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Abstract:
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When people experience a change in income, losses loom larger than comparable gains. And when they judge the fairness of their income, deficiency is felt more keenly than comparable excess. The loss aversion of prospect theory and the deficiency aversion of justice theory arise from the value function and the justice evaluation function, which can be written, J = ln(A/C), where the actual amount A can change from Time 1 to Time 2 or be larger/smaller than the just amount C by an amount k, where J is the justice evaluation or the value outcome, and where overall injustice E(J) can be decomposed into injustice due to poverty and injustice due to inequality. Research indicates that losses are felt twice as keenly as gains. This paper shows that deficiency(loss) is felt twice as keenly as excess(gain) when k equals [sqrt(5)-1]/2 (?.618) of the just or Time 1 amount. Because the Golden Number has been thought at least since Plato to be uniquely beautiful, present in nature and treasured in art, the question arises whether researchers and/or respondents may be (unconsciously) choosing magnitudes of loss/gain that hover about the Golden Number, themselves in thrall to this amazing number.
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