The Wiki Man | 29 August 2009

There is an experiment in behavioural economics which involves showing people some item — a mug or suchlike — and asking them what they might be prepared to pay for it. Some time later, you contrive to give them an identical mug for free. You then ask how much they want to hand their mug back. The figure they cite is significantly higher than before. This discrepancy, which defies conventional economic models, is known as the ‘endowment effect’.

An extreme example of this was demonstrated by Dan Ariely, who found that students who had been unsuccessful in the ticket lottery for a major Duke University basketball match were on average prepared to pay only $170 for a ticket. Yet those students who had been successful in the same lottery typically demanded $2,400 to sell their ticket to anyone else.

This bias in human thinking seems to be linked to a form of self-delusion by which we overvalue those things we already have: ‘She’s pretty because I married her’, as one psychologist has it. The same trait underlies much national prejudice — ‘French food must be the best in the world because I am French’ or, more recently, ‘The NHS must be good because it’s British’. This phenomenon explains the ‘We love the NHS’ badges that have sprouted all over Facebook. Our sense of pride somehow led us to take American attacks on the NHS personally, with the kind of wounded reaction you’d have if someone insulted your dog.

I have always suspected the BBC’s Radio 3 and Radio 4 are great beneficiaries of the endowment effect, where ‘we love them because they’re ours’. This is not to say BBC Radio isn’t often very good — simply that most people have absolutely no basis for comparison, since these are often the only quality radio stations non-metropolitan Brits know.