by Bruce Hood
Successful traders cannot afford to have a strong endowment effect. If they were always to ask twice what people were willing to pay for items, then they would soon be out of business. This explains why experience as a trader reduces the endowment effect in that their asking prices are more closely matched to those the consumer’s willing to pay.13 Again, imaging studies point to the reduction in the pain of loss. Experienced traders show lower activation of the negative loss centres of the insula compared to inexperienced traders who are still treating sales as a loss.14 However, it remains uncertain as to whether experience as a trader diminishes the endowment effect over time or rather that those individuals who become successful traders are less attached to possessions in the first place. The endowment effect may be a System 1 bias to avoid losses, but it can be overridden by the cultural context of the value we put on possessions as well as goals to make a profit.
THE THRILL OF THE CHASE
What compels us to acquire in the first place? Why do some people describe themselves as shopaholics? You might imagine it is the acquisition that is so satisfying but, as many hardcore shoppers will attest, it is the anticipation of the acquisition that is so powerful. People can work themselves up into a frenzy. Law-abiding citizens can become lawless mobs – as witnessed by the growing phenomenon of ‘Black Friday’, where shoppers fight over shopping bargains, fuelled by the prospect of gain. People have even been killed in the stampede to get a bargain.15
Jean-Paul Sartre, in a twist on William James’s quote about ‘a man’s Self is the sum total of all that he CAN call his’, wrote: ‘Man is not the sum of what he has already, but rather the sum of what he does not yet have, of what he could have.’ For Sartre, it is the pursuit of goals, rather than acquisition, that defines who we are. His insight is consistent with the neuroscience of motivation. In the brain there are different mechanisms operating depending on whether you already own something or whether you desire ownership.16 Objects already perceived as extensions of the self are incorporated into the neural networks that generate the sense of self. In contrast, objects that you desire may appeal to your sense of self, but they also trigger systems that respond to novelty and the thrill of the chase. This is the ‘must have’ feeling you get when you see the latest Apple product if you happen to be an Apple groupie. Several years back, I went through a period of collecting old movie posters that I bid for on eBay. I would log on to auctions to buy posters, but the anticipation was more exciting than actually acquiring the purchase when it arrived in the post. I collected well over fifty posters before I finally realized that I could not display them all and the thrill of the chase had worn off.
If you think about it, we spend a lot more time pursuing pleasures than consuming them. Common to most pleasurable experiences is novelty – remember the Coolidge effect? As the Stanford University neuroscientist Brian Knutson points out, a long tradition of human exploration, from crossing the oceans to climbing mountains and stepping on the moon, is testimony to the motivating force of novelty.17 It is also a form of ownership to be the first, which is why we celebrate and remember these individuals. Goals that are easily obtained are less rewarding than achievements that take time and effort. Why is this?
One explanation comes from the way we are motivated to achieve goals by different systems in the brain. Nestled deep within a bend of the brainstem – the oldest part of the brain that supports all the vital functions – is the ventral tegmental area (VTA). This contains dopamine neurons responsible for activating the motivational systems of the brain that respond to novelty and reward. One of these areas sitting atop the brainstem is the striatum, an interconnected set of systems that control our behaviours in relation to punishments and rewards. In 1954, Canadian psychologists James Olds and Peter Milner, from McGill University, were conducting research on brain learning mechanisms in rats using electrodes to stimulate different areas when they stumbled upon what was, literally, an exciting finding.18 Rats with an electrode implanted in their septal (the rat equivalent of the human striatum) would repeatedly push a lever to deliver a brief electric shock directly to their brain even at the expense of drinking and eating. They had become addicted to self-stimulation because it was so exciting. VTA dopaminergic neurons also project to the prefrontal cortex where executive decisions are made. This is where we get our passion to pursue. Together the VTA, striatum and prefrontal cortex represent the motivational circuits that identify our goals, and then set about pursuing them.
Subsequent research since the original discovery of pleasure centres in the brain has confirmed that VTA dopaminergic neurons are activated by a range of addictive human pursuits including sex, drugs and rock’n’roll.19 To that list you can add shopping. In one study of patients who were administered drugs that alter dopaminergic activity for the control of their Parkinson’s disease, one of the side-effects was an increase in gambling, sex addiction and compulsive shopping.20 Each of these is associated with anticipatory pleasure. As the character Dr Frank-N-Furter in The Rocky Horror Picture Show teases us, it is the anticipation, not the conquest, that is so pleasurable. In the case of shopping, Knutson and his colleagues demonstrated that the anticipation of a bargain activates the VTA, whereas high prices or a financial loss register in the disgust centres of the insula region of the brain.21
We assume consumerism is motivated by the pleasure of acquisition, but in fact it is the pursuit that really compels us to constantly fill our lives with stuff. When we are motivated to acquire, we have a goal that is intrinsically rewarding. We may feel disappointed or thwarted if we fail to achieve that goal but, equally, we are not satiated by success because acquisitions rarely deliver the expected pleasures we anticipate. Even if our acquisitions do provide us with pleasure, that emotion easily habituates and so we set off again to seek out the next must-have thing.
