Tuesday, October 9, 2012

We need to APPRECIATE!

Good morning economists. Have you ever been in a situation where you appreciate something or someone in your life only after you lose it (or him/her)? Why is it that we do not appreciate what we have? And why is it that we desire what other people have even though they may not even compare to ours?

My friends over at "Trust me I am an economist" posted the following picture which got me thinking.
Think about it...this little graph basically describes our life cycle. We are usually excited when something new is about to enter our lives, then we get bored with it after an appropriate amount of time and once we lose it, we remember the good times when we had it. Apparently this applies both to material goods and human beings as well.

If I were to theorize about this I would argue that the creation of habits decreases our utility or enjoyment we get from having that particular something. Indeed, a study conducted in 2011 in England found that 60% of UK home owners undervalued the stuff they had in their homes. This in turn, caused them to buy lower insurance coverage.

Have you lost something or someone lately? 

Have an appreciative day!


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