Let the 'Endowment Effect' take hold of Airmen
By Capt. Nathan D. Broshear , Twelfth Air Force (Air Forces Southern) Public Affairs
/ Published March 27, 2009
DAVIS-MONTHAN AIR FORCE BASE, Ariz. -- Which is more valuable, the house you own now or the house you intend to purchase when you PCS? Which is more valuable to the mission, your job today or your former assignment? If you're like most people your subconscious will value what's in front of you -- literally on your desk or in your home -- more highly than the items, responsibilities or tasks waiting for you in the future.
This phenomenon has been called the Endowment Effect, the theory that people place a higher value on items they presently possess versus items they seek or may own in the future. It's been studied in numerous experiments by scientists around the world and written about in magazines ranging from the Economist to Time. The Endowment Effect explains why you treasure your home (typically valuing it higher than market value), while bidding low on the houses near your next duty station (subconsciously valuing the latter below market value).
In another example, students at a college basketball game were asked how much they would sell their tickets for -- these rabid fans had camped out for days for a chance just to buy the tickets. The students who successfully scored a seat quoted prices as high as $2,400, while students who had not received a ticket said they would purchase one (from one of the lucky fans who actually got a seat) for an average of $170.
What the experiment sought to prove was that people who have ownership of an item value the item much more highly after they take ownership or possession. The thought of having a ticket to the game might be worth a lot to a prospective fan, but once students actually secured their seats, the value they placed on attendance shot up astronomically. In a sense, the Endowment Effect is the opposite of "buyer's remorse."
Studies have also found the same to be true in the workplace. Airmen should be on the lookout for the darker side of this effect; the tendency to value a plan or course of action currently in effect rather than changing course. Staff will naturally value their current project over a new direction in the same manner as fans held tightly to their hard-won basketball seats.
It's up to the individual to recognize when they've committed too firmly to their chosen plan to the detriment of a better solution. When you're working a project, seek a third party to evaluate your progress and suggest a new approach. You may find a critical evaluation (or an inspection) may yield a new perspective, a new vision or path to success.
Understanding the impact of the Endowment Effect on members of your squadron can also lead to creative solutions. Allowing Airmen to take ownership of a task will greatly increase the likelihood they'll perform with excellence. We've all heard the maxim of "taking ownership for mistakes" -- but when was the last time you asked a subordinate to take ownership of a project's success?
Let the project become their personal endeavor, infused with their creative ideas and talents. Don't haggle over minor details -- these are the aspects that will create the most present value to the owner of the task. Rather, provide a general framework and direction for the team, then let the Endowment Effect take hold.
For commanders and supervisors, the Endowment Effect is a powerful reminder to provide your team with the assets to accomplish their mission, and then allow them to make the project their own. You'll soon find the team has a greater sense of pride in their work and passion for its successful completion. And as for valuing their present job over a future assignment -- there's nothing wrong with a bit of unit espirit de corps!
For more information (including data gathered for this article), check out: The Economist, "It's Mine, I tell you" 19 June 2008.