The endowment effect

A very helpful concept to understand when sorting through your things is something psychologists refer to as the “endowment effect”.

There you are, clutter clearing an area of your home, and you come across an object that has no real value and even though you no longer use it (or perhaps have never used it), you feel reluctant to let it go. Everything about it screams at you that it is clutter, but somehow you don’t feel able to throw it away.

Another time you can see this is when you buy new clothes. Suppose you buy a new jacket. Before you bought it, it was just another jacket hanging in a shop and meant nothing to you, but as soon as you own it, something changes. Now it’s YOUR jacket. It now means more to you than it did before. Even if you take it home and never wear it, it’s yours. Even if every time you see it, you realize you wasted your money because it’s not the right jacket, it’s still yours, and so you feel reluctant to part with it.

Or at least some people do. Psychologists have observed that most people feel more attachment to an item they own than to something they do not own, and some people feel this more than others.

In behavioural economics, this leads to something known as the “endowment effect” or “divestiture aversion”, where people place more value on an item they own than one they do not, even if they have only owned it for a few minutes. This is because humans are hard-wired to be loss-averse, and letting go of something that is owned can trigger feelings of loss.

So here’s something you can do next time you come across such an item while clutter clearing your home. Ask yourself this simple question:

‘Before I discovered I had this item, how much effort would I have been willing to put in to obtaining one just like it?’

This gives you a completely different perspective, and more often than not, you realise it’s not something you would put any time or effort into acquiring. It’s something that happens to have come into your life at some point and is now just taking up space. This change in standpoint makes it much easier to let it go.

Copyright © Karen Kingston 2013

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9 Responses to The endowment effect

  1. Pookie says:

    I always ask myself when deciding whether to keep something, if someone said, “would you like this, I don’t want it anymore”, would I take it? The answer is usually no.

    Now I understand why this works from what you say above, its because if I pretend its not mine it has nothing to do with me, no attachment.

    Would you like this not very attractive bit of old tat? Definitely not.

  2. Carole Wilding says:

    Are we truly ‘hard-wired’ to be loss-averse? The mind does react to objects either to grasp them or push them away. This applies to things as well as people, ideas and ideals. When we buy certain clothes or objects we see them as extensions of ourselves, to let go of what we have always believed ourselves to be, displayed in the clothes we where or where we shop or what we eat or what we believe in is difficult because we presume that we are losing our Selves. This is due possibly to constant conditioning from very young through parents, our peers and the media.

    With a different outlook or perspective before we buy certain objects or take on beliefs or ideas it may help to let go of this grasping mode that we all indulge in. To stay still and ask ourselves, What does this object add to my Self as I believe my Self to be? What am I trying to hold on to? What image am I trying to convey?

    Aversive behaviour is the same. If we come across clothes, ideas, people whom we push away. Why? Do they not fit into the criteria of who we think we are? Is it that we fear the effect of them in our world of Self?

    We have the capability, as Karen’s newsletters often show, to change our perspective on EVERYTHING. We are not our thoughts. We are not our clothes. We are not our ideas or beliefs?
    Perhaps we could use space clearing to clear our minds as well as our physical environment.

  3. Thomas Clancy says:

    I would like to hear how to psychologically release something that was once of personal value, was stored and forgotten, and now is re-discovered through clutter cleaning. I have wall calendars from 1979-1983, our first years of marriage & parenting that have special events marked, which are very nice to reminisce about. I guess I should put the info to computer files if I want to preserve it, and then I can dispose of the actual calendars. I also have old golf magazines in which my Dad underlined and made notes. I’ve reduced them to only the significant pages, but they still take up space and have questionable “real” value.

    • Hi Thomas

      It looks like you have answered your own question! As you have realized, you don’t need to keep the actual calendars or the golf magazines. You can either photograph or scan them and keep them digitally instead.

  4. Merilyn Parker Armitage says:

    Thank you, Karen for this ‘simple’ question. I am moving house and down sizing so now I have to really think about what I want to keep and let go of – your suggestion about taking me back to before I acquired it will be helpful. I found that walking the Camino de Santiago has helped my mentality on this. Walking with an 8 kilo back pack that contains all your requirements for a month really shows you how little we actually need. However I do have to clear my office and I am finding that I am hanging on to the files that represent my career over the last 30 or so years. Many are courses that I designed and attended – my portfolio you might say. The thought of just tipping them into the municipal refuse tip is more than I can bear right now.

  5. Melanie Pearson says:

    I always go back to the same thing – move on and let someone else enjoy it by donating to charity or selling it and using the money you make to buy something new for your ‘current self’. This works fantastically with children & the abundance of toys/games they seem to get nowadays!

  6. Dina says:

    I sometimes have a hard time letting go of things, because I always feel that I might need them.
    I have been getting better a letting go of the old to make room for the new. And I think that, that is not only a way of thinking that pertains to feng shui, but also the law of attraction as well. I have magazines that have recipes in them. Recipes that I have never tried. I keep telling myself that I am going to try that new recipe for chocolate cake really soon, but I never get the chance. I still hold onto the magazines. I need to let them go so I can make room for new cake recipes :)

  7. Sloane says:

    Hi Karen,

    I always enjoy reading your blog posts. I have done a lot of clutter clearing in the past thanks to the inspiration in your book and have found the process very freeing. However, recently I feel I have hit a wall with clutter clearing. My space is no longer disorganized, but I still have items that I know no longer have a place in my life, but I can’t seem to part with them. From reading these blogs, I understand intellectually that letting go of these items is what would be best, but emotionally I’m still attached. I haven’t done a space clearing on my space and I want to know whether that would help the process of letting go and help me become unstuck. I know you suggest doing a space clearing after the clutter clearing is complete, but if I can no longer clutter clear…What do you suggest?

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