Before we even take possession, our brains are savouring the prospects of gain. Once we own them, we endow our possessions with excessive value because they are an extension of our self. The problem is that many of us quickly habituate to them and then set off again for the next conquest. These are powerful emotional drives that are not easily satiated by possession. Some people simply never stop acquiring, which eventually can take over their lives and they can literally be smothered by ownership.
UNABLE TO LET GO
One of the most extreme forms of abnormal ownership manifests as hoarding disorder, a condition of peculiar interest to the general public. A television show on American cable network A&E called Hoarders generated record numbers of viewers. Then there were related spin-off shows – Hoarder SOS, The Hoarder Next Door, Britain’s Biggest Hoarders and even Hoarding – Buried Alive. It turns out many people take a voyeuristic pleasure in watching a show about hoarders, perhaps because many people love to marvel at the dysfunctional lives of others.
Hoarding has deep roots. Many animals hoard. Insects, birds and mammals stockpile food. Hoarding disorder could be considered a normal foraging behaviour that has got out of hand. Every Christmas and New Year when supermarkets are closed only for a couple of days, shelves empty as the general public regresses to a frenzy of panic buying to ensure that they will be safely fed over the festive period. Even in good times, when resources are abundant, every household has a stock of food in the fridge or tins in the larder. It’s a good strategy to make provision for lean times, but humans are different in that some stockpile items of no intrinsic value that prevent them from living healthy lives.
Hoarding disorder is a specific form of pathological collecting where the sufferer is unable to discard objects to the extent that their homes become so cluttered that they are unable to move around freely. These houses often draw the attention of local authorities when they become infested firetraps. Unlike obsessive collectors who seek out specific items to acquire, the hoarder collects almost anything. The most common items are newspapers and magazines, but a true hoarder throws away very little.
Around 1 in 50 members of t
he general public have a hoarding problem in that they accumulate excessive amounts of items that eventually affect their lives. It can start in childhood but the incidence of hoarding increases with age, with a 20 per cent increase with every five additional years.22 The volume of stuff presents a risk to health and, in some rare cases, death when the owner has been crushed by the collapsing weight.23 Australia’s Melbourne Fire Brigade estimates that one-quarter of preventable fire-related deaths in the over fifties are due to hoarding.24
There are a number of reasons that hoarding disorder arises, including a genetic component as the incidence runs in families.25 It has a multitude of associated risk factors including anxiety, depression, negative life events, disrupted childhoods and various cognitive dysfunctions related to suppressing urges and controlling thoughts. Hoarders often talk about their possessions in terms of their potential to be useful but the one thing that is common to hoarding is the fear of loss. Hoarders typically rationalize their behaviour with the assertion that things are valuable or potentially valuable and can be re-used or that they are part of their identity. In all these cases, hoarding seems to provide a sense of comfort and familiarity.26
Hoarding used to be considered a subtype of obsessive-compulsive disorder but is now regarded as a disorder in its own category. There is even some evidence that hoarding activates distinct brain areas. Hoarders and those with obsessive-compulsive disorder had their brains scanned as they watched either their mail or letters belonging to someone else being shredded.27 When they had to decide whether to keep or shred their post, hoarders experienced heightened anxiety, indecisiveness, sadness and regret compared to those with obsessive-compulsive disorder. These emotions were associated with circuitry in the frontal regions of the brain that are usually associated with inhibition and evaluating risky situations.28 Moreover, the extent of brain activation predicted the severity of their hoarding disorder and self-report measures of the discomfort they experienced when faced with the prospect of discarding possessions. They literally felt sick at the prospect of losing something.
It may be no coincidence then that these are the very same brain regions activated by the endowment effect where there is an over-valuation of personal possessions.29 In a sense, the hoarder exhibits the extreme form of the extended self, as it is only when possessions become owned that the disorder manifests. Everything we own is registered in the brain as ‘ours’ as opposed to someone else’s, but whereas most individuals can readily update, replace, renew or discard their extended material identity, the hoarder cannot let go for fear of self-loss. They may rationalize their actions as prudent foresight but, on balance, the price they pay in terms of mental and physical health – as well as the cost to relationships – simply does not add up.
Some possessions are more personal, and hence considered more a part of us, than others. For most people, their home is perhaps the clearest extension of their self since our identities are intricately linked to the place where we spend most of our time. When we say something or someone is ‘homely’, we are describing a set of attributes that are comforting, safe and reassuring. ‘Homemade’ and ‘home-baked’ are descriptions that evoke the personal touch. We talk of homes having hearts and souls as if they were living entities. Some of our strongest feelings are for things that we associate with our homes, which is why we defend the right to retain ownership of them so vehemently.
