Richard Thaler, an economist at the University of Chicago, is the person who first used the term endowment effect to describe placing a higher value on something already owned than would be placed on the object if not currently owned. According to an article in the Economist:
Dr. Thaler, who recently had some expensive bottles of wine stolen, observes that he is "now confronted with precisely one of my own experiments: these are bottles I wasn't planning to sell and now I'm going to get a cheque from an insurance company and most of these bottles I will not buy. I'm a good enough economist to know there's a bit of an inconsistency there."
Based on Thaler's statement, how do his stolen bottles of wine illustrate the endowment effect, and why does he make the statement: "I'm a good enough economist to know there's a bit of an inconsistency there"?