On Tuesday after dinner, I was chatting in the car with a friend about an upcoming daytrip to tahoe. As we were discussing rides, the main concerns were the need/availability of tire chains, the number of seats in people’s cars, etc. Someone else's car was mentioned, the same car as my friend (same model, different engine). When it came to the concerns we discussed (chain size, number of seats) the two cars were identical; however my friend’s first reaction was “my car is better” (jokingly of course).
At first I disagreed, as the two cars were the same make/model. But then the reaction itself started piquing my curiosity, as it reminded me of a
post I recently saw in the freakanomics blog that featured a comparison of the kindle vs the nook. The author described the
endowment effect, a concept in behavioral economics which basically theorizes that people place a higher value on objects that they own than objects that they do not. It then goes to contrast that against a
“grass-is-greener” effect, which theorizes that the object we do not own is more desirable, simply because we don’t own it.
Clearly my friend is currently in the
endowment effect camp at the moment, which is completely understandable, as whenever I make a large purchase (i.e. car), I have the same feeling. However, I wonder if there is an gradual shift for people as ownership progresses? As a person becomes accustomed to an object, it becomes taken for granted. The pro’s and more importantly, the con’s of the object become clear to the owner, and perhaps they wish they got the other object in the comparison?
Take me for example. Every time I step into a pho restaurant, I have two main options to choose from: pho, or rice dish. Assuming both are the relative the same price (which seems to be the case at most pho places), I proceed to make a choice between the two. Let’s say, for this example, that I choose the pho. I chose it because it is always yummy and I enjoy pho broth (and the msg) and the noodles are always a good choice. I would
rather have the pho that the rice, and my rationalization is that at the same price, pho is
better. As I sit there, confident in my choice, my eating companion may choose the rice dish, which I view as obviously inferior to my pho. As I sit there, I still desire my pho, as I occasionally have irrational cravings for the noodles.
After we get our order, I still think my pho is better as I’m happily slurping (yes, slurping…because it’s awesome) my delicious noodles. As I keep enjoying the pho and the guy across from me is enjoying his dish, my mind subconsciously weighs the pros/cons of the pho vs the rice.
The noodles are great, and the broth tastes great, but the broth is hot, and it’s sunny and 75 outside. The rice looks good, and it’s definitely cooler than the soup. Plus the meat in the rice dish looks sooo good. As I subconsciously play out the comparison in my head, there is a gradual shift from
“my pho is better” to
“I wish I got the rice dish”. At that point, at the same price, the rice dish is
better.
While my curiosity on this gradual shift from
endowment to the
grass-is-greener effects mostly stems from an interest in the behavioral economic aspects, I wonder if people (like myself) have this shift because we take things for granted? After the initial honeymoon period of
I love everything about this, we flip our opinions because of our own internal restlessness, and begin to desire what we don’t have. I’m sure there are other areas where we feel this, and not just with noodles and cars. I myself am totally guilty of doing this, as evidenced by my flip-flopping on pho.
In small group we’re studying the life of Paul as we journey through the book of Acts. As Paul puts it in Philippians 4,
“I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do all this through him who gives me strength.” (clearly spoken like a man who has never had a bowl of pho) This whole process of studying Acts has been very convicting at times. I can easily rationalize my mindset through economic principles, but knowing what I know, I can’t in good conscience be ok with always wanting what I don’t have.
As a basement behavioral economist, this shift in behavior is explained by my nature to be discontent and to want what I don't have. As a Christian, I’m convinced that this is a byproduct of my sinful nature. While it’s in my nature to be restless, I need learn how to be content with what God’s placed before me. Basically, I need to be discontent with my discontentment (if that makes sense at all). Whether that’s my current job, or present life circumstances, or even a bowl of pho, wanting what’s on the other side of the fence isn’t what I should be doing.
hmm...all this talk is making me crave pho though…
