The world is transforming to enable most of us to travel and work from wherever we want. When so much much mobility is available, what keeps us tied down to one town or one city?
There are several factors at play – the ease of habit, the presence of one’s friends and relatives, the attachment to one’s city and so on. A prominent factor in that list is the stuff we own and surround ourselves with.
We come back to the same house every evening because of the things we won – the bed and mattress we sleep on, that comfortable armchair we bought online, our library with its several books, our kitchen cabinets, our refrigerator, and in some cases, the house itself. If we could pack our dearest belongings into a suitcase, there aren’t many things that prevent us from working the next week from a completely different town.
Ownership is a two-way street. Just like Newton’s thrid law.
Every additional thing that we own enlarges our suitcase. If your belongings fit into several suitcases, the cost of packing them, lugging them across towns and unpacking them again increases exponentially with each additional suitcase. In essence, one of the defining variables of our freedom is the amount of stuff we own.
Is there a means to quantify this?
The endowment effect is a popular behavioural economics concept. It is defined as the additional value that people attach to the stuff they own, merely because they own them. To illustrate this, there was a study performed by Daniel Kanheman, Jack Knetsch and Richard Thaler. They gave participants a mug, which could be traded or sold. Once they established ownership of the mugs, they found that people expected twice the amount to part with it in compared to what they would pay to acquire it. If the mug cost $3, they expected $6 for selling it. The endowment effect in this case is 100% or 3$.
The difference in price quantifies the extent to which the mug owns us.
Different parts of the world have never been as accessible to everybody reading this post. In these circumstances, it is important to understand the factors that hold us back from exploring its wonderful reaches. More so if they have to do with the inanimate objects that we surround ourselves with.
Source: Endowment effect