In this post, I argue that many institutions and entire sectors often stagnate because loss aversion becomes embedded within layers of management. This is not a hard rule, but a probabilistic tendency across domains. These layers are likely to protect the status quo at the expense of seizing future opportunities, which are ultimately more important in reshaping competitive landscapes.
Before delving into examples, let me first consider the human bias of loss aversion. The idea is that the pain of losing something is psychologically about twice as powerful as the pleasure of gaining something of equivalent value. One famous psychological experiment is the coin toss win/loss scenario. Subjects are offered a bet where they lose £10 if the coin lands on tails, and asked how much they would need to receive if the coin landed on heads to take the bet. Rationally, even a gain of £10.01 should be enough to make the gamble worthwhile, yet it was found that many participants would only accept the bet if the gain was at least £20. This finding, originally demonstrated by Kahneman and Tversky illustrates why classical economics, which assumes rational actors, can fall short. In real-world scenarios, behavioural biases like loss aversion can significantly skew decision-making.
What counts as a loss though if you are an established figure within your company and/or sector? The risks you face are rarely financial. More often, the risks are reputational or procedural. A failed initiative may reflect badly on your leadership, or invite scrutiny or disruption. As a result, however, you may choose not to pursue meaningful improvement, or to grasp a new but speculative opportunity. Decisions are filtered through the lens of what might go wrong, not what might be possible. This can result in companies not innovating effectively over time. Nokia, Kodak, and Blockbuster are commonly cited examples of firms that failed to adapt in the face of emerging competition. Senior and middle managers were criticised for doubling down on the long-standing business model, even as the market indicated it was becoming outdated and misaligned with emergent consumer behaviour. In such cases, however, the market is swift and unforgiving in determining winners and losers, and thus the sector as a whole transitions quickly.
Might this loss aversion and cautious approach to innovation manifest itself differently in professions such as teaching and the broader education sector? In these fields, the pressures and incentives differ markedly from those in commercial markets, leading to different but equally entrenched forms of resistance to change. The Future of the Professions, a book by Richard and Daniel Susskind, recounts how the authors interviewed a large number of professionals from a wide range of sectors. A telling observation appears in the preface: although most interviewees thought the professions needed reform, almost none thought their own profession should, or could, be transformed. They note that professionals may support reform in principle, but often do not see such change as applicable to their own field. Might this protectionism be a subconscious manifestation of risk/loss aversion? A critical difference between the professions discussed by Susskind and the commercial firms like Nokia or Blockbuster is the absence of a market mechanism. In education, for example, there are no swift market corrections or disruptive entrants to challenge the status quo in the same way. To be clear, I am not advocating for the marketisation of education. Rather, I am noting that without market dynamics, professions such as education tend to resist change. Other sectors like accounting or law may in theory be subject to market forces, but the barriers to entry in those fields make disruptive change similarly difficult, though for different reasons.
There have been consistent calls for decades to reform education. Why have such reforms so rarely materialised? Has loss aversion played a role in this inertia? Is there a reluctance within exam boards or the Department for Education to advocate for structural change? Despite various curriculum revisions and some adjustments to KS4 and KS5 assessments, the core mechanics of high-stakes written exams, rigid specifications, and timed summative testing remain effectively largely unchanged. From the standpoint of someone particularly concerned with problem-solving, these reforms have repeatedly skirted the issue. In a system where exam boards compete for schools and school performance is judged by exam results, is it realistic to expect problem-solving to receive serious attention?
Another dynamic that builds on the issue of misaligned incentives is the devolution of responsibility. This trend may itself be a form of institutional risk aversion, with governments placing layers of bureaucracy between themselves and the delivery mechanisms they oversee. Mariana Mazzucato’s book The Big Con highlights this tendency for consulting bodies to proliferate and dilute responsibility. Has this already happened within maths education? Do we require the continued parallel efforts of ACME, AMSP, MEI, NCETM, ATM, MA, EEF, The Mathematical Observatory, other research institutes, Oak National Academy and other free market resource providers, and a multitude of exam boards often working with overlapping responsibilities? Has the proliferation of such organisations made systemic change more difficult? In my opinion, these bodies may individually carry out valuable work, but the cumulative structure is opaque, and makes unified strategic change almost impossible.
This brings us to the current moment. The government has tasked Professor Becky Francis with leading a broader review of education, including but not limited to mathematics. But what is realistically possible under such conditions? It is difficult to imagine that one individual would propose genuinely radical reform when the personal risks are so great. The incentives all point towards small-scale evolution rather than true transformation. One might also question whether decisions taken at a macro level are actually focused where it is needed. What are the most important challenges to address to sustainably improve maths education at secondary level:
Is it important to have a free market for resources, or should some providers be selected and funded to develop their product into a comprehensive resource with free access for schools?
Is it important to have a free market for exam entry, or would mandating a national board ensure consistency and quality whilst also significantly reducing costs?
Is it more important that schools retain the autonomy to design their own schemes of work and assessments, or would mandating a national structure free teachers to focus more fully on lesson delivery? Could a unified scheme of work enable all CPD to align more closely with the actual sequence of lessons being taught in every school?
Should schools and MATs be left to define their own success metrics, or is there a need for clearer national guidance on what constitutes meaningful progress in maths education?
We expect institutions like the NHS to deliver consistent, high-quality service guided by national standards. Might the same logic apply to education? If so, then perhaps the curriculum review should not just consider content, but the structures of governance that shape its delivery.
Another blog post, coming soon.
George Bowman
Founder, Maths Advance
MATHS ADVANCE BLOG 
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