The Endowment Effect and "Self" in Children

Object ownership and possessions are a peculiar, if not unique, human preoccupation. No other animal exhibits the same degree of interest and valuation of objects that have no intrinsic value. This supports various accounts (mostly notably William James's 1890) that humans use possessions to signal one's status.

Once objects come into our possession, they are valued more in trading situations than others are willing to trade for them in a bias known as the "endowment effect." Although there have been economic models of this bias (most notably 2002 Nobel prize winner, Daniel Kahneman's), a social psychological account based on the self-concept has been gaining popularity. Belk's (1988) "extended self" hypothesis argues that we use possessions to signal to others our values and self worth as defined by cultural conventions. This account is not incompatible with Kahneman's loss aversion hypothesis but it does explain better why the endowment effect is not universal and is modifiable when different cultural self norms are primed.

To date, human studies of the endowment effect have been almost entirely with adult populations though there are good theoretical reasons to study the emergence of the behaviour in younger children, especially as conceptions of self start to emerge in preschoolers and may become shaped by culture over middle childhood. There have also been remarkably few studies that report manipulating the self concept in preschoolers.

In the current proposal we seek to investigate and integrate these two streams of research during this early period of emerging self and object valuation. First we seek to fill a missing gap in the literature on the endowment effect by establishing the emergence of the bias in young children. Second, we will manipulate factors that have been shown to strengthen the endowment effect in adults namely, length of possession and the investment of labour. Finally, we will manipulate children's explicit and implicit self-concept using interviews and collaborative tasks respectively to determine whether there is a corresponding shift in the endowment effect.

As every parent knows, the early years are a key stage for social development. There are literally hundreds of parenting books that offer advice about how best to navigate this difficult and often distraught period that begins with the "terrible two's." At this age children are still learning how to integrate with other children and sharing objects and toys is one of the most important skills they must learn. Our research promises to shine a new experimental light on this period by examining the importance of object possession and concepts of self.

We believe that the human obsession with possessions is largely a reflection of self concepts where objects signal status. This process begins early in development and many of the playroom battles are fought over sharing possessions. We do not believe that we will (or even whether we should) change how these dispute unfold, but we believe that we may be able to provide the evidence to explain the common wisdom that cooperative activities make children more prosocial.

This will be of interest to parents and playschool teachers but may also filter into other bodies, such as local authorities, that recognise the importance of the early social environment on long term development. We seek to broadcast our findings to the largest audience possible using all forms of available media.