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Why Do We Cling to Our Things?

Cultural variations on the Endowment Effect
Meera Lee

My husband has a rather nice down parka he’s been trying to sell for quite a while. Similar jackets of the same vintage regularly sell on eBay for about 80 dollars, but this one is still sitting in a suitcase in the back of our closet, because he refuses to part with it for less than twice the going price. This isn’t because he’s nostalgic about the years of blizzards he’s lived through inside it; and it’s not because he desperately needs the money. He just firmly believes the jacket is worth that much—even though when I quiz him he admits he’d never pay that price for someone else’s identical parka.

Does this scenario sound familiar? If you grew up in a so-called "WEIRD"—western, educated, industrialized, rich and democratic—society, it probably should. The cognitive bias known as the “endowment effect” has been reliably demonstrated to exist in “WEIRD” populations for decades. The term describes the tendency for mere ownership of an object to increase the value people place on it. When half the volunteers in Daniel Kahneman’s classic 1991 study were given cheap Cornell University coffee mugs and invited to set a selling price for their new possessions, for example, a surprising pattern emerged. Mug-receivers consistently asked several dollars more for their mugs than the other volunteers—those who hadn’t been given a mug—were willing to pay. (The bias is usually demonstrated in a research setting using trivial objects, to eliminate the influence of personal preference or sentimental value.)

The endowment effect is most often explained as an example of an irrational behavior associated with loss aversion; in other words, parting with our possessions requires an unreasonable amount of compensation because we don’t weigh the pleasure of gaining something new as heavily as the sting of losing something we have. But several recent studies are complicating this picture. Do we really value possessions so much just because we don’t like giving things up? Or is something else complicating this simple picture—identity, for instance, or culture?

About a year ago, Georgia Institute of Technology researcher Sara Loughran Dommer published a study suggesting that the endowment effect may have more to do with the way we see ourselves than we might think. Among other things, Dommer showed that the endowment effect is magnified when people are thinking about feelings of social rejection (e.g. remembering a past relationship in which they were rebuffed). Sellers who were primed to feel unloved asked an average of $2.47 for the ballpoint pens they’d been given earlier on; a control group asked just $1.59 for the same pens. (In both cases, buyers were unwilling to pay more than about 90 cents.)

Dommer’s explanation for this is that we draw some of our sense of self-worth and identity from the things we own; that’s why we cling to them even more fiercely when we feel vulnerable.

Psychology professor Coren Apicella was interested in a different question: Does the endowment effect exist in non-”WEIRD” cultures, he wondered? How long has it been around? For an answer, he looked to the Hadza, a hunter-gatherer people in Tanzania whose ways of life remain quite similar to the ones which prevailed throughout most of human history. In a fascinating set of findings, Apicella showed that the endowment effect was present, albeit not as strongly as in Western societies, in camps that were geographically close to a nearby village—where the Hadza came into contact with modern life in the form of tourists and commerce. But in more isolated camps the effect was essentially absent. Being given a particular object didn’t make the Hadza value it any more than a similar object they didn’t own. They were perfectly willing, for example, to exchange their red lighter for a blue lighter in an even trade.

Apicella can’t say whether this means that the endowment effect is a learned tendency that people acquired fairly recently, such as with the rise of capitalism—or whether it’s actually present among the Hadza, but masked because their culture considers most possessions communal. Either way, he says, “the results suggest that these isolated hunter-gatherers are more rational than the average western consumer when it comes to economic decisions." It’s a powerful statement that might just resonate the next time you’re setting a price for your old stuff on eBay.



Lisa Harris
3 years ago

 This article is very significant and such a great for the fresher’s reading. Superb insightful as usual!

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