Behavioral economists initially coined the ostrich effect to describe the behavior of investors, but it can crop up in pretty much any area of life, including personal finance, project management, and health. And it’s more pervasive than many people may realize. According to one poll, almost half of US adults don’t know the annual interest rates on their credit cards,¹ while another study found that 20% of people enrolled in a weight loss program had never weighed themselves before.² 

From finances to health, the ostrich effect can prevent us from making informed decisions because we simply don’t have all the information we need to evaluate our options carefully. For example, we might delay or outright avoid seeking information if we think it’s likely to convey uncomfortable truths. This behavior is commonly displayed by investors, who check their financial portfolios less frequently when markets are flat or falling.¹⁹ 

It’s not hard to see how this lack of awareness can degrade the quality of our decision-making. If an investor fails to check their investment portfolio during unsteady periods, they can’t make timely decisions to optimize their financial results. Similarly, suppose we put off going to the doctor because we want to avoid the possibility of a distressing diagnosis. In that case, we miss out on the significant health benefits of catching and treating potential problems early. Often, ignoring our problems allows the consequences to snowball, making it even more difficult to address these issues in the future. For instance, neglecting financial warning signs that our accounts are diving into the red can lead to accumulating debt, interest, and financial strain that we could have avoided had we acted sooner. 

Actively avoiding or failing to pay sufficient attention to uncomfortable information can also strain our relationships and create difficult work situations.²⁰ Whether we’re reluctant to seek criticism, delay uncomfortable discussions, or ignore constructive feedback, missing chances to resolve issues or improve our behavior can lead to stagnation and missed opportunities for personal growth—in both work and life.

By reducing the quality of decision-making among individuals, the ostrich effect can have far-reaching impacts on a larger scale. Whether it’s influencing investor behavior, slowing progress on climate action, or reducing engagement in preventive healthcare, various systemic consequences can occur when we stick our heads in the sand to avoid potentially uncomfortable information.

Impact on financial markets

Most research on the ostrich effect is centered around a financial context. And for good reason—the bias plays an important role in investor behavior. Since investors as a whole are less likely to check in on their portfolios during market dips, stock markets tend to see reduced trading activity following downturns. In fact, one study found that investment account logins dropped about 9.5% after a decline in the previous day’s market.²¹ While economists suggest that this may protect investors from overreacting to bad news, it could also mean that they miss opportunities to make timely, corrective actions. At scale, this can influence how securities are priced—stock prices may remain artificially high if investors collectively fail to act on early warning signs, delaying price corrections and potentially leading to large-scale sell-offs.²¹

Climate action

The ostrich effect moves beyond finance. For one, it can be a serious drawback to tackling societal problems like climate change. Because it’s so overwhelming to contemplate the severity and complexity of these issues, it’s often easier for elected officials to just ignore them entirely, and to reject information that contradicts their official stance. 

The ostrich effect also influences the behavior of individual citizens within these larger systems, undermining efforts by leaders and policymakers to spread awareness about issues and encourage change. For example, a homeowner motivated to reduce their energy usage may not monitor their household energy consumption if they expect it to be higher than they’d like.² As a result, they’ll miss information about which appliances use the most energy or what steps they could take to reduce their consumption.

Engagement in preventive healthcare

On a systemic level, this avoidance tendency can also impact people’s willingness to engage in preventive healthcare. For example, one fascinating study explored how women’s inclinations to go for an annual mammogram can change after a co-worker is diagnosed with breast cancer.²² As a starting point, researchers found that about 70% of women took up their company’s offer for an annual, on-site mammogram. However, this number decreased by about 8% in the year after a co-worker received a breast cancer diagnosis. Not only that, but this impact on seeking mammogram screenings persisted for at least two years. The results of this study suggest that when people fear a potentially frightening medical diagnosis, they may be more likely to avoid routine screenings. This can lead to more expensive and complex healthcare later on, increasing the burden on entire health systems. 

Depending on the context, the ostrich effect has a couple of different meanings. In finance, this bias was coined to describe a specific pattern of investor behavior. Some investors are sometimes more willing to make investments if the level of risk associated with them is unreported, compared to similar investments with established risk.³ From a psychological standpoint, however, the ostrich effect usually refers specifically to people’s reluctance to get feedback on their performance, even though that information would help them monitor their progress and successfully work towards their goals.²

It might be tempting to write off the ostrich effect as simple laziness. But people often go out of their way to avoid getting this kind of information, even when it’s accessible and easy to use—like investors seeking out investments with unreported risk. A more relatable example might be that of a college student who does not read a professor’s feedback on their paper, even if they want to do better in the course. In fact, generally speaking, people are motivated to assess how they are doing and to strive for self-improvement.² Despite our good intentions, there are a few other forces at work within our psyche that can contradict and overpower, the desire to perform better.

