In search of the optimal: satisficing and housing search models

Presentation to HSA Conference 2015

r.j.dunning@shef.ac.uk

@RichardJDunning

Housing policy & behavioural economics

• New Labour (e.g. Halpern) to Conservatives (Control Shift), the coalition & the Behavioural Insights Team (Jones et al, 2010; Ferrari et al., 2011 Dolan et al, 2012; Leggett, 2014)

• New Homes Bonus (Dunning et al., 2014)

• financial calculus, rational operators and organisational decision making

• Unclear impact, limited conceptualisation of problem or mechanism for change

• Financial Payments to Developers (DCLG, 2014)

• Rational actors, financialising emotions, competitive planning opposition

• Unclear impact, miscomprehension of motivations, behaviour

OBE and NBE

• Bifurcation or continuum – Old BE and New BE (Watkins & McMaster, 2011)

Old BE

• Herbert Simon, procedural rationality, old institutionalism, social constructionism

• “the concept of “economic man” (and I might add his brother “administrative man”) is in need of fairly drastic revision” (Simon, 1955, P.99).

New BE

• Mainstream/Neoclassical economics, utility maximisers with constraints, information deficit, psychological insights

• “Then behavioral economics will cease to be a distinctive label for an approach as it becomes part of mainstream economic thinking, evincing a healthy reunification of psychology and economics.” (Camerer, 1999, P.10577)

Spectral approach to BE

Tu & Goldfinch, 1996

Tu & Goldfinch, 1996

Speare, Goldstein and Frey, 1975

Speare, Goldstein and Frey, 1975

Maclennan,1982, P.68

Maclennan, 1982

Wong, 2002, P.224

Wong, 2002

Marsh & Gibb, 2011

Marsh & Gibb, 2011

Housing theory: an NBE-OBE spectrum

Conclusions

• Policy makers are misapplying / inconsistently applying BE• Evidence that BE policies/‘insights’ aren’t achieving their

objectives

• BE housing theory is failing to adequately explain its assumptions and perspectives• This failure masks inconsistency (internally and externally)

• It suggests that there is no clear NBE/OBE bifurcation in research

• There is a research gap at the OBE end of the spectrum

• An OBE approach is compelling, but needs theorisation and an empirical programme• This approach could address the ineffectiveness of BE policies

References• DCLG (2014) Attitudinal research on financial payments to reduce opposition to new homes, DCLG,

London• Dolan, P., Hallsworth, M., Halpern, D., