Chapter 7: The High Price of Ownership

Chapter 7: The High Price of Ownership
Why We Overvalue What We Have

Endowment Effect: we predicted that when we own something – whether it’s a cat or violin, a car or a basketball ticket – we begin to value it more than other people do.

Ownership pervades our lives and, in a strange way, shapes many of the things we do. Adam Smith wrote, “Every man [and women] … lives by exchanging, or becomes in some measures a merchant, and the society itself grows to be what is properly a commercial society. ” That’s an awesome thought. Much of our life story can be told by describing the ebb and flow of our particular possessions – what we get and what we give up.  We buy clothes and food, automobiles and home, for instance. And we sell things as well – homes and cars, and in the course of our career, our time.
	Since so much of live is dedicated to ownership, wouldn’t it be nice to make the best decisions about this? Wouldn’t it be nice, for instance, to know exactly how much we would enjoy a new home, a new car, a different sofa, and an Armani suit, so that we could make accurate decisions about owning them? Unfortunately, this is rarely the case. We are mostly fumbling around in the dark. Why? Because of three irrational quirks in our human nature. 
	The first quirk is that we fall in love with what we already have. 
	The second quirk is that we focus on what we may lose, rather than what we may gain. Our aversion to loss is a strong emotion. As soon as we begin thinking about giving up our valued possessions, we already mourning the loss. 
	The third quirk is that we assume other people will see the transaction from the same perspective as we do. 

Ownership also has what I’d call “peculiarities”. For one, the more work you put into something, the more ownership you begin to feel for it. (Ikea Affect) We can feel ownership even before we own something.
	“Virtual ownership”, of course, is one mainspring of the advertising industry.

There is no known cure for the ill of ownership. As Adam Smith said, it is woven into our lives. But being aware of it might help. 
	My own approach is to try to view all transactions (particular lager ones) as of I were a non-owner, putting some distance between myself and item of interest.