BBC Future column: Why we love to hoard

Here’s last week’s column from BBC Future. The original is here. It’s not really about hoarding, its about the endowment effect and a really lovely piece of work that helped found the field of behavioural economics (and win Daniel Kahneman a Nobel prize). Oh, and I give some advice on how to de-clutter, lifehacker-style.

Question: How do you make something instantly twice as expensive?

Answer: By giving it away.

This might sound like a nonsensical riddle, but if you’ve ever felt overly possessive about your regular parking space, your pen, or your Star Wars box sets, then you’re experiencing some elements behind the psychology of ownership. Our brains tell us that we value something merely because it is a thing we have.

This riddle actually describes a phenomenon called the Endowment Effect. The parking space, the pen and the DVDs are probably the same as many others, but they’re special to you. Special because in some way they are yours.

You can see how the endowment effect escalates – how else can you explain the boxes of cassette tapes, shoes or mobile phones that fill several shelves of your room… or even several rooms?

No trade

To put a scientific lens on what’s going on here, a team led by psychologist Daniel Kahneman carried out a simple experiment. They took a class of ordinary University students and gave half of them a University-crested mug, the other half received $6 – the nominal cost of the mug.

Classic economics states that the students should begin to trade with each other. The people who were given cash but liked mugs should swop some of their cash a mug, and some of the people who were given mugs should swop their mugs for some cash. This, economic theory says, is how prices emerge – the interactions of all buyers and sellers finds the ideal price of goods. The price – in this case, of mugs – will be a perfect balance between the desires of people who want a mug and have cash, and the people who want cash and have a mug.

But economic theory lost out to psychology. Hardly any students traded. Those with mugs tended to keep them, asking on average for more than $5 to give up their mug. Those without mugs didn’t want to trade at this price, being only willing to spend an average of around $2.50 to purchase a mug.

Remember that the mugs were distributed at random. It would be weird if, by chance, all the “mug-lovers” ended up with mugs, and the “mug-haters” ended up without. Something else must be going on to explain the lack of trading. It seems the only way to understand the high-value placed on the mugs by people who were given one at random is if the simple act of being given a mug makes you value it twice as highly as before.

This is the endowment effect, and it is the reason why things reach a higher price at auctions – because people become attached to the thing they’re bidding for, experiencing a premature sense of ownership that pushes them to bid more than they would otherwise. It is also why car dealers want you to test drive the car, encouraging you in everyway to think about what it would be like to possess the car. The endowment effect is so strong that even imagined ownership can increase the value of something.

Breaking habits

The endowment effect is a reflection of a general bias in human psychology to favour the way things are, rather than the way they could be. I call this status quo bias, and we can see reflections of it in the strength of habits that guide our behaviour, in the preference we have for the familiar over the strange or the advantage the incumbent politician has over a challenger.

Knowing the powerful influence that possession has on our psychology, I take a simple step to counteract it. I try to use my knowledge of the endowment effect to help me de-clutter my life. Perhaps this can be useful to you too.

Say I am cleaning out my stuff. Before I learnt about the endowment effect I would go through my things one by one and try to make a decision on what to do with it. Quite reasonably, I would ask myself whether I should throw this away. At this point, although I didn’t have a name for it, the endowment effect would begin to work its magic, leading me to generate all sorts of reasons why I should keep an item based on a mistaken estimate of how valuable I found it. After hours of tidying I would have kept everything, including the 300 hundred rubber bands (they might be useful one day), the birthday card from two years ago (given to me by my mother) and the obscure computer cable (it was expensive).

Now, knowing the power of the bias, for each item I ask myself a simple question: If I didn’t have this, how much effort would I put in to obtain it? And then more often or not I throw it away, concluding that if I didn’t have it, I wouldn’t want this.

Let this anti-endowment effect technique perform its magic for you, and you too will soon be joyously throwing away things that you only think you want, but actually wouldn’t trouble yourself to acquire if you didn’t have them.

And here’s the thing… it works for emails too. If someone sends me a link to an article or funny picture, I don’t think “I must look at that”, I ask “If I hadn’t just been sent this link, how hard would I endeavour to find out this information for myself?”. And then I delete the email, thinking that however fascinating that article on the London sewerage system sounds or that funny picture of a cat promises to be, I didn’t want them before the email was in my possession, so I probably don’t really want them now.

That’s my tip for managing my clutter. If you have any others, let me know.

10 Comments

  1. Fre
    Posted July 23, 2012 at 11:24 am | Permalink

    It could also be relationship advice

    If this person wasnt my partner, how hard would i try to seduce her or him?

    Well that could get ugly soon.

    You could see a link to attachment theory. And the endowment effect a sort of consequence of our personification of objects.