Faced with the loss of their property, some people take extreme measures to prevent anyone easily taking away what they perceive they own. Or they deliberately sabotage the property. Apparently, every estate agent has a horror story to tell.30 People will foul, booby-trap or destroy homes when faced with repossession. However, the worst spiteful acts are not against property but against people who are considered the property of others.
The leading cause of death around the world in women of reproductive age is murder by a current or former partner.31 In many instances, this violence results from separation or the threat of losing someone. In the ultimate act of self-destruction when faced with loss, some deranged partners – and it is usually men with no previous criminal record – will annihilate their families and possessions before killing themselves.32 Why else would people commit such destruction if not because of a distorted sense of self and ownership?
The flipside of family annihilations in Western culture is the corresponding crime of so-called ‘honour’ killings in Asian cultures, which typically involve the murder of daughters and wives who are believed to have brought shame on the family. Although predominantly associated with Middle Eastern and South Asian countries, ‘honour’ killings are found around the world. In both tragic scenarios of family annihilations and ‘honour’ killings, the integrity of self-identity, albeit as an individual in the West or as a family in Asian cultures, is judged to have been violated. Such horrendous crimes are a distortion of what many regard as normal attitudes about ownership. We naturally consider spouses and family members as an extension of ourselves. We will all experience the death of loved ones, which is why the condolence ‘I am sorry for your loss’ captures this ownership relationship so aptly. However, these personal relationships do not entitle the ultimate act of ownership – jus abutendi, to treat property as we wish, even to the point of destruction.
HOME IS WHERE THE HEART IS
In 1997, Susette Kelo, a nurse with a life-long passion to live in a traditional house overlooking water, had her dream come true when she purchased a Victorian clapboard house in need of renovation that looked out over the Thames River in Fort Trumbull, a working-class neighbourhood of New London, Connecticut. Susette loved her house and threw herself into restoring the property. She decided to paint it pink – ‘Odessa Rose’ from Benjamin Moore’s historic collection. It was in a run-down part of town, but it was hers.
Less than a year later, her world was thrown into turmoil. Susette was not the only person looking to find a prime waterside property. To revitalize the area and bring in investment to create new jobs, the New London Development Corporation (NLDC) planned to redevelop Fort Trumbull into a prime waterside area tailored to the recent arrival of the multinational pharmaceutical giant Pfizer.
Seven months after moving in, Susette received notification from the NLDC that her house, along with around ninety other properties, was subject to a compulsory purchase order under the power of a legal manoeuvre known as ‘eminent domain’. Not every resident wanted to move. Some of these residents had been in their houses for generations. Susette’s neighbour, Mrs Wilhelmina Dery, had been born in the house she occupied and wanted to live out her remaining days there. Money was not enough compensation for that wish. For Susette Kelo, who became the lead named plaintiff in the subsequent court case, it was not the money, but the principle.
The legal battles in the courts raged on for nearly ten years until Kelo v. The City of New London eventually ended up at the US Supreme Court in 2005. The City argued that the redevelopment was for public use because it would bring economic growth to a deprived area. In spite of widespread public outrage in this David and Goliath confrontation between humble homeowners and the might of ‘big pharma’, the Supreme Court judges, in a five to four split, ruled in favour of the City of New London. The properties at Fort Trumbull would be compulsorily purchased and then bulldozed to the ground to make way for the new urban village that Pfizer wanted.
The fallout from the Kelo v. The City of New London case was tumultuous and led to debates at the national level. The public disapproval rating for the Kelo decision was around 80–90 per cent, a figure higher than for many other controversial US Supreme Court cases. Others were more pragmatic. Both the Washington Post and the New York Times welcomed the decision as common sense, and for the greater good to act in the public’s interest. Libertarians were outraged. In a country where private property is privileged to the extent that you are entitled to defend it with considerable, and sometimes lethal, force this ruling meant that any private property could be taken away i
n the interests of commercial gain.
Why were people so outraged? Why were Susette and her neighbours so reluctant to move for the potential economic benefit that redevelopment would bring to the community? Were they not being selfish in refusing to budge when so many desperately need the jobs that the new development would bring? Jeremy Bentham advocated that utilitarianism compels us to take decisions which are in the best interests to most. Or as Spock says, in his much-lauded death scene from Star Trek II: The Wrath of Khan (1982), ‘The needs of the many outweigh the needs of the few.’
Why all the complaints, when property owners were adequately compensated? To investigate the psychology behind the Kelo v. The City of New London case, two lawyers at Northwestern University in Chicago conducted a study to determine just how much compensation should have been offered for a hypothetical property and whether it really mattered who ended up with the land.33 Using an online survey of adults, they presented differing eminent domain scenarios, including whether a property had been in the family for two years or a hundred years. They also varied the intended use of the acquired land, for building a) a children’s hospital, b) a shopping mall, or c) for some unspecified use. Respondents were told that the property under consideration was valued at $200,000 by an independent appraiser and that they would be paid all relocation expenses. How much would these adults be willing to accept for the property?