Je Ne Regrette Rien - The Secret to Increasing Diversity

Senior executives in the media industry often talk about employing more people from under-represented backgrounds as a “risk”.

We have all heard it before:

“Employing the black director I haven’t worked with before is a risk.”

“Commissioning a new script from a disabled writer is a risk.”

“I am not against diversity, I just want a safe pair of hands, I just can’t afford to take the risk”

Advocates of increasing diversity try and counter these types of sentiments by saying that many of these diverse candidates are in fact highly qualified and are not risky at all, in fact “diversity is a strength”.

The media executive, duly accepts the arguments and how they too believe in diversity, explains how they are not racist, sexist, and do not have a prejudiced bone in their body, but this time the risk is still too great and they will stick with the status quo.

The reason the diversity advocates never win this argument is by talking about risk - even if its to argue that diversity is not risky - they have already accepted a framing of the argument that not only works against diversity but some important economic theory.

To win the argument we need to understand what really motivates senior business leaders - sometimes even better than they understand themselves and that involves understanding some simple game theory economics.

The fact of the matter is senior media execs are taking risks every day. Greenlighting TV and film projects is some of the riskiest business decisions one can make and they make them every day.

When senior media execs say diversity is too risky they are in fact confusing risk with regret.

Let me explain the difference.

Buying a lottery ticket is risky.

Not buying it and finding out that it could have been the winning ticket leads to regret.

Economic game theory explains that a lot of the time what people are doing is not trying to minimise risk. But minimise regret.

So how do economists define regret?

Regret is the difference between the real outcome and the alternative better outcome that didn't happen. In other words it is the difference between the happiness you derived from reality versus the happiness you think you could have derived from an imagined counterfactual.

The greater the difference the bigger the regret.

That is why people buy lottery tickets. They are not trying to minimise the risk of losing money - if they were the easiest course of action is to not buy a ticket - they are trying to minimise regret. The regret of potentially not buying the winning ticket.

So what has this got to do with diversity?

In the regret model, if a media executive commissions a programme to be directed by a white director they have never worked with before this carries far less potential regret than working with a black director they have never worked with before.

If the programme by the white director does terribly the exec has no regrets about employing the director on the basis of their race because in the alternative scenario the status quo also involves a white director.

There is no regret based on race.

However if they employ a Black director and it does badly then the alternative status quo scenario involves a white director. Therefore there is regret based on the race.

Both scenarios might be equally risky.

But one has far more potential regret than the other.

The economics theory around regret also says that the higher the public profile of your decisions the more regret can be associated with them. To put is simply it is what we commonly call “shame”. Shame is higher the more people are able to judge your actions.

It is therefore not surprising that this is a massive issue in the media industry where commissioning decisions are very public.

Once you understand the theory of regret then you can address it, rather than have ad infinitum arguments about risk which diversity champions appear to win but fail to change people’s actions.

And it is possibly the best argument for why we need an industry wide solution to diversity as opposed to thinking that individual media execs, or even individual channels, can solve these problems by themselves.

One's level of regret is heavily influenced by the actions of those around us.

Going back to the lottery ticket example.

If all our friends and peers are buying lottery tickets we will be more likely to buy one. This is because the potential regret of not buying one is greater if we think someone we know is going to win. The counterfactual feels more real.

Knowing this if authorities stipulated that we all had to buy 4 lottery tickets we would do so and win or lose there would be no regrets as the decision had been removed from our hands. The counterfactual has been removed.

(Please notice the amount of risk associated with buying a lottery ticket has not been reduced).

Similarly if media executives and broadcasters were all told by a media regulator that they had to commission a set amount of programmes directed by people from under-represented groups this would remove the idea of regret. It would remove the counterfactual.

Media regulators like Ofcom are not just there to “police” the industry but also to create the economic environment to make sure the best decisions are made. Simple game theory suggests they should set minimum standards to reduce “regret”.