Ego And The Endowment Effect

By Anthony Gold

How much would you pay for a coffee mug decorated with your school’s insignia?

On average, probably somewhere around $10.

But here’s an interesting twist.

Once you own the mug, how much would you be willing to sell it for?

This is what researchers wanted to study in an economics theory known as the endowment effect – which hypothesizes that people ascribe greater value to things that they own. This seems somewhat counterintuitive since a $10 mug should be worth $10 to us, whether or not we have purchased it.

But it turns out that is not the case.

In study after study, the data shows that we value owned goods about 2.5 times more than unowned goods – for the same items!

In other words, once we own it, we value it 2.5 times more than before we owned it.

Nothing changed to alter the value of the coffee mug except the concept of “mine”.

This concept is closely correlated with the theory of loss aversion in which we strongly prefer avoiding losses over acquiring gains. Thus the thought of departing with my coffee mug (once I own it) is much more poignant that the idea of buying the mug in the first place. And as such, I will put a much higher premium on selling it.

But coffee mugs are just the tip of the iceberg. Look at the value we ascribe the concept of “me”.

The reason why studying and practicing any spiritual thought system is so challenging is that at the core is this concept of oneness. In order for there to be oneness, there can be no concept of “I”. Yet we’ve put such extraordinary weight and value on the idea of “me”. Maybe not this body, but certainly the concept of “me” that transcends the body.

This perceived pain of losing that conceptual “me” is so great that we choose to no longer pursue such transcendent work.

Undermining the ego’s thought system must be perceived as painful, even though this is anything but true. Babies scream in rage if you take away a knife or scissors, although they may well harm themselves if you do not. In this sense you are still a baby. (T-4.II.5)

Letting go of the ego is so seemingly terrifying that we quickly abandon such studies. However, as we learn in A Course in Miracles, it is nothing more than our belief that gives the ego all its power. Join us in Monday’s class where we’ll explore the nature of the endowment effect and how we can simply withdraw our investment in the costly ego thought system. I look forward to seeing you then.

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