The Endowment Effect: Why It’s Hard to Let Horses Go

Recently, there has been some online discussion about what to do when a horse isn’t the right fit, including this article. We all hope that our horses are great matches for us, but sometimes that isn’t the case. Maybe a young horse turns out to be too tricky for an amateur, a free horse has underlying problems, or a talented prospect just doesn’t have the scope or ability for a professional’s upper level dreams. In many cases, people have a hard time admitting the horse isn’t the right fit. Even if they do, they can’t stomach the thought of selling him. Why is it so hard to let horses go?

Photo by JJ Silliman.

Psychology research might offer an explanation. Once someone owns something, she places a higher value on it than she did when she acquired it. This is an observation first coined as the endowment effect around 30 years ago by Richard Thaler, who now works at the University of Chicago. In other words, people who own something tend to value it more than if they didn’t own it. The longer they own it, the more they value it. Lab research has confirmed this to be true with even the most trivial items, like chocolate bars and coffee mugs. Monkeys do it, too, so it could be evolutionary. The endowment effect is summarized nicely in this Economist article and the first part of this Medium article.

The endowment effect has been used to explain why Henry Kissinger refused to pull out of the Vietnam War in 1969; why bidders end up paying more in frenzied eBay auctionswhy investors will hold onto loss-making stocks; and why you’re more likely to buy something just because you’re shopping on an iPad because you can “touch” the item, which makes you feel like you own it.

Think about it.  Holding onto a horse that is making you unhappy is a bit like holding onto a loss-making stock. At some point, it makes sense to cut your losses, especially if you have tried everything to try to improve the situation (coaching, veterinary care, saddlery adjustment, training by a professional, and various other options). 

We can’t say for sure whether the endowment effect is responsible for how hard it is to let horses go when they aren’t the right fit—part of it could be feeling bad about giving up, not being comfortable selling the horse, or even just loving the horse too much to let him go despite the difficulties. However, it’s likely that the endowment effect is at least partially responsible. Knowing about this psychological phenomenon can help us realize why it’s hard to let go. 

The endowment effect might help explain another phenomenon: why we may be pricing our horses higher than others value them at. If the endowment effect is real, it must be true that people want a higher price for something they already own compared to what others are willing to pay for it, since owning something automatically makes you place higher value on it. This is not to say that everyone is over-pricing their horses. However, it may be true that you are asking a lot of money for your horse just because you have owned him for eight years. When pricing your horse, it is always good practice to think about what you would pay for your horse if you didn’t yet own him.

Applying the endowment effect to horses is hard.  After all, they aren’t chocolate bars or coffee mugs. They are pets, friends, partners, and investments in dreams. However, we have to realize that just because we own them doesn’t mean they are the right fit. On the other hand, I could write a whole article about how it’s worth it to persevere with a horse even if you think he’s a bad fit. From personal experience, I can say that giving up when the going gets tough may mean missing out on future rewards. The best horse of my career so far has been difficult in the past to say the least—and sometimes he still is! However, a lot of hard work has resulted in a very successful partnership, including numerous top placings at national and international levels. In the end, you have to make a judgement call. Being honest with yourself is particularly important if the situation means that you or your horse are at serious risk of injury. If you really are a poor match for a horse, try to overcome the endowment effect—there are lots of horses out there, and one might be a better match.