It is easier to ignore losses

Humans are notoriously loss averse; in other words, we hate losing things. The pain we feel when we incur a loss is greater than the pleasure we get from an equivalent gain. To illustrate, imagine that somebody offers you a gamble on a coin toss. If the coin comes up heads, you win $150, but if it comes up tails, you lose $100. Would you take the bet?

Obviously, $150 is greater than $100—you stand to gain more than you stand to lose. But for most people, the potential pain of losing $100 is stronger than the joy of winning $150. Research has shown that, to be willing to take this gamble, most people need to be offered at least $200. In other words, the potential gain needs to be at least twice as large as the potential loss to convince us to take on the risk.⁴

Our fear of losing can sometimes cause us to be short-sighted. Myopic loss aversion occurs when people lose sight of long-term gains because they’re focused on short-term losses. Investors, for example, often underinvest in assets that carry more risk, because they’re afraid of incurring losses in the short term. However, this can lead them to lose out in the long term, since riskier investments have higher returns.⁵

Outside the world of finance, myopic loss aversion means losing sight of our big-picture goals because we are preoccupied with the costs of working towards them. The college student striving for an A in their course may genuinely want to improve, but the immediate suffering that comes with reading a professor’s feedback (and being made aware of their shortcomings) looms larger in their mind than the pride they’ll feel in the future. This dynamic often gives rise to the ostrich effect: People often prefer to be blissfully unaware of information that’s hard to swallow, even if that information might be useful in the long run.

We are biased towards the positive

In general, humans have a strong preference for positive information. This bias runs deep, right down to automatic processes that are primarily outside of our control. We tend to make optimistic predictions and have optimistic expectations; we are more likely to remember positive events than negative ones; and, most importantly, for the ostrich effect, we pay more attention to positive information.^6,7 By the same token, our excessive optimism often leads us to downplay negative information and reject more pessimistic forecasts of how the future might play out.⁸ This bias is at the heart of countless other cognitive distortions, such as the planning fallacy, the Dunning-Kruger effect, and self-serving biases.

Our preference for the positive is a big reason that people stick their heads in the sand. In one study by Betty Chang and colleagues, where participants were asked to think of situations where they had avoided monitoring their progress and then rank reasons why they hadn’t self-monitored more, one of the most frequent explanations given was that people experienced negative emotions when they thought about working towards their goal.⁹ People also reported worrying about receiving negative feedback or being told that their progress wasn’t good. The anxiety of facing down a challenge is often enough to deter people from really trying.

We’re trying to protect our ego

Beyond our general aversion to negativity, the ostrich effect is driven, in part, by our desire to maintain a certain self-image. We have a deep-seated need to feel good about ourselves, and as a result, we often bend our perceptions of reality just a tad, to protect our ego. This is known as a self-enhancement motive.¹⁰

Self-enhancement motives can bias our cognition in surprising ways, helping us to zoom in on our successes while minimizing the impact of our failures. One study, for example, found that most people view themselves as above-average drivers. This finding on its own is evidence that people inflate their perceptions of their own abilities since it’s mathematically impossible for everybody to be “above average” at something. But the real kicker is that people continue to insist that they’re better at driving than most, even after they’ve caused an accident and been hospitalized.¹¹ 

Our drive for self-enhancement can powerfully sway how we see ourselves, even putting us at odds with reality. This motive also guides our behavior when it comes to seeking feedback or guiding information. Even if we know, on some level, that we’re not doing a particularly good job at something, it can still be psychologically painful to confront this possibility. Because of this, we tend to avoid situations that threaten to confirm the negative beliefs we have about ourselves.

This fact was demonstrated by one study, where students solved anagrams that were either difficult (e.g. TAUCYI—Acuity) or easy (e.g. ZYIDZ—Dizzy). People who were given the trickier anagrams were likely to come out of this task not feeling too hot about themselves, while people given the easy ones were likely to feel pretty good. After finishing with this initial task, participants were told they had to pick some more anagrams to solve from a number of different tests, and were given information about how students of high and low ability tended to perform on each test.

Students who had been given difficult anagrams were less likely to choose tests that were highly diagnostic—meaning, tests that had a big gap between the performances of high- and low-performing students. Instead, they chose tests where the high- and low-achievers performed similarly because a person’s score on this kind of test doesn’t really tell you anything useful about their abilities. By turning down meaningful feedback, participants avoid having their insecurities confirmed.¹² The ostrich effect can be born out of this same instinct to preserve our ego.

