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. With Endowment v. adaptation
The June 21-27 Economist has an item that mentions in passing that “the fastest-growing part of America’s commercial-property business in the last 30 years” is the self-storage business. “There are now almost seven square feet of self-storage for every American.”
That’s sort of astonishing. What in the world are people storing?
The Economist brings this up in relation to the latest research on “the endowment effect,” and suggests (not entirely seriously) that our tendency to overvalue something simply because we own it (that’s the endowment effect) explains our reluctance to pare back on useless junk — and thus we rent out storage space for it when there’s too much clutter in the home.
The endowment (or “mere ownership”) effect comes up in Buying In, but so does another basic psychological concept relevant to our consumer behavior: adaptation. The latter encompasses, basically, our tendency to overestimate how long the pleasure we associate with a new thing will last (and to overestimate how long the misery associated with some negative event will last). In the context of stuff we buy, adaptation is what clutters your closet (or storage unit): All the things that seemed awesome at the moment of purchase, and then got ho-hum, and forgotten, pretty fast.
I’ve never seen research that reconciled these two concepts, and I wonder if such a study exists. Do we actually overvalue (per endowment effect) the junk in the closet (or the storage unit)? If we do, then why is forgotten and as a practical matter unenjoyed (per adaptation)?
Is there a point where the endowment effect fades, and adaptation kicks in?
Or do the two exist simultaneously in, say, that trendy raincoat (or whatever) that you had to have when it was on-trend and there was a waiting list — but that you haven’t worn since?
That is: Is it the case that said raincoat-owner no longer gets pleasure from the thing, yet still overvalues it?
Or: Is the way the endowment effect tends to be measured (direct questions about “what would you sell this for,” etc.) so outside the realm of the way we think about stuff we own in the months/years after acquisition, that it’s just not a relevant thing to try to measure at after x amount of time?
I feel confident that most everyone reading this owns a bunch of junk that doesn’t really mean much (or have much value). Maybe some of you even have rented storage space to keep it in.
I’m also confident that it meant something (and did have value) at the moment of purchase.
I’m less confident about the moment when that meaning (and value) evaporates.
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Reader Comments
My wife and mother-in-law are quite anti-clutter and subscribe to the law of purging. That is, if you haven’t worn it or used it for a certain period of time (a year is often the applied standard), then get rid of it (donate it, put it on freecycle, recylce it, or toss if it is of no value at all).
Being a guy, and one who didn’t have many possessions when he got married, I like the practice. I have even (sort of) learned to be ruthless with books.
In thinking about these purging sessions, I believe that both can exist simultaneously. Or not exactly simultaneously, but that the object can conjure up both. That is, once you divest an object of its endowment. “Yeah, you know, I really don’t use it. It doesn’t have value to me.” Then there is often an adaptation flashback. “Wait a sec… When I got this I was sure that I would derive such and such a pleasure out of it, and I didn’t get as much as I thought I would, but maybe if I keep it and rededicate myself to it — to use it/wear it/read it/listen to it — that pleasure can be recaptured.”
Certainly, it’s more true of objects that require active use but aren’t completely worn out (I will rotate this into my wardrobe this winter; I will start exercising on the treadmill; I will re-read my 19th century novels from college) as opposed to objects kept for sentimental reasons (tickets stubs, stuffed animals, greeting cards, that raggedy old concert T-shirt, and other chotchkes). But I believe that in order to get rid of something it has to lose both its endowment and its residual adaptation power because we are very, very good at re-investing objects with a belief in the original purpose behind acquiring them, even if our goals/living situation/relationships/body type have changed in the meantime.
Rob, so many variables to the question, hard to pin down the exact reasons. Some possible reasons from articles I’ve read and my own observations:
1. For some, (particularly women), the actual process of purchase raises endorphin levels.
2. Apartment buildings used to have healthy-sized storage spaces, not so with newer developments.
3. As we age, we accumulate more, so as the population ages, we need more storage space. a
4. Number of small businesses has increased over the years, increasing the need for storage.
5. The advent of self-storage and mini-pod storage has increased the availability and lowered the cost of storage.
6. The highest % of storers (as of 2006) is in FLA and CA, could be kayaks, and other water sport vehicles needing to be stored.
