The Mere Ownership Effect: Why Everything You Own Is Worth Less Than You Think

by | Jun 21, 2022

The Mere Ownership Effect: Why Everything You Own Is Worth Less Than You Think

It had been plaguing me since I first got into the business of selling real estate 8 years ago. Why do so many home sellers believe their home is worth so much more than it really is? And believe me, they really do. 

I had figured it was because people can be greedy (which they can), or that they really needed the money (which they probably did), or that some people just aren’t realistic (which they aren’t). 

Or does everyone use the same strategy to sell a house as they do to sell a used couch on Craigslist? Price it high and let the buyer talk you down to the price you wanted. 

I racked my brain for many years with this conundrum and then decided to do a little digging. It turns out that this phenomenon actually has a name—The Mere Ownership Effect. And it doesn’t just apply to home sellers, it applies to almost everyone. 

The Mere Ownership Effect

The Mere Ownership Effect is the psychological observation that people will evaluate things that they own, higher than things that they do not own. Things that they have chosen, higher than things they have not chosen. And things that they have been given, higher than things they have not been given

I don’t mean to crap in your cookie dough here but this means that your house, your car and that cheesy gold necklace you wear are worth way less than you think they are. 

Researchers speculate that this occurs because people are motivated to see themselves in a positive light. Hell, we all want to feel good about ourselves—don’t we?

Emotional attachment could also be partly to blame. When you own something you develop an emotional bond to it, memories have been made with it, you picked it out yourself, etc. The potential loss of that item will then be seen as painful, and therefore more value placed on keeping it. 

This can also be viewed as ‘subjective value’. Sometimes things really are worth more to the person that owns them than they are to anyone else, and that’s ok. Your gold ‘Mr. T Starter Set’ looks great on you, by the way. 

But wait, there’s more. People value things that belong to them more than other things because they value themselves more than other people. Their things are just an extension of themselves. 

Wait, what? 

Yep it’s true, people also tend to have a very favorable self image in general. But this shouldn’t be news to anyone that’s been subjected to watching a couple episodes of The Real Housewives of Wherever. (You can thank my wife for that reference). 

In fact, there have been numerous studies done that show most people will rate themselves as better than average at common traits or skills like honesty, trustworthiness, intelligence, driving ability, sex, etc. There’s even an Australian study where 86% of participants rated themselves as above average on similar metrics, while a mere 1% rated themselves as below average. 

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Statistically speaking its impossible, of course, for most people to be above average at anything. 50% are going to be above, and 50% are going to be below. It doesn’t take an MIT mathematician to know that. 

Yes, it’s important to feel good about yourself. And yes, to feel good about yourself it’s helpful to think of yourself in a positive light. 

Unfortunately, many people see their worldly possessions as an extension of themselves. We live in a ‘Keeping up with the Kardashians’ world where materialism runs rampant. Probably the result of nonstop marketing, ads and celebrity endorsements telling us if we don’t have the latest and greatest, we’re not going to be sexy, cool or respected.  

We need to separate ourselves from our stuff. We are not the things we have. Don’t let the shit you own define you. Ironically, we need to place even less value on our material possessions and more value on being a better person. Having a better car doesn’t make you a better husband, and buying a $2000 suit doesn’t make you a better friend. 

Everything you own is worth less than you think, and in the grand scheme of things, it’s worth far less than that.

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