Beware the Endowment Effect!
Touch is an extremely powerful sense, probably more so than you realize most of the time. When thinking of strong tactile responses, you may quickly envision how much better a well-timed hug made you feel when you were down. But it’s not just the feel of another person that affects perceptions. A research study showed that people who merely touch a warm coffee mug suddenly had more feelings of closeness and cooperation with those around them.
So what does this have to do with your finances? Well, potentially a lot. Other research into touch has focused on something called the endowment effect. What scientists have found is that when you have a sense of ownership over an item—even a fleeting sense—that item suddenly has significantly more perceived value to you. And it isn’t just the things you’ve paid for and taken home. Even touching an item in the store starts to rev up your feelings of ownership
How It Works
Scientists have speculated that the endowment effect is closely tied to a longing for control. Possessing an item can feed into your desire to exert power over the variables in your life. If you let these kinds of emotions take over, rational and analytical thinking can be swept aside.
How Stores Use It
A very popular manufacturer of personal computers—who shall remain nameless here—has taken the art of the endowment effect to new levels. In their stores, the laptop screens are all set to the 70 degree angle that has been determined to make you most likely to prop open the screen just a bit more. As soon as they’ve got your hands on the computer, a good part of the battle is already won.
In other bit of touch engineering, an upscale fashion department store trains their sales staff to strongly encourage shoppers to “start a fitting room,” knowing that once the shopper starts trying on items, the odds they will buy spike sharply.
How You Can Combat It
- Have you ever told a child to “look with their eyes?” That’s solid advice for adults too!
- Beware of “cut-away” packaging that allows you to feel a product. The maker isn’t doing this to let you test the quality. They are trying to cash in on the emotions of touch.
- Avoid trying on that expensive item “just to see how it looks” or test-driving that out-of-your-budget luxury car.
- By all means, try to keep your child from grabbing items off the shelf at the store. It will undoubtedly make your life a lot easier.
- Give yourself time. In a lot of cases the initial thrill of a buying a new item wears off as you consider the impact of the purchase. Always give yourself a moment or two to reassess what’s in your cart before you check out.
- Be aware of your triggers. Using your senses to get you to buy is an ever-growing and evolving science. Your touch, smell, hearing, sight and taste are all guitar strings just waiting to be strummed by marketers. The next time you walk into a store, think about each of these senses and how they impact the way you feel about certain products.
Go ahead and try on that sweater to see how comfortable it is. And don’t hesitate to rub your hands across those sheets. But always be mindful of why you buy the things you do and whether you are making an emotional shopping decision or a practical one.