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A Man Needs A Fish Like A Woman Needs a Bicycle
Sunday, October 09, 2005
HOARDING JUNK: HOARDING AS NON-EVOLUTIONARY, OR, WHY EVOLUTIONARY BIOLOGISTS ARE NOT ECONOMISTS: Just read an interesting article in Times On-Line. The bottom line is that hoarding is hard-wired into our brains, because valuing the things we have more than what others offer us for it menas that we will tend to stay alive longer:

"“From an evolutionary viewpoint, if you can get more of something that’s good for you, such as food, you will be healthier and better off and have more children,” Professor Huck said.

In a hunter-gatherer environment, where people have to swap meat against, say, berries to get a balanced diet, it is advantageous to like the food to which one has immediate access more than what might be reasonable from a purely nutritional view. This is because a preference for the food we already have strengthens our resolve when we are bargaining for other goods, enabling us, on average, to make better deals."

Now this all makes sense, except for one tiny little problem. If this were true, why would anyone trade? After all, according to the theory provided, I will not trade at anything other than a very high valuation. But, on this argument, those I trade with must feel the exact same way, and so they also want a truly high valuation--a high price. So, where does trade come in? Economists say that trade aoccurs because those who value what they have trade it for higher valued items.

So, the evolutionary explanation leaves me unconvinced. This little morsel though sheds some more light:

“An alternative evolutionary explanation for the endowment effect is that if one learns to like what one has, one may spend less costly resources to acquire other goods.”

So, its about habit and preferences now. And this makes more sense. We get used to holding things that we own.

Or, helping out the evolutionary biologists, we could say: Even if we value what we have more than it is worth, the fact is that we usually have more than one of it. The mug experiment is not very helpful--it assumes one unit of consumption, only. We usually have more than one unit to consume, so that diminishing marginal valuation kicks in. We usually have more than enough, and so, we value it less highly than otherwise might if we have only one. After all, we love variety in consumption. So, we are willing to trade some of it--but then, this stops being an explanation of the economic viability of hoarding, and rather just one more factor to be considered. Our love of uniqueness becomes a more useful explanator--fitting hoarding into that framework becomes more useful.
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