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A couple of nights ago, I reached a chapter in Thinking, Fast and Slow where Kahneman talks a bit about his involvement in the beginnings of the field of behavioral economics, which involved some work with Richard Thaler in addition to his ongoing collaboration with Amos Tversky. As Kahneman put it, Thaler had been collecting examples of instances where people's economic behavior was irrational, as a study of where neo-classical economic ideas failed.

The example listed in the book was about an economics professor in Thaler's department who collected nice bottles of wine. This professor would never pay more than $35 for a bottle, and then at the same time he would be extremely reluctant to part with a bottle for anything less than $100. What could explain this huge gap between his buying and selling prices? Long story short, after a series of experiments to try and puzzle out what's going on, this phenomenon got labeled the endowment effect. In short, humans tend to assign more value to objects when they own them.

So then, yesterday, I squandered spent a bunch of time reading articles from a special issue of the journal Nature about The Circular Economy. This is something that I tend to think about often, in an abstract sense, in relation to how I exist as a human being on this planet, because I find it more aesthetically pleasing to perceive myself as a participant in a series of cycles rather than as a consumption machine.

[I will point out that this is an idealized perspective, however, because there are a number of large-scale biological/biogeochemical/astronomical processes that we humans can't experience as cycles. The one that sticks out for me is phosphorus, which becomes available through weathering or mining, and gradually travels out to the oceans, where it eventually sinks to levels where it's basically inaccessible to living things. That said, there are many places where there are untapped opportunities to slow the rate of linear processes, and we humans need to keep working on them.]

One of the articles, in the Books and Arts section, talks about the history of the circular economy concept and recent revivals in things like the cradle-to-cradle design movement. Frankly, I've always found this notion a little too high-level and abstract. The historical piece also points out some problems with this perspective. Here's the paragraph of interest:

There are problems, too, with the circular model itself. Martin Charter, director of the Centre for Sustainable Design at the University for the Creative Arts in Farnham, UK, notes a “lack of overall clarity over the concept. Perhaps just 100 companies worldwide have adopted a true circularity mindset as a core strategy.” As for the circular mantra of switching to the digital, data centres waste an average of 90% of the energy that they consume (30 billion watts, equivalent to the output of 30 nuclear power plants) and account for 17% of technology's carbon footprint. Although the circular 'business case' looks remarkable (global management consultants McKinsey and Company estimate that it could add US$2.6 trillion to the European economy by 2030), the fact that business remains central to the vision is a vulnerability. The growth economy impedes sustainability. In 2014, for instance, Chevron and a number of other big oil companies retreated from investments in renewables because of poor returns. Business competitiveness and 'disruption' can hinder the collaboration that is central to eco-design. UK design engineer Chris Wise has noted that the practice of using 'least materials' is at odds with the construction industry's prime aim of selling more materials (C. Wise et al. Nature 494, 172–175; 2013). The 'rebound effect', in which designed efficiency leads to greater use or consumption, is a related conundrum.

Another article, however, takes a different angle on things. Entitled "Make recycled goods covetable," it comes back to some key points about ownership and materialism, and the aspects of human psychology that humans have to grapple with if we are to do a better job of managing the rate and nature of flow of material goods. It begins, "Humans are unique in the animal kingdom in their capacity for materialism. We make, use and trade objects for their symbolic value as much as their functionality," and carries on from there. The crux of the argument is that human biases towards valuing exclusivity and authenticity undermine principles of recycling and reuse. I think you can probably see how this whole line of reasoning might also be related to the endowment effect, described at the beginning.

But for me, these lines of thinking caused a big flashback to the Alien She exhibit at the Portland Museum of Contemporary Craft, in particular to the display of handbags from the Counterfeit Crochet Project. The Nature feature also includes a piece on a related phenomenon, the growing popularity of Repair Cafes.

I bring these things up because I have to wonder about how humans value and relate to handmade items compared to designed/manufactured goods. Contemporary life calls for a mixture of the two types, but I have this feeling that general aesthetic satisfaction would be higher and waste production would be lower if peoples' priorities shifted towards the handmade. This is one way of achieving the "exclusivity and authenticity" outlined in the article on making recycled goods covetable.

The other way is hinted at in the Japanese art of Kintsugi, a thing which keeps popping up for me as an "Oh, that's clever!" thing on social media. The act of working to repair an object, whether the repair involves gold dust or otherwise, changes one's relationship with that object.

I have this sense that I might be wired to respond more strongly to these things than many people, just based on my creative impulses (and most definitely my upbringing! Especially my mother's wonderful influence). But I also think these are aesthetic qualities that can be drawn out of other people, too, under the right circumstances. There is great satisfaction to be derived from creation and repair, as well as from ownership of well-made and unique items.

Interestingly, the article on reuse notes that the endowment effect appears to be stronger in individualistic societies where there are more rather than fewer possessions, suggesting that possessiveness may be driven by gaps between those who have and those who have-not. Thus the endowment effect is enhanced when there's hightened awareness of inequality in individualistic societies. The author thus suggests that, for economic harmony, ignorance and/or greater equality are important factors to consider.

While I find some of the extremes of minimalism to be unrealistic and silly (Guy Who Owns Five Things!!), I do find reasons for hope in the movement, as in the DIY movement in the US and the raging popularity of The Life-Changing Magic of Tidying Up. They are signs of cultural changes in how people relate to their stuff and what's important in this whole experience of life.


( 2 remarks — Remark )
Mar. 31st, 2016 06:44 pm (UTC)
Replying on my own LJ since I below the comment length limit =P
Apr. 1st, 2016 02:09 am (UTC)
There was an interesting article in The New Yorker a couple years ago, about t-shirts. The writer notes that the difference between a cheap t-shirt and a really high quality one is about $5. So, in order to show to the masses that you can afford to spend a whole buttload of money on a t-shirt, you get one that says DKNY or whatever, so you can advertise your willingness to spend $100 on a shirt. That is a large part of why we have the sort of copyright law we have: because it's how our culture provides validation for conspicuous consumption.
The article went on to say that as even a $100 t-shirt doesn't really get true wealth across, the next option is something that is clearly handmade, because that implies both even more wealth and also artistic taste.
Hence an interesting balance between people who buy handmade because they like the idea, and people who buy handmade to advertise their social position.
( 2 remarks — Remark )

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