In 1990 a group of economists ran an experiment at Cornell University that has been repeated in lecture halls ever since. They gave half a room of students a branded coffee mug and left the other half empty-handed. Then they opened a market: the students with mugs could sell, the students without could buy. Standard economic theory predicts the two groups should settle on roughly the same price, because the mug is worth what it is worth regardless of who happens to be holding it. That is not what happened. The students who owned a mug demanded, on average, around twice as much to part with it as the other students were willing to pay to get one. Brief, arbitrary ownership had roughly doubled the mug’s psychological value.
The finding is called the endowment effect, a term coined by the economist Richard Thaler in 1980 and demonstrated definitively in that 1990 study by Daniel Kahneman, Jack Knetsch and Thaler, published in the Journal of Political Economy. It describes something most of us recognise once it is named: we value things more simply because they are ours. The moment an object crosses from “available” to “mine,” our sense of its worth jumps, and it does so from ownership alone, without the object changing in any way.
There is a detail in the classic experiment that is almost too neat for anyone in promotional merchandise to ignore. The two items used to test the effect, the objects swapped back and forth to see how ownership shifted valuation, were a mug and a set of pens. The two most universal promotional products in the world are, quite literally, the props in the most famous ownership experiment ever run. When a branded mug or pen is placed in someone’s hands, it is not a neutral object being received; it is an object that, the research suggests, immediately acquires a “mine” premium that a passing advertisement can never earn. A digital impression is seen and gone. An owned object is valued more highly than the market would price it, purely because it now belongs to the recipient. That gap between market price and felt value is the quiet advantage physical merchandise has, and it runs through the thinking at GoPromotional, the UK promotional merchandise supplier.
It is important to be precise about what this effect does and does not mean, because it is easy to overstretch and doing so undermines the whole argument. The endowment effect is about the valuation of an object someone already owns. It is not evidence that owning a branded mug makes someone more likely to buy from the company whose logo is on it. Those are two different psychological jobs. The claim the research supports is that ownership raises felt value; the claim it does not support is that felt value automatically converts into a purchase from the giver. Reciprocity carries the purchase-behaviour weight; endowment carries the valuation weight. Blurring the two is exactly the kind of overreach that makes marketing claims collapse under scrutiny.
There are honest caveats worth knowing as well. The endowment effect is real and has been replicated many times, but it is not an unchallenged law of nature. It tends to be weaker for goods that are easily substitutable or clearly held for resale, and some researchers, notably in work by Shogren and colleagues in 1994 and later by Plott and Zeiler, have shown the effect can shrink under certain experimental conditions. None of this cancels the finding. It just means the responsible version of the claim is “ownership reliably tends to raise valuation” rather than “ownership always doubles it.” A supplier who presents the effect as an iron law is not being straight with you.
So what does a marketer actually take from this? The useful lesson is that getting a physical object into someone’s possession is a meaningfully different act from getting an advertisement in front of them. The advertisement is observed; the object is owned, and ownership changes how the object is valued. A branded item is not just a carrier for a logo. It becomes a possession, and possessions are treated with a warmth and a value that impressions never receive. That is a subtle but genuine argument for tangible merchandise over purely digital reach, provided you keep the claim inside the lane the evidence actually supports.
There is also a design consequence hiding in the caveats. If the effect is weaker for throwaway, easily replaced items, then the flimsiest giveaway is working against the very psychology it is meant to exploit. An object that feels cheap and substitutable is one the recipient will happily part with, which is the opposite of the endowment effect in action. An item with some quality and character, something a person would actually be reluctant to give up, is where ownership does its work. The psychology, once again, points towards choosing well rather than cheaply.
The Cornell mug has been teaching that lesson to economics students for more than three decades. It is a fitting emblem for the whole field, because it shows in the simplest possible terms that the value of a thing is not fixed by its price tag. Put it in someone’s hands, let it become theirs, and its worth quietly climbs. For anyone deciding whether a physical branded object is worth more than a fleeting digital impression, that is a finding worth remembering.
Article received on email.
