Jack L. Knetsch

Who they are

Knetsch was a professor in the Department of Economics and the Resource and Environmental Management program at Simon Fraser University from 1974 to 1998, and was professor emeritus afterwards. Simon Fraser's economics department records that he held a Ph.D. from Harvard University and had worked at Resources for the Future in Washington, DC, before moving to Vancouver.

The department describes his field as behavioural and environmental economics and counts more than 200 publications. Its account is that his experimental work, done with co-authors including Daniel Kahneman, challenged key assumptions of neoclassical economics and affected how the monetary value of environmental losses is estimated. The department also carries a Jack Knetsch Award among its undergraduate prizes, and Simon Fraser's resource management program describes him as an excellent teacher, mentor and colleague.

Key papers

The 1991 column in the Journal of Economic Perspectives reviews the evidence for the endowment effect and status quo bias and discusses how they relate to loss aversion. The 1990 paper in the Journal of Political Economy tests the endowment effect experimentally. Knetsch also published a 1989 paper in the American Economic Review on the endowment effect.

The abstract of the 1991 column opens with a wine-loving economist who bought Bordeaux at low prices that has since risen to $200 a bottle at auction, and who will neither sell at that price nor buy another bottle at it. The column attributes the name endowment effect to Thaler (1980), the name status quo bias to Samuelson and Zeckhauser (1988), and the underlying asymmetry of value, which it calls loss aversion, to Kahneman and Tversky (1984).

Key ideas

The 1991 column treats the three patterns as related, with losses weighing more heavily than equivalent gains as the common thread. That reading is the one Kahneman carries into Thinking, Fast and Slow. It is contested: David Gal argued in 2006 that a general preference for the status quo explains the others, and Ritov and Baron found a bias toward omission accounts for part of the status quo effect.

---