My oranges are more valuable than yours!
If you walked by a market in the city or the town in which you live, and a vendor gave you a free basket of oranges, you would value these oranges at a higher price than what you would have originally paid. Why? Because of something called the endowment affect, a psychological and behavioral economic concept that simply states people value items they own at a greater level than that same item when they do not own it. At the core this is due to the sentimentality and emotional nature of human beings as well as, I believe, our animalistic and competitive nature.
We are a species of collectors. In ancient times it likely started with simple items such as shells, stones, and feathers. Today it has morphed from land and material products to connections, “likes” and “shares” on social media.
Each day in our society of consumerism we are inundated with new products and free trials of the hottest thing. I can presume you have a drawer in your kitchen, you know that one that is filled with a bunch of junk that you wouldn’t be able to name if asked. However, if you were forced to comb through that drawer and asked to sell each item, you would tag a price that would be much greater than what you would pay for it.
If you have had the opportunity to attend a trade show or industry event where promotional products are given away at many different booths, then you’ve likely become excited by the “freeness” of the promotional tote bags, pens, and squishy balls you’ve collected. Because these are in your possession, you likely attribute a certain level of value to these items. Likely due to the time, energy, and effort you put into going to the convention and collecting all of these promotional products. Fast forward a week, you are sitting at your work computer and you see a social media post by a trade show attendee at a different event and with similar promotional products — you would not value them the same.
The next time you attend a trade show or professional event where free branded products are given away. Stop and ask yourself, will this product create an improved experience for me? Will I see real value in this product that matches what I would pay or sell it for?
A higher order questions that arises from this thought is, does the endowment affect drive markets to produce more waste? Churning a constant flow of new products where people attribute an unrealistic value even when it is known they are destined to fill the junk drawers of kitchens across the US?
As millennials and Generation Z continue to shift their purchasing behaviors to experience driven products and services over material things, I wonder if this will this cause a psychological shift away from the endowment affect. The more people adopt a certain behavior, the more likely others around them are to exhibit the same behavior. Will this trickle down through the next generation and help enable markets, economies, and the world to be more sustainable with a focus on experiences and service driven offerings instead of manufactured goods? Take a look at the items in the depths of your closet and ask yourself “What would I sell this for?” And, “what is this really worth?”
