Imagine taking a six-hour flight from New York to Los Angeles, but right before taking off you learn the airline has a new policy: Reclining your seat is negotiable.
This poses two questions: First, how much are you (the recliner) willing to pay the person behind you (the reclinee) in order to push your seat back four inches? Second, what does your legroom cost the reclinee?
Researchers ran an experiment and found that recliners were only willing to pay about $12 to recline, while reclinees weren't willing to sell their legroom for less than $39.
The difference can be explained by what behavioral economists call the "endowment effect," where a person places more value on what they have than what they don't have. So if you were the reclinee, your legroom is $27 more valuable than your neighbors, simply because it belongs to you.
In his book, "Stumbling on Happiness," the psychologist and author Daniel Gilbert explains how the endowment effect is woven throughout our lives. "Consumers evaluate kitchen appliances more positively after they buy them, job seekers evaluate jobs more positively after they accept them, and high school students evaluate colleges more positively after they get into them," he writes.
In other words, a toaster, a job and a university are all shiny and lovely. But once they become ours, they instantly become shinier and lovelier.