Get better at sticking with your goals by learning how to over come the “endowment effect”
If you’ve found yourself stuck, overwhelmed, or stagnating in your personal growth, it may be due to something called the Endowment Effect.
The idea is that we tend to value things that we already have much more than things that we don’t. It’s the reason why people accumulate boxes full of junk in the homes, or closets full of clothes they no longer wear. But it’s also the reason that so many of us feel overwhelmed, instead of excited, by our to-do lists.
A to-do list or list of goals should excite us when we look at it. But for so many of us, those lists have become a source of anxiety, because we’ve accumulated so much stuff in them. It is largely due to the Endowment Effect.
Luckily, there is a way to address the evils of this effect, and get back on track toward the goals and projects that energize and enrich your life.
How the Endowment Effect Works
In a now famous study conducted by Daniel Kahneman, Jack Knetsch, and Richard Thaler — participants were asked how much they would pay for a coffee mug. They were also given that same coffee mug, and asked what price they would need to be paid in order to sell it, once they owned it.
The study found that the participants were asking for over twice as much to part with the mug they already owned, compared to the price they’d pay to get it. In essence, it takes twice as much money for a person to part with a mug they own than it takes to get a new one.
In another study conducted by Ziv Carmon and Dan Ariely, participants were asking for about 14 times more to sell NCAA Final Four tickets than they were originally willing to pay for them. 14 times more!!!
There are many proposed explanations for the Endowment Effect. But the effect remains the same. It is 2 to 14 times more difficult for us to part with things we have than to acquire new things.
Put another way, for every thing we get rid of, we’re likely to acquire 2 to 14 new things. Anyone with a junk drawer, packed storage room, or stuffed closet can probably attest to the truth of this.
But the material things are not even the biggest problem. We see the Endowment Effect take hold in an even more problematic realm in our lives that may of us are probably less aware of: our goals.
Psychological Hoarding
While the hoarding of physical objects is a problem, it’s one that is arguably simple to identify. You can see the scale of the problem by simply looking around you. You can see how much space physical objects are taking up, and it’s clear that they need to go.
The problem is not so easy to see when it comes to a more insidious kind of hoarding: hoarding psychological things.
Some people hoard useless objects that they will likely never use again. And those objects take up space and make daily life more stressful for them. Many more of us do this with things like goals and commitments.
We take on goals or make commitments — to ourselves or others, and they get stacked together in our minds. We keep them there, and don’t bother to evaluate whether they leave us enough mental space. And mental space is necessary for relaxation, creativity, and personal growth.
But what we don’t realize is that every goal or commitment we let in to our life takes up space in our mind, and exerts force on us. Every goal we’re not working toward, or commitment we’re not working to meet makes us feel guilt, anxiety, frustration, and generates negative self-talk.
With your mind packed to the brim with all that negative stuff, it’s a huge drag on your energy and enthusiasm — and thus on your potential for growth. In order to get to work on the things that really matter to you, you need to purge.
Purging Without Guilt
Nearly every study on goals and achievement confirms that writing down your goals makes you more likely to achieve them. Another way writing down your goals helps you is that it makes it easier for you to look at those goals over time, and ask yourself if they’re still as valuable now as when you first wrote them down.
This question is not one to take lightly. The quick, unexamined answer we often give is “yes, this goal is still valuable to me, and so I’ll keep it on my list — along with all the other commitments I’ve picked up since then.”
And this is exactly why we don’t achieve so many of our goals. This is the Endowment Effect in action. We already have these goals and commitments, which is making us think they’re more valuable than they are. So we keep them, and they nag at us.
But writing down your goals and commitments can help you more effectively purge them, and give yourself more room for newer goals and commitments, or for old ones that still really excite you — and you’re willing to put renewed passionate effort toward achieving.
Answer A Simple Question
Performing this purge comes down to asking one simple question:
“If I didn’t already have this goal or commitment on my list, how hard would I fight to get it there?”
In terms of a more step-by-step way to answer this question, try the following exercise.
Go down your list of goals and commitments. For each one, assign it one of 4 enthusiasm classifications, based on whether you’d want to take them on if someone offered you them today:
- Hell Yes!
- Yes
- I guess (as in, I feel like I’m letting someone, or myself, down if I say “no”)
- No
For anything that’s not a “Hell Yes!” or a “Yes”, it’s something that you need to find a way to get rid of. If you’re not enthusiastic about it now, it’s highly unlikely you will be in the future. And if you can find a way to negotiate it out of your life and off your mind, do it — as soon as you can. On the other hand, if you feel that you need to do it, then make a firm commitment to yourself that you will put in the work. But understand that you’ll have to sacrifice working toward some other thing on your list — at least for now. Be realistic with yourself, so you don’t get stretched too thin again.
The point of this is not to train you how to flake out of obligations, it’s to help you to look at the things that are pulling at your mind right now, and honestly evaluating their value. Anything you are doing, or feel obligated to do should bring value to your life. Whether it enriches your relationships, makes you money, builds your skills and experience, or helps you rest and recover.
If there are things on your list of commitments that don’t add value to your life, you need to do something to get them off of your plate. Keeping them around will only make you feel worse, and will make it easier to accept other commitments into your life that you probably shouldn’t.
Wrapping It Up
- The Endowment Effect says that it’s 2 to 14 times harder for us to get rid of things, and just as easy to accumulate new ones.
- Due to the Endowment Effect, we tend to accumulate goals and commitments at a faster rate than we accomplish or get rid of them.
- Because we don’t get rid of goals and commitments fast enough, we become overwhelmed, stressed, and anxious.
- Because we’re overwhelmed, we lose the energy to work on the goals and commitments that really matter to us.
- We need to purge old goals and commitments that no longer resonate with us — much like we need to purge our living space of objects that simply take up space.
- Purging your mind of these old goals and commitments is about asking and candidly answering a simple question.
- With your purge done, you’re free to put renewed and focused energy toward the goals and commitments you’ve chosen to keep — being assured of their importance in your life.