Undercover Economist

Why more and more means less

Status quo bias means that most of your stuff stays because you can’t think of a good reason to get rid of it

Now that Christmas is a brandy-soaked memory, there comes the difficult business of packing away all the gifts that haven’t been broken or eaten. Double-stack the books on the bookshelf, squeeze the woolly sweater into the sock drawer and don’t even think about trying to keep the toys tidy.

Before you blame the decadence of western civilisation for the difficulty of this seasonal clutter, note that the boom in consumer spending each December isn’t new. According to Joel Waldfogel’s brief yet comprehensive book Scroogenomics, Americans were happily splurging at Christmas three or four generations ago with much the same vigour as they do today, relative to the size of the US economy. Nor are Americans exceptional in the lavishness of their Christmas celebrations: Waldfogel reveals that many European countries enjoy an even greater blowout.

No, the trouble with all this clutter, it seems to me, is simple economics. We can afford to buy more and more Christmassy stuff — clothes in particular have been getting cheaper for many years — but the one thing that isn’t getting any cheaper is room to put all the extra stuff in. This is true for most people and it is particularly true for FT readers, who are more likely than most to live in places — New York, London, Hong Kong — where the price of a home can make almost anything look cheap in comparison.

I used to think I knew the answer to this problem: cleverly designed storage space. I am no longer so convinced. Elegantly organised cupboards simply postpone the day of reckoning. The house looks neat for a while but eventually the sheer volume of possessions can overwhelm any storage solution.

Perhaps it’s time for a new approach, and the book that’s been rocking my world for the past few weeks is Marie Kondo’s The Life-Changing Magic of Tidying. If you follow Kondo’s ideas faithfully you’re likely to be driving three-quarters of your possessions to landfill, at which point most of your storage problems should evaporate. The Harford family have all succumbed to the Marie Kondo bug in a big way and are suddenly seeing areas of the floor in our house that we had quite forgotten existed.

Kondo espouses some strange ideas. She unpacks her handbag and tidies away the contents every evening when she returns home. She firmly believes that socks need rest. She advocates saying “thank you” to possessions that are about to be discarded.

Yet despite all this oddness, what really struck me is that Kondo is an intuitive economist. I realised that I had been committing some cognitive blunders, enough to embarrass any self-respecting economist. These errors explained why my house was so full of possessions.

The first mistake was simple status quo bias — a tendency to let things stay the way they are. When you’re trying to clear stuff out of the house, it’s natural to think about whether to throw something away. Perhaps that’s the wrong question, because it places too high a barrier on disposal. Status quo bias means that most of your stuff stays because you can’t think of a good reason to get rid of it.

Kondo turns things around. For her, the status quo is that every item you own will be thrown away unless you can think of a compelling reason why it should stay. This mental reversal turns status quo bias, paradoxically, into a force for change.

My second error was a failure to appreciate the logic of diminishing returns. The first pair of trousers is essential; the second is enormously useful. It is not at all clear why anyone would want a 10th or 11th pair. It’s good to have a saucepan but the fifth saucepan will rarely be used. I love books but I already own more than I will be able to read for the rest of my life, so some of them can surely go.

The trick to appreciating diminishing returns is to gather all the similar stuff together at once. Once every single book I owned was sitting in a colossal pile on my living-room floor, the absurdity of retaining them all became far easier to appreciate.

. . .

A third mistake was not fully appreciating the opportunity cost of possessions. There’s a financial cost in paying for a storage locker or buying a larger house or simply buying more bookshelves. But there’s also the cost of being unable to appreciate what you have because it’s stuck at the bottom of a crate underneath a bunch of other things you have.

All this may seem strange talk from an economist, because economics is often associated with a kind of crass materialism. The field no doubt has flaws but materialism isn’t one of them. If anything, the blind spot in classical economics is that the last word on what consumers value is what consumers choose.

Behavioural economics, famously, has a different view — it says that we do make systematic mistakes. But until reading Kondo’s book, I didn’t realise that in every overstuffed bookshelf and cluttered cupboard those mistakes were manifesting themselves.

Written for and first published at ft.com.

Free email updates

(You can unsubscribe at any time)