Why we value physical goods more than digital ones.

Thanks to a sea change in technology over the past decade, we can now store and access a lifetime’s worth of books, movies, music, and photos in a space no larger than a smartphone. Such advances, which make much of what we own instantly accessible and easy to transport, should seem almost immeasurably valuable.

However, a series of experiments by Questrom marketing professor Carey Morewedge and University of Basel postdoctoral scholar Ozgun Atasoy suggest otherwise. The pair found that in most cases, people are willing to pay significantly less to own a digital product than its physical counterpart. “The absence of the ability to touch and control a digital object directly makes people feel like it’s not really ‘theirs,’ ” explains Morewedge. The findings have powerful implications for companies seeking to increase the value of the digital products they offer to consumers.

For example, when tourists on Boston’s Freedom Trail were asked to pay what they wished for a souvenir photo of them standing with an actor dressed as Paul Revere, they were willing to pay $3.39 for a relatively low-quality Polaroid, and just $2.29 for a high-resolution digital photograph. People did similar digital discounting when presented options to buy popular books and movies.

Rented products were one notable exception to this trend. People were willing to spend similar amounts on both digital and physical textbooks for a course when they were renting for a term, rather than buying them.

The pair’s nuanced findings suggest that the premium of a physical good over a digital one comes primarily when consumers seek to have “psychological ownership”—a feeling of possession–of an item. When people don’t expect to keep an item for the long-term, like a textbook rental or Netflix DVD, there is little premium on the physical object itself.

Morewedge notes that one way to increase the perceived value of digital products is to give consumers the chance to create a sense of ownership over such digital products. For example, many companies offer the chance to create avatars within the product, increasing a user’s connection with the item. Another option is to create digital cues that suggest real-world counterparts, like the “wooden bookshelf” on which Apple’s iBooks are arranged. “These kinds of efforts should help people feel greater attachment, affection, and connection to digital products,” he says.

Read the complete paper in the Journal of Consumer Research.

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