  2. Aoyagi Aichou
    Posted July 23, 2012 at 1:04 pm | Permalink

    That can be a life-changing article for some people – then again, most of those people are probably too attached to their habits of hoarding things to give it up.

  3. Sisu
    Posted July 23, 2012 at 1:04 pm | Permalink

    Here’s how I do it (I was raised by hoarders and am shedding my clutter.)

    I use the reverse endowment effect, but I put a price on every object. The price of replacing it via yard sale, because these things aren’t new. My goal is to have gotten rid of $1000 worth of stuff by the end of summer- 87 cents for the paper clips in the mason jar, for example. It’s a game. I can always get more paper clips; I’ll be able to come up with 87 cents if I suddenly desperately need a mason jar full of paper clips. (Oh, and a dollar for the jar.)

    I’m up to $457. It’s a reverse yard sale event, I’m donating things, giving things away, and counting up the ‘actual’ worth of the objects as I go. It’s amazing to see the difference between what I valued it at, and what I would value its identical replacement at. I wouldn’t part with this vase for twenty dollars- but I think I could replace it for five. It gets a five dollar mental price tag and goes out the door. It lets me systematically strip objects of their symbolic properties as belongings, and see them just as things.

    I’m starting to buy a lot more stuff this way, too, knowing that I’ll be looking at it the same way someday. “It’s ten dollars. If I need it I can come back. It will be here.”

  4. Posted July 23, 2012 at 3:38 pm | Permalink

    Enlightening. Thanks for this. Merrill Markoe had a hilarious commentary on the subject in one of her books, too long to repeat here.

    I try to imagine the best-case travel scenario and what I would take on the trip. The rest gets sold at a tag sale.

    I read in the Guardian about an experiment, people sat at a pay phone longer if someone was waiting for it. The researcher called it “mindless territorialism”. I wonder if that’s the same phenomenon.

  5. jbkly
    Posted July 23, 2012 at 4:53 pm | Permalink

    Great post and great timing — I’m moving across town in a week and I can already think of several things that were coming with me but now won’t be!

  6. Posted July 23, 2012 at 8:39 pm | Permalink

    I forgot my other suggestion: apothecary cabinets. They’re amazing. Some of them have dozens of drawers for everything under the sun. Don’t buy from Ikea as they’re actively taking down the rainforest. Reclaimed wood ones are expensive but you can find used ones on Ebay, Craigslist etc. The website Apartment Therapy features storage units and declutter suggestions as well, some pieces are very beautiful. They showed one person’s idea of using a spice rack & reused glass spice bottles to store wall tacks, paper clips etc.

  7. Raelene Charles
    Posted July 24, 2012 at 1:12 am | Permalink

    20 years ago, the roof and ceiling on my shack of a starter home caved in one night, dumping a couple of startled squirrels into my living space. I fled into the night with a trash bag full of clean laundry and a few personal items.
    It was wonderful, the least burdened I have ever felt, a relief to be away from all of those things. My rented studio had only an airmattress, a kitchen table, two chairs, 4 plates, 4 forks and spoons, 2 pans. My friends were appalled at my voluntary poverty, but it was so grand while it lasted, the happiest period of my life.
    Now I’m junked up again. My Mother is 89 and “downsizing” all her things to my house. It upsets her if I refuse anything, so I don’t.But now I realize why even the silver is in the corner in a pile. I don’t want it to become *my* stuff.
    I appreciate the insights your articles have started bubbling in my brain. I’m going to work with thid Mind Hack!

  8. Caroline Cordery
    Posted July 24, 2012 at 10:39 pm | Permalink

    William Morris: “Have nothing in your house that you do not know to be useful, not believe to be beautiful.”

  9. rmgw
    Posted July 29, 2012 at 7:23 am | Permalink

    Excellent stuff….but there’s another effect in keeping gifts: one remembers the giver by them. William Morris also left this out of account: shell-covered effigies of the Eiffel Tower with “to the world’s best gran”picked out in gold paint are probably neither useful not beautiful, nor do they have monetary value, but many a fond matriarch dusts this clutter thinking of the donor….

  10. Posted July 31, 2012 at 11:19 am | Permalink

    Not too long ago we were all nomadic hunters. There was no garbage. All that you owned you carried with you.


One Trackback/Pingback

  1. [...] Mind Hacks has a nice pointer: Say I am cleaning out my stuff. Before I learnt about the endowment effect I would go through my things one by one and try to make a decision on what to do with it. Quite reasonably, I would ask myself whether I should throw this away. At this point, although I didn’t have a name for it, the endowment effect would begin to work its magic, leading me to generate all sorts of reasons why I should keep an item based on a mistaken estimate of how valuable I found it. After hours of tidying I would have kept everything, including the 300 hundred rubber bands (they might be useful one day), the birthday card from two years ago (given to me by my mother) and the obscure computer cable (it was expensive). [...]

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