Some economic principles and models are rather limited to an ideal world - but some others are a great source of explanation for real life developments.

Part of the latter category is what academics Kahneman, Knetsch, and Thaler described as the "Endowment Effect, Loss Aversion, and Status Quo Bias" in a paper published in 1991. Explained in simple words this principle of behavioural economics provides proof that people assign more value to things they already own. And that their fear of losing a certain value outweighs their appreciation of winning the same value (at the same probabilities, that is). Both behaviours result in people favouring the status quo over something new, even if that new state is likely to be objectively better.

This concept is not only valid for economic transactions, but it is also at display in politics. It is no news that people favour strong leadership in challenging times and over the past 100 years there's plenty of examples. What is interesting however, is that the promises political leaders make to their constituency in times of perceived challenge and uncertainty, are hardly ever painting a picture of a great new world. Rather, it usually is the description of how to get back to an earlier state of the world, in which everything was better.

Why is that? Firstly, even though many details are generously omitted to make that past state look better than it actually was, after all it's just a description of the real world. That is much easier to do and harder to counter by political opposition than envisioning a future state that's very different from what people know.

But another reason is endowment and loss aversion. I realized recently that in many comments of political researchers, the success of right wing populist parties in Europe was attributed to a fear found in a large part of the population. And not just any fear, but the fear that their living standards would diminish if the current developments in the world, as they see it, continue. Whether that is globalization or migration, all those developments seem to bring more threat than opportunity.

Even though economists have proven in many ways that open economies and immigration lead to higher GDP growth, those opportunities aren't enough to outweigh the fear of losses. This growth will come with changes in industries and society. Some people will find it easy to adapt, some others will not. Confronted with this reality, people are endowed to what they have, rather than taking uncertainty and risk to gain more.

The endowment effect and loss aversion are real world behaviours that can explain why moderate and/or liberal forces have a hard time to reply to the attention catching, populist voices of the conservatives. On a more pragmatic level however, it also shows that those that favour of societal growth and development need to offer a tighter security net to those most at risk to lose when shifting away from the status quo.