How many “quit my job to open a shop” posts have you scrolled past on social media?
The photos are always the same—warm lighting, potted plants, a pour-over kettle, and a cat.
The caption is always: “Finally, I don’t have to deal with my boss anymore.”
Thousands of likes. The comment section is flooded with “So jealous” and “Address, please.”
You’ve been tempted. You’ve even run the numbers: transfer fees, renovations, equipment, the first three months’ rent… It seems like, if you just grit your teeth, it’s within reach.
Richard Thaler, the 2017 Nobel Laureate in Economics, has spent his life studying the systematic errors people make in economic decision-making.
One of his most famous discoveries is the “Endowment Effect.”
The experiment was simple: give one group of students a coffee mug each, and ask them how much they would be willing to sell it for. Then ask another group of students without mugs how much they would be willing to pay for the exact same mug.
The result: those who owned the mug demanded more than twice the price offered by the buyers.
The exact same mug. The only difference was whether or not you owned it.
Once something becomes “yours,” you automatically perceive it to be more valuable. This is not greed. It is your brain’s factory setting—the only bug is that it blinds you.
Thaler calls this the distortion of mental accounting—you are not valuing an asset rationally; you are adding an emotional premium to “your stuff.”
Quitting your job to open an independent shop is a large-scale, real-world exhibition of the Endowment Effect.
The location you chose, the menu you designed, the logo you spent three months polishing—their value in your mind far exceeds the price the market assigns to them.
Therefore, when someone warns you that “the foot traffic here isn’t enough,” your first thought is usually, “But my product is good enough.” When the balance sheet shows a loss, you easily tell yourself, “Building a brand takes time.”
This isn’t because you are stubborn. It’s because it is “your shop,” and your brain has already slapped an artificially inflated price tag on it.
Research like Thaler’s repeatedly reminds us of a brutal truth:
It is not that people cannot do the math. It is that people are highly prone to getting the math wrong on “their own things.”
What about franchising? The mental accounting of franchising is entirely different.
You were not involved in creating the brand, so your emotional investment in it is much lower. This means that when the business runs into trouble, you are more capable of making rational judgments: close it down if necessary, or sell it off if necessary.
This sounds cold-blooded, but Thaler’s research proves exactly this: In business decision-making, “not loving it enough” is sometimes a structural advantage.
People who open their own stores treat the shop like a child—you do not easily “give up” on your child. Franchisees, however, treat the store like a project—if the project fails, you simply swap it for another.
When business is smooth, you cannot see the difference between these two mindsets. But when it comes time to make the critical decision to “cut your losses or hold on,” the disparity becomes glaringly obvious.
This does not mean franchising is inherently better than opening your own store. Thaler wouldn’t draw such a simplistic conclusion either.
What his research truly tells you is that before investing real money, you must first ask yourself a question:
Of the math you are doing right now, how much is based on cold facts, and how much is an emotional markup because “this is my dream”?
If you can answer this question honestly, regardless of whether you open your own store or buy a franchise, you are already far more clear-headed than most.
This is exactly why those who best understand cognitive biases are the most vigilant against overvaluing the projects they “personally built, personally love, and personally funded.”
Once the emotional filter is applied, it becomes incredibly difficult to run the numbers solely on market logic.
That store you plan to open, the numbers you are currently crunching—are you absolutely sure you are doing the market’s math, and not a dream’s math?
【 Insight 】— Decision-making can be practiced.
