Watch the video above and talk about it with a group or mentor. Learn more.

Christian Jarrett talks about the Endowment Effect and how owning something changes it’s value in our minds.

Feelings of ownership emerge early in life. In fact, we value items more highly as soon as we own them. We can even go as far as believing that things we own contain some unique essence.

The Endowment Effect

As soon as we own something, we tend to value it more highly. This is known as the  Endowment Effect. This sense of ownership begins very early in life. For example, kids will throw a temper tantrum as soon as you take away their favorite toy. This doesn’t change much as we get older. Experiments have proven that most people would hesitate to trade something they own for something else of equal, or maybe even greater, value.

Sense of Self and the Things We Own

There is a quick connection between the things we own and our sense of self. For example, our brain activity reacts the same when we see new things we own as it does when we think about ourselves. This proves that once we own things, we value them as much as we do ourselves and they become part of who we are.

The Essence of Things We Own

From a young age, we have a “magical thinking about objects.” For example, kids would rather keep their original toy than take home an exact replica. Adults will pay a lot of money for an item once owned by a celebrity because it may still contain some of their essence. People value family heirlooms because it helps them remember lost loved ones. Whatever the essence we believe are within the things we own, it makes them more valuable to us.

Once we own something, we have a sense of responsibility for it, we don’t want to give it up, and we want to keep it safe. This is true because we believe our things have some kind of unique essence within them. The things we own become part of ourselves, and therefore, are valuable to us.

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Key Points:

  • The endowment effect. As soon as we own something, we tend to value it more highly. This is known as the  Endowment Effect.
  • Sense of self and things we own. There is a quick connection between the things we own and our sense of self. For example, our brain activity reacts the same when we see new things we own as it does when we think about ourselves.
  • The essence of things we own. From a young age, we have a “magical thinking about objects.” For example, kids would rather keep their original toy than take home an exact replica.

Quote This:

I am convinced that material things can contribute a lot to making one’s life pleasant, but, basically, if you do not have very good friends and relatives who matter to you, life will be really empty and sad and material things cease to be important. -David Rockefeller

Talk About It
  1. What is your initial reaction to this topic? What jumped out at you?
  2. What is your prized possession? Why?
  3. What do you own that is valuable to you, but may not be valuable to anyone else? What makes it so valuable to you?
  4. What is one thing you own that you could not live without? Why?
  5. Describe any signed autographs or family heirlooms you may have. What makes them so valuable to you?
  6. Do you think you hold some possessions in your life too highly or too tightly? Why or why not?
  7. Write a personal action step based on this conversation.