7. As our lives become busier, we have less time to do everything. Need to clean the attic, the garage, the basement, etc. Let’s just store it and do it another time.
8. In homes/apartments built in the 50’s and before had significantly less closet space. Perhaps psychologically, humans have a need to fill the space.
9. Baby boomers, generally children of depression-era parents, can’t bare to throw anything away because they were raised with the “you can never tell when you’ll need it again” mentality.
Boomers have probably passed on this mindset to their Echo Boomer offspring.
10. The disposable era has changed shoppers’ mindsets. Whether or not the item they buy is disposable, some buyers think, “if I don’t like it, I can get something else.” Same goes for marriage. ‘Til death do us part has been replaced by “if it doesn’t work out, I can always get a divorce.”
My 10 possibilities. Time’s up. BTW, I rarely save anything.
best
bonnie
here’s another angle – Throwing the thing away or ebaying it means admitting finally to yourself that you are never going to wear it or use it or otherwise get the benefit that you had intended when you buy it. So you decide to take the small economic loss of paying to store instead of the (perceived) large emotional loss of letting go. A sentiment that is often rationalized as “I’ll hang on to it – maybe I’ll get around to using it someday”
Maybe it’s all about regret minimization?
It seems like you always regret giving away maybe 5% of the stuff you donate in a closet purge. Value never evaporates; it simply fluctuates over time, depending on unpredictable circumstance. Most of the time, you’re right to call a “time of death” on your love for an object. But you just never know when that raincoat might become cool again.
If paying $19.99 a month for storage eliminates regret, is that a rational consumption choice? Maybe so…
Rob – I need to comment on the storage building crisis. Really, just the building of all the buildings. Storage buildings are a blight on the country side. I recently took a trip back to Hot Springs, Arkansas. What was once a beautiful drive is now scarred by these hopelessly ugly buildings. The stuff may be out of sight, but the rows and rows of metal buildings are everywhere. I don’t know the reason people hang on to crap that they never see or use – but I know where their crap is.
Take care – Allen
Dave, your angle makes sense.
Wonder how, or if, our emotional state differs when we throw things away vs. selling them. Personally, I never consciously consider economic loss when I dump things. Subconsciously, who knows?
A couple of buying habits to share, somewhat off subject.
1. It’s quite common for women to buy shoes that are too narrow, or clothes that are too small.
Usually, the shoes are for dressy occasions and women figure they can put up with the pain for a few hours. Clothes that are too small are purchased with the conscious rationalization that they’ll fit perfectly after “I lose a couple of pounds.”
2. In college I knew a guy who bought all of his dress shirts at the Salvation Army. Back then, they cost a buck a shirt. When the shirt got dirty, he’d donate it back, and buy a new one. Why? Because the dry cleaners charged $1.75 per shirt. How brilliant is that!
Best,
bonnie
richmond, va
USA
I like Dave’s point too. Sandy’s as well.
But I like Allen Weaver’s, too, and vis a vis that one: I think it’s worth raising here, the possibility that maybe a better solution than building a lot of storage centers for a bunch of junk we never use any more but we don’t want to admit as much — and in fact a better solution than regular purges or whatever — would be to buy more selectively in the first place.
This is kind of what I’m getting at both in this post and the book. Maybe a better time to evaluate the success of a purchase isn’t the undeniably pleasurable moment of acquisition, but some time later. To go back to the hypothetical raincoat example in the post: That would be a failed purchase, in my view, whether you give it to goodwill, live it in the closet, or put it in storage.
Maybe sometimes it’s better to think twice about finding pleasure in new acquisition, and find it somewhere else instead.
Just a thought.