The first of these is the so-called endowment efect. One of Kahneman’s most famous experimental discoveries is the tendency for subjects to value more highly an object that is owned than the same object when it is not owned. The mere fact of possession seems to add value to an object for its owner. Kahneman and his collaborators call this the “endowment efect” (Kahneman, Knetsch, and Thaler 1990, 1991; Knetsch 1989; Thaler 1980). Within behavioral economics the commonly accepted explanation of the endowment efect is just that human beings are hardwired to feel aversion to loss. The endowment efect is interpreted as indicating a marked asymmetry between the response of subjects to prospective losses and prospective gains. In essence, people dislike losing a given valued thing much more than they like gaining the same thing. However, it is not at all clear that the theory of loss aversion does much more than ofer a diferent way of describing the behavior it purports to explain.
The theory of consumption as labor commensuration, by contrast, suggests a substantive sociological and historical explanation for the endowment efect. The endowment efect can be explained by the tendency, in a society dominated by wage-labor exchange, for owned objects to become saturated with the sunk costs represented by the labor exchanged (and, therefore, free time given up) for the money used to acquire them. If acquiring commodities is, in part, an efort to make the wage equivalent to the free activity given up in exchange for it, and if that free activity is inalienable and qualitatively particular, then the characteristics of free life activity (sacrificed in order to work) might well get transferred to the wage goods received as compensation for its loss. Coming to own commodity objects by exchanging a wage for them then gives those objects a particular meaning by virtue of the particular bits of life exchanged for them. Wage goods, once possessed, thus become inscribed with the sacrifice represented by the work that went into acquiring them. To put it another way, if labor is indeed inalienable, then that inalienability might to some degree get transferred to the objects received in exchange for labor. Those objects then become relatively inalienable, such that their owners will be reluctant to part with them. That then gets expressed in the higher value owners place on them, compared with identical goods that are not owned—Kahneman’s endowment efect.
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