Turning the endowment effect inside out

Once people take ownership of something, sporting event tickets for example, they are generally unwilling to part with it unless they are offered 2-14x its cost.

Behavioral economics call this the endowment effect and the willingness to accept (WTA). It’s the adding of value people assign goods simply because they own them and amount of money they are willing to accept to abandon a good.

This mindset becomes a problem when there is an external need to assign an accurate value to goods we own. For example, during spring cleaning or when making an exchange.

What ends up happening is we hold onto things not because of the value they return but the baseless price we assign. In some cases we even ignore the harm a good is causing, such as added clutter and the effect on wellbeing.

To break out of this mindset, what if you were able to get you mind to a place that sees things for what they are? What if you were to think in terms of NOT owning something?

When spring cleaning, rather than thinking, “should I get rid of this?” you think, ” if I didn’t own this would I buy it today?”

The answer is almost always “no.”