The Endowment Effect and Taking Ownership of Social Problems

“Just own it.”
 
Have you ever said this to someone? Have you ever said it to yourself? If you have, it was most likely because you wanted whatever the ‘it’ was to be more meaningful. You may have been diminishing an accomplishment (e.g., “My GPA was 2.7 last semester”) or shrugging off a mistake (e.g., I cheated on an exam”) or putting something off (“I’ll go to the doctor next week”). Either way, you or the person in question was not embracing the full gravity of the ‘it’ in question. So why do we resist taking ownership of things—often important, defining things—in our lives?

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As soon as you take ownership of something, you can no longer sit idly by. You need to ask yourself what happened in your classes last semester and how you can turn it around. You need to admit you cheated, face the consequences, and hopefully be better for it. You need to accept that you are sick and face the potential difficulties and challenges ahead. In some ways, life is easier if you do none of the above. You don’t have to justify anything. You don’t have to draw attention to an obvious misstep. You don’t have to change the status quo.
 
This trait, I believe, is related to the endowment effect, and it may shed some light into behaviors associated with the Coronavirus and #BlackLivesMatter. Essentially, we tend to place more value on something once it is in our possession—whether we’ve owned it for 20 years or 20 seconds. There are numerous experiments to demonstrate this effect, often where two groups of people are given objects of equal value and refuse to trade with one another. As soon as I receive the pen, I think it is more valuable than your mug; however, had I been given the mug to start, I would think it more valuable than your pen. Just think back to school cafeteria bartering and how you thought your Little Debbie was worth your friend’s Handi-Snack AND Fruit Roll-up combined.
 
The endowment effect can help explain many phenomena, from why someone goes ‘all-in’ holding two-pair in a 6-handed Texas Hold ‘Em (“This hand is unbeatable!”) to why fantasy football trades are so difficult to make (“My benchwarmer is better than your starter!”) to why some sellers on Facebook Marketplace are never able to see anything (“My Grandpa’s toy train is worth more than that!”). In each case, the value assigned to the object differs depending on the point-of-view. When it is in our possession, it is worth more.
 
The possession does not have to be literal. For instance, I may think my alma mater is going to win the NCAA tournament because I take ownership of my school, which may cloud my judgment. Another example. My best friend died of leukemia six years ago, and therefore, this disease means more to me than others. I feel attached to it and, in a sense, I take ownership of it. What does that mean? In both very different situations, I act on the attachment. I spend $20 on a bracket taking my school all the way, knowing full well that is a long shot. Or I put myself on the bone marrow registry to see if I can be a match for my friend.
 
Behavioral economists have a name for this as well: Willingness to Pay. I was willing to pay $20 on a Cinderella team because I am personally invested in the school. I was willing to donate bone marrow for my friend. Incidentally, I have remained on the registry ever since because, in a sense, I have taken some ownership of the disease itself.
 
How do these concepts apply to Coronavirus and #BlackLivesMatter? The simple answer is that the only way to tackle them is to embrace them. The Coronavirus is not going away until we all take ownership and are willing to pay something. For first responders and essential workers, the payment is enormous. For most of us, though, the ‘payment’ is quite small. Wear a mask, maintain physical distance, don’t go out to a crowded bar. So why do many resist this simple request? Perhaps the virus has not become meaningful to them in a real way. It still seems abstract, which warrants no personal stake in the game. “I don’t know anyone who has gotten seriously sick from this disease, therefore it doesn’t matter to me. My life is fine. Why should I care?”
 
The reluctance is all over the media, manifesting through small turns of phrase like ‘the China Virus’. This is shorthand for: “I didn’t start this thing and therefore I am not obliged to fix it.” Less offensive but more destructive is proclaiming—as the national strategy for overcoming a pandemic—that “America is a nation of miracles.” Waiting for a miracle is a wishful, passive response which assumes zero responsibility. Both of these reverse the endowment effect, pushing blame and accountability in other directions. Leaders do not meet challenges with “I’d like to start by saying this not my fault.”
 
For some people, #BlackLivesMatter is a slogan that is neither divisive nor unifying. It may seem like a distant, niche cultural phenomenon that does not impact them personally. They may feel they have [literally] no skin in the game—a sentiment reinforced by the current administration. While Coronavirus has been met with “It’s not my fault,” #BLM has been met with “It’s not a real problem.” The Republican National Convention spent four days trying to convince America that it is not a racist country. Why? Because if a problem exists, you have to fix it. The much easier approach is to tell ourselves: don’ feel guilty, we did nothing wrong, what’s in the past is in the past, we can sleep easy knowing this is a non-issue, we don’t have to change anything about our lives, white privilege is a hoax, see look at this handful of black speakers, how could a racist country achieve that! At least praying for a miracle admits that Coronavirus exists. Pretending racism is not a problem is a deliberate attempt to reverse the endowment effect. It allows a national shirking of responsibility for anyone who feels detached from or inconvenienced by a civil rights movement.
 
Unfortunately, unlike Coronavirus, there is no vaccine for racism. There is no impending miracle. This is a problem that requires everyone to take ownership. So many people have paid and continue to pay with their lives, their dignity, their safety, their opportunity; surely the rest of us should be willing to pay something. It doesn’t have to be protesting or supporting civil organizations. It may be as simple as acknowledging the problem exists. It may be removing personal defense mechanisms and having an open dialogue. Considering how much has been paid by generations of people of color, this seems pretty doable.