it’s a hazard. Economists call it the “endowment effect”: we value what we have more than what we don’t have. It’s one reason churches find it easier to continue old programs than to start new ones—even when the cost is the same.
The endowment effect kicks in literally when someone leaves a block of stock in a local company as an endowment gift. Many investment committees hang onto the donated stock until they find something better—even though they know that the best policy is to diversify their holdings. The longer the stock stays in the portfolio, the more difficult it becomes to find anything better. The result is to expose the congregation’s finances to excessive risk—a risk compounded by the fact that if stock in a local firm declines in value, the congregation is apt to be hurt in other ways at the same time.
The endowment effect is one of a number of ideas from the relatively new field of behavioral economics—the study of how people actually make financial decisions, in contrast to the strictly rational decisions classical economists assumed. A related concept is “loss aversion,” which predicts that people will work harder to avoid losing what they have than to gain something new.
The classic way to demonstrate loss aversion is to ask two groups of people to choose between alternative plans for vaccinating people against a disease. Without vaccine, the disease will kill 600 people. One group has to choose between a vaccine that definitely will save 200 and another that has only a one-third chance of saving everyone. Most people, given this choice, choose the first vaccine.
The second group is asked to choose between a vaccine that will definitely let 400 people die, and another that has only a two-thirds chance of letting all 600 die. Given these options, most people choose the latter, even though the only difference is that this time the choice is expressed in terms of a loss (letting people die) instead of a gain (saving people). We are more willing to take risks in order to avoid losses than to achieve gains.
This helps explain why new ideas face such an uphill battle for acceptance in most congregations, while old ideas persist unquestioned. Remaining in a familiar building or continuing a cherished worship style does not feel risky even though there may be good reason to believe that doing so may limit our potential to attract new members. Moving to a new location or changing our worship style, by contrast, feels extremely risky because it involves the immediate loss of something we have now. In reality, the risk of clinging to the old may be much greater than the risk of trying something new.
Another related concept is the “sunk-cost fallacy” or “gambler’s mistake.” For a gambler, this is the idea that if you bet a lot of money on a hand, you’d better keep on betting to avoid losing the money you have put into the pot. For congregations, it may be a matter of sticking with a strategy (like browbeating people for their stinginess) long after it has repeatedly proved unsuccessful. In part, this is a simple matter of saving face: so long as you keep on trying, you can blame other people or circumstances for your failure. But as soon as you wise up and quit, you have to admit you’ve made a mistake.
Some of the most striking examples of the sunk-cost fallacy come from international relations. The long-time U.S. policy toward Cuba was to drive Fidel Castro from power; at his retirement in February of 2008, Castro was the longest-standing head of state in the world. You might think that this perfect record of failure would make it easier for the United States to change its mind; in fact, it has made it much harder.
How many of our churchy habits (or their synagogue-y equivalents) are based on sound evidence that they help us to achieve our mission, and how many do we cling to mostly to save face?
On a more upbeat note, behavioral economists have pointed to a whole family of common misunderstandings about probability. One of these is the idea that seemingly miraculous coincidences somehow violate the laws of probability.
Suppose, for instance, that you flip a coin ten times and get “heads” every time. Or you poll your congregation and discover that two people were born in the same faraway small town. Do such events suggest the working of mysterious forces? Not at all. They may be rare events, but rare events are very common.
Ten heads in a row is a rare outcome of ten coin flips—it happens less than once in a thousand tries. But the same could be said of any other specific string of heads and tails. Thomas Gilovich, a psychology professor at Cornell, asks his students to use X’s and O’s to simulate a series of coin tosses. One student in each class is assigned to record the result of an actual series of coin flips. Gilovich can always identify the real coin tosses from the fake ones. How? The real one always contains more seeming patterns—long strings of X’s, for example—while the fake ones are too “random” to be really random.
What does this have to do with congregations? Let me tell a story. One October at a church staff meeting, I presented a Christmas pageant plan. It was on a Renaissance theme and required a singing, juggling troubadour who would lead children in a circus exhibition with gymnastics, magic tricks, and singing. By the time I was done, my colleagues were rolling their eyes at one another. One said, “But Dan, we don’t have anybody who can do that.”
This is true: The following Sunday, a man visited our church who was an acrobat, a juggler, a magician, and a singer who knew how to teach. He had visited before, but then we didn’t need him! This time one of the staff spotted him immediately. He led the pageant and joined the church. Ten years later he was still there.
A miracle? Perhaps. But miracles are not improbable; they happen all the time. All you have to do is notice them!
Dan Hotchkiss is a senior consultant at the Alban Institute. “Fallacies of Planning” originally appeared in the June 2008 issue of Clergy Journal (www.logosproductions.com) and is reprinted with permission.
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