We’re afraid to change our beliefs

In the same survey mentioned above, the biggest reason that people gave for not monitoring their own progress was that they were afraid that implementing the feedback would require making a change to their beliefs, or to their behavior. This might just signal a lack of willingness to put in the effort to succeed, and that might play a role in some cases—but there’s more to it than that.

The desire for psychological consistency is a major determinant of our behavior. It’s behind one of the most robust effects in psychology, cognitive dissonance, which describes how people maintain their existing beliefs by rejecting new information, rationalizing it away, or adjusting their perceptions.

The core idea, first proposed by social psychologist Leon Festinger in the 1950s, is that people experience intense psychological discomfort when they hold contradictory cognitions (basically, beliefs or feelings).¹³ When this tension arises, we feel deeply anxious until we can resolve it. Festinger famously illustrated the power of cognitive dissonance by embedding himself in a doomsday cult that had predicted that the end of the world would occur on a specific day. When the prophesied apocalypse failed to materialize, instead of realizing that they had been wrong, members of the cult doubled down on their beliefs, proselytizing and recruiting new members.¹⁴

When we’re committed to an idea, or invested in a specific way of seeing the world, we will go to great lengths to cling to our beliefs. Arguably, the ostrich effect is an offshoot of cognitive dissonance: it enables us to avoid information that disconfirms our established worldview. We’re especially biased to reject information that contradicts our established self-concepts, a drive that is known as the self-verification motive.¹⁰

Many studies, across many different fields, have found evidence of the ostrich effect at work. The temptation to bury our heads in the sand is probably greatest when the stakes are high—which also, unfortunately, means that the ostrich effect can have very serious consequences, both at the individual and societal levels.

Take, for example, the case of diabetic patients and blood glucose monitoring. For people who have diabetes, it is essential to make sure that the amount of sugar in their blood stays within a certain range. To this end, there are inexpensive and easy-to-use tools available to help them monitor their levels of blood glucose. And yet, studies have found that most people with diabetes do not regularly self-monitor their blood sugar.² Personal finance, as mentioned above, is also an area where the ostrich effect can wreak havoc. According to one British survey, only 10% of people who reported financial anxiety actually checked up on their finances at least once a month.²

The ostrich effect can also hold us back from addressing larger-scale problems, such as climate change. There is scientific consensus that climate change is a real, man-made problem, and it will require immediate, decisive action in order to avert its most disastrous consequences. And yet, many politicians have responded to this threat by ignoring and suppressing information about them. In 2012, for example, lawmakers in North Carolina made it illegal to base coastal policies on the latest scientific predictions of how much sea levels would rise due to climate change.¹⁵ Ordinary citizens are also guilty of burying their heads in the oil sands, with 18% of Americans believing either that the climate is not changing, or that human activity has nothing to do with climate change.¹⁶

Though it can be tempting to run away from constructive criticism, in the long run, we’re almost always better off knowing where we stand and how we can improve. Although it may take a little determination, it’s definitely possible to get around the ostrich effect.

Focus on your big-picture goals

Whether you’re trying to improve your health or deciding how to invest, it’s helpful to try to adopt a long-term mindset. When you feel yourself getting bogged down in temporary setbacks and disappointments, try to remind yourself of your ultimate goal, and focus on the reasons that you decided to do this in the first place. Although the losses might still sting more, this can help to offset the pain of receiving constructive feedback.

In doing this, it’s not enough just to be aware of your goals. Write them down and regularly revisit them to reflect on whether you’re making progress. Try to set clear, specific goals and break them into manageable steps so you can track your progress with objective measures. For example, if you’re trying to improve your financial life, this might include monthly budget reviews or regular check-ins to monitor your credit card balance. 

It’s also important that your goals are personally meaningful. Research suggests that when we are highly motivated to reach our goals—either because there is a strong monetary incentive or we find the goals intrinsically rewarding—we are more likely to monitor our progress, even when checking in requires a great deal of self-control.²

Create psychological distance

If you’re still feeling averse to seeking information about your own progress or performance, creating psychological distance might help dampen your emotional reaction and make it easier to confront uncomfortable truths.²³ When you distance yourself from unpleasant information, you’re less likely to feel anxious about the negative emotions it might trigger. One way to do this is to pretend that you’re looking up information for a friend. For instance, if you’re nervous about asking for feedback on a work project, imagine that you’re asking for a colleague who completed the project instead of yourself.

Another way to create psychological distance is to write about your goals in the third person as if someone else is pursuing them. Beyond reducing the emotional weight of self-criticism, this could also be a great way to uncover the root of your anxiety and convince yourself that seeking information is the best way to overcome it. For instance, if you’re avoiding checking your grades after an exam, you might try this thought experiment: “Sarah is nervous about her midterm results because she is worried a low grade will mean she isn’t going to pass the final. But if she checks her exam results, Sarah can figure out which topics she needs to focus on to feel confident going into the final.”

Automate your exposure to uncomfortable information

Setting up automated reminders can be a great way to ensure you’re exposed to potentially unpleasant information regardless of your level of self-control or motivation. This might mean creating notifications that alert you when your bank balance reaches a certain point or monthly emails that tell you how much energy your household is using. By repeatedly exposing yourself to progress-tracking information, feedback, or data about your performance, there’s a good chance you’ll become more comfortable with this information over time.²⁴ This strategy is based on the mere exposure effect, where repeated exposure to something increases our preference for it, even if it makes us feel uncomfortable at first. Automating this process is a great way to increase your familiarity with this information so it feels less and less aversive.

Try being mindful

Mindfulness has been a hot topic over the past few years. Most of the time, people seem to talk about mindfulness meditation as a tool to improve focus and productivity. But at its core, mindfulness is just about paying attention to your experiences as they unfold, nonjudgmentally observing what’s going on inside your mind. Mindfulness is often used as a tool to interrupt harmful patterns that people have fallen into: instead of blindly following an emotional response or instinct, people can simply note that the impulse exists, and then move on from it.

Mindfulness can help combat the ostrich effect by allowing us to accept our anxiety about receiving feedback and gain greater control over our emotional responses.¹⁰ By taking a second to examine how we’re feeling and what we’re thinking, we might be able to recognize that it’s perfectly okay to feel uncomfortable, but we don’t have to let these feelings affect our behavior. Many studies have provided empirical evidence that mindfulness practice improves people’s self-knowledge.¹⁰

Be kind to yourself

A key element of mindfulness is that it is non-evaluative and nonjudgmental.¹⁰ The point isn’t to catch yourself out or chastise yourself for slacking off. After all, nobody’s perfect, and there’s no reason to feel ashamed of your faults. Not only is it unnecessary to be hard on yourself, but it’s also counterproductive, and will probably only add to the negative emotions surrounding your goals and receiving feedback.

What are the symptoms of ostrich syndrome?

Information avoidance, a key characteristic of the ostrich effect, can manifest in various ways. If you want to find out whether you or someone else is exhibiting ostrich syndrome, look out for these common behavioral and psychological signs:²⁵

• A preference for ignoring negative information, even if this information is beneficial
• Avoidance of feedback and constructive criticism
• Failure to monitor progress towards goals
• Procrastination on tasks that could reveal uncomfortable information
• Making biased interpretations of feedback or warnings to justify avoidance behavior
• Unresolved relationship conflicts due to avoiding difficult conversations

As we’ve explored throughout this article, these symptoms can show up in various domains, including personal finance, health, workplace performance, environment, and academic settings—anywhere someone might encounter potentially negative information about reality. While these avoidance behaviors can provide temporary emotional relief, they typically lead to larger problems in the long run.

Is the ostrich effect ever useful?

Like many cognitive biases, there are a few situations where the ostrich effect can be useful, at least temporarily. Overlooking some negative information can help you stay motivated and persist through the initial stages of challenging projects, creating a kind of “fake it till you make it” mindset.²⁵ For instance, startup founders often exhibit a form of unrealistic optimism that spurs risk-taking and outside-the-box thinking.²⁶ However, it’s important that this optimism is balanced with realism to promote long-term success.

Similarly, the ostrich effect can be valuable in high-stress situations, especially when you’re not able to address problems right away.²⁵ Filtering out distressing or overwhelming details—and paying selective attention to positive or reassuring information—can make it easier to act quickly or maintain emotional control in high-pressure situations. By temporarily avoiding the emotional impact of negative information, you may be better able to focus on priorities until you’re in a position to confront uncomfortable issues head-on.

The ostrich effect was first coined by Israeli economists Dan Galai and Orly Sade in a 2003 paper about investor behavior.³ In their research, Galai and Sade found that investors often avoid monitoring their investments when market conditions are uncertain. They used the term “ostrich effect” to describe this behavior, based on the common (and, disappointingly, untrue) belief that ostriches try to avoid predators by just sticking their heads into the sand.

