Julia Roberts is a superb actress. All too often, though, she headlines in movies whose themes I find uniquely unappealing. This means, when I do see her films, I have been dragged reluctantly to the cinema by my insistent other. This simple observation partially explains my lack of appreciation for Ms Roberts’ choice of scripts: how could I confess to having liked a movie when I had protested my disdain 90 minutes earlier? Nonetheless, I am willing to confess here that one of her films did contain a scene I appreciated very much. This was the one in which a lady leaves some US city and embarks on a voyage of emotional, romantic and cinematographic self-discovery in Italy, Bali and India. The highlight for me was near the start of the film when she packed all of her belongings into self-storage before her grand departure.
“My life is in those boxes,” she sighs. The manager of the self-storage simply rolls his eyes; he has heard that line before.
“Most people don’t even bother to come back and pick up their lives,” he adds.
I was reminded of this scene recently when I came across a report on the booming self-storage industry in the US. Apparently the number of self-storage companies has doubled since 1998 and there is now enough capacity to shelter every man, woman and child in the country. I’m guessing the owners of all this stuff have not gone off to find their karma on some Indonesian island. Rather, they are people who’ve clearly decided they no longer want or need certain ‘valuables’, but who simply cannot bring themselves to throw them away. I also suspect there was a lot of wisdom in the comments of the self-storage manager in the movie: much of this property will never be actively used again.
Self-storage can be thought of as a halfway house for many goods that are destined to be sold, scrapped or abandoned at some later date. In this case, it is a very costly dustbin indeed. The storage facility providers know this, of course. Indeed, in the report, they salivated over the Black Friday retail sales numbers, safe in the knowledge that a certain proportion of the goods sold would one day end up in their care. Why do we consumers do this to ourselves? Why not simply sell or dump the stuff in the first place and save ourselves the costly storage fees?
There is a behavioural explanation for why people prefer to hoard unwanted belongings in self-storage facilities rather than simply throwing them away. It is called the endowment effect. Simply put, we tend to attach a higher value to things simply because we own them. This makes it difficult for me, for example, to dispose of the bicycle my daughter used to ride when she was six even though she has just turned 12. I wouldn’t buy a bicycle for six-year olds if someone else had one for sale – it is worthless to me – but I cannot bring myself to accept that the one I have is also worthless. So instead, I put it into storage and tell myself that a niece or grandchild might one day like to have it. I also conveniently forget that my six-year-old had pestered me at the time, not for bicycle previously owned by an older cousin or aunt, but the one adorned with Elsa the Snow Queen, or whatever other children’s character was popular at the time.
This tendency applies not only to toys, but to some of our higher-priced belongings too, like used cars, homes, or even stocks. The psychological attachment created by it being part of our endowment could result in our demanding an unjustifiably high price when it is time to sell. Whether by foregoing the reasonable offer of a potential buyer, or by paying years of self-storage fees, the endowment effect costs us money.
The solution to this mis-perception also lies in the paragraphs above. Clearly, once an item has dwelled a certain time in self-storage, the decision to throw it out becomes strangely easier. This is because the endowment effect is diminished when the article is out of sight – the property ceases after a while to be perceived as part of one’s endowment. This solution still requires a period of costly storage though. Another alternative, therefore, is to imagine a stranger called to sell an identical product that was not yours; how much would you be prepared to pay for it? Whether you are ready to admit it or not, that figure is also what your stuff is worth.
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