September 9th, 2009 - 26 Comments
Smeal’s Lisa Bolton explains why consumers often hold on to stuff that they no longer need or even want:
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A lot of marketing research concerns itself with the acquisition of goods but what about their disposition? A recent New York Times Magazine article takes readers on a visit to self storage facilities—and did you know that there are seven times more storage facilities than Starbucks coffee shops in America?! It turns out that we are squirreling away all kinds of things, not just in our basements and attics and garages, but in storage units that charge a monthly fee for the privilege. In addition to wondering why people are accumulating so much stuff, all of this storage begs the question: Why don’t people just get rid of it?
There are a lot of reasons—from sentimental attachment to the efforts involved in disposal itself—but I’ll just focus on two here. First, consumers may be falling prey to the “sunk cost fallacy.” Having invested money in buying something, people continue to (irrationally) focus on these sunk costs rather than focusing on the future costs and benefits. Firms and governments do this too when they continue to invest in new products and projects that are failing and don’t make economic sense—Concorde anyone?
Second, consumers may hang on to all this stuff in order to avoid waste. I don’t mean wasted money (which is a lot like sunk costs) or environmental waste (although that may also be a concern), but instead I am referring to waste arising from “unused utility.” We may have gotten all the use that we want from an item, but, if the item still has additional leftover utility, we will be reluctant to get rid of it. As a result, our storage units start filling up with VCRs and furniture and other items that still have plenty of use left in them—even though we no longer want or need them. Waste not, want not!
Which reminds me: Does anyone need a gently used VCR or high chair? Both have plenty of use left in them!
P.S. Aside from storage facilities, there are lots of other ways to dispose of your stuff—from Goodwill to Freecycle to our very own Trash to Treasure annual sale here at Penn State. So if you can’t use the stuff yourself, maybe someone else can!