Galai and Sade were inspired by the work of behavioral economists Daniel Kahneman, Amos Tversky, and Richard Thaler. Kahneman and Tversky, two of the “founding fathers” of behavioral economics, developed the concept of loss aversion in the 1970s, showing that “losses loom larger than gains.”⁴ Thaler, who frequently collaborated with Kahneman and Tversky, is well known for his work on mental accounting, which describes how people assign subjective value to money depending on the situation. Thaler also coined myopic loss aversion, alongside another economist, Shlomo Benartzi.³

The ostrich effect can cause organizations to overlook feedback or miss early warning signs of trouble, impacting various stages of the product development process. For example, companies might dismiss negative feedback from customers while putting too much stock in good reviews as indicators of customer satisfaction.²⁵ As a result, flaws in the product can go unaddressed, hurting customer satisfaction in the long run. Similarly, companies that are concerned about cybersecurity vulnerabilities might look the other way instead of addressing these issues, leading to compliance gaps and a greater risk of data breaches down the line. 
The effect can also cause business executives to downplay or ignore negative performance metrics. For instance, one study found that managers of retail cannabis dispensaries are more likely to seek out information about product performance when they expect good news vs. bad.²⁷ Managers were even more likely to exhibit the ostrich effect when they could not attribute performance to external factors but rather had to internalize the blame for mistakes. The researchers also found that the tendency for managers to avoid bad news about product performance led to real-world effects, such as an increased likelihood of product stock-outs. Overall, the ostrich effect can lead to poor product decisions, missed opportunities for improvement, and increased vulnerability to risks.

Just as the ostrich effect has important implications for product development, it can also impact the adoption of technological innovations like AI. For instance, many professionals avoid talking about AI, dismissing it as a trend or claiming that it is too technical for their specific needs.²⁸ Much of the hesitance to adopt AI is rooted in fears about complexity, the need to learn new skills, and its potential to disrupt jobs. Instead of embracing these incredible new tools, many working professionals and business managers choose to look the other way, denying the impact that AI could have on their roles or simply waiting for the “trend” to pass. Unfortunately, this means that many firms are at risk of falling behind competitors that readily adopt AI to streamline tedious processes, manage customer engagement, and support decision-making. 

On the other hand, there’s also a risk that those who do readily adopt AI neglect important information about risks, such as ethical issues, AI bias, or the spread of false information. Both AI developers and initial adopters might ignore warning signs of these risks because acknowledging them is uncomfortable—and confronting them may disrupt the current rate of progress. This can result in the development of AI tools that are unreliable or untrustworthy. In this context, the ostrich effect could also lead to the overuse of AI tools without appropriate human oversight.

Receiving constructive criticism from coworkers and superiors is an important element of any job, and essential for employees to improve in their work. However, because of the ostrich effect, many employees don’t seek out feedback, hurting both themselves and their organizations.

Research has found that the drive to protect one’s own ego often holds people back from asking for feedback at work. The same study also showed that, in environments where people didn’t tend to go looking for constructive criticism, people were reluctant to seek feedback because they worried about how other people might judge them for doing so. These findings underline the importance of creating a workplace culture that encourages people to ask for feedback on their performance.¹⁷

Many people care about the problem of climate change, but given the complexity of the problem, it’s difficult to know how to address it. Unfortunately, research has found that feeling unknowledgeable about an issue can give rise to the ostrich effect, especially when the problem is urgent.

In one study, participants read a short passage about a possible oil shortage. For one group, the text said that the US would have enough oil to last another 240 years; for the other group, it said that oil would start to run out in 40 years. After they had read the passage, participants completed a questionnaire that assessed how interested they were in learning more about the issue. People who felt less knowledgeable about energy resource management were more avoidant of learning more about the problem, but only they had read the version of the text that presented an oil shortage as an urgent problem.¹⁸ This finding suggests that, even as people become more aware of how serious the threat of climate change is, this might not prompt them to act, and instead could lead to more avoidance.

What it is

The ostrich problem describes how people often avoid learning negative information or seeking feedback on their performance.

Why it happens

People are biased towards positive information, and are also motivated to protect their own egos. The desire for psychological consistency also plays a role.

Example 1 – The ostrich problem and job performance

People often refrain from asking for feedback at work, largely to protect their ego, and because they worry about how other people will perceive them.

Example 2 – The ostrich problem and climate change

When people feel unknowledgeable about a problem, and that problem is urgent, they are likely to avoid learning more about it. This has implications for how we approach climate change education.

How to avoid it

To avoid the ostrich effect, try some mindfulness exercises, and try to remind yourself of your long-term goals.

Are You Making Bad Financial Decisions Because of Information Avoidance?

This article explores how the ostrich effect can hurt people’s efforts to manage their personal finances, and explores some more reasons why people avoid useful information.

Tackling Climate Change (½): Why Don’t We Act On Climate Issues?

The ostrich effect is one of many barriers to addressing climate change. This article, the first of two parts, explores some more reasons that this topic is so cognitively challenging.