Collard, Walford, Vernon, Itagaki, and Turk (2020) on Endowment, Ownership, and Culture

Philip Collard, Alexandra Walford, Lucy Vernon, Fumihiko Itagaki, and David Turk, “The Relationship Between Endowment and Ownership Effects in Memory Across Cultures.” Consciousness and Cognition 78, February 2020, 102865. 

• One manifestation of endowment effects is that people require more money to part with an owned item (willingness-to-accept, WTA) than they are willing to pay (WTP) to acquire such an item if it is not yet owned – as if the mere fact that you own something raises its value to you. 

• Prospect theory offers one explanation for endowment effects: things you own become part of your reference point, so to “lose” them is particularly painful, thanks to loss aversion. 

• But maybe the endowment effect is not about loss aversion, perhaps it is about your identity being connected to owned items. You have a positive view of your self-worth, so things that become associated with your self become more valuable in your eyes. Ownership of items also has been connected with an increased ability to remember the item down the road. 

• Hmm, but maybe in some cultures people are not so wrapped in self-worth that they raise the value of stuff they own because it is connected to them? Maybe cultures differ, too, in how much ownership of an item increases the ability to recall the item? 

• Experiment 1 (n=32): eight household goods are divided into two equally-valued sets of 4 items each, where those equal values are based upon student valuations collected in a pre-experiment. A participant is told that they own one of the sets but not the other. Then each of the eight items is shown, and the subject indicates how much they would be willing to sell the item for (if they “own” it) and how much they would be willing to pay for it (if they don’t own it). 

• The 32 British undergraduates showed an endowment effect: they were willing to pay on average 9.25 pounds for the unowned set, but would have to be paid 10.65 pounds to part with their “owned” items. But would a similar endowment effect be identified if the experimental subjects were not British but Japanese? 

• For Experiment 2, 61 British undergraduates were recruited, along with 52 Japanese undergraduates. A version of Experiment 1's endowment task was performed, along with new ownership and memory tasks. In the endowment experiment, the Japanese students showed no endowment effects, but once again, the British did. (The endowment task was not identical in the UK and Japan for an unexpected reason: one of the everyday items that made up part of the sets of goods was not available in Japan! "For the Japanese participants, the spatula was replaced with a ladle as the former item was not available locally [p. 4].") 

• As for remembering the items, the British subjects were much better for the items they “owned” than for ones they did not own, but the Japanese showed no difference in recall based upon ownership. Further, British subjects (but not the Japanese) showed a positive correlation between their endowment effects and the impact of ownership on their recall. 

 • Maybe these (British) endowment effects are not about loss aversion, but rather about connections to self?