Several Unclutterer readers directed us to the article “It’s mine, I tell you” from the June 19 issue of The Economist. The article discusses the physiological, psychological, and economically irrational attachments people have with objects they own. And, to take it one step further, why it’s difficult to part with our possessions:
From basketball tickets to waterfowl-hunting rights to classic albums, once someone owns something, he places a higher value on it than he did when he acquired it—an observation first called “the endowment effect” about 28 years ago by Richard Thaler, who these days works at the University of Chicago.
The endowment effect was controversial for years. The idea that a squishy, irrational bit of human behaviour could affect the cold, clean and rational world of markets was a challenge to neoclassical economists. Their assumption had always been that individuals act to maximise their welfare (the defining characteristic of economic man, or Homo economicus). The value someone puts on something should not, therefore, depend on whether he actually owns it. But the endowment effect has been seen in hundreds of experiments, the most famous of which found that students were surprisingly reluctant to trade a coffee mug they had been given for a bar of chocolate, even though they did not prefer coffee mugs to chocolate when given a straight choice between the two.
My only problem with the author’s explanation of the endowment effect is that it doesn’t acknowledge that people (like the trader in the article) will part with goods. Obviously, it happens or my neighborhood’s Freecycle list wouldn’t exist and there wouldn’t be garage sales. There is a point, as with any transaction (barter or financial), when it is worth getting rid of an object. I’m interested in hearing more about the elements that must exist for that transaction to take place. If I were to guess, I would say that basic understanding of the endowment fallacy would make such a transaction easier. Therefore, let me suggest that everyone read the full article and make it easier to part with clutter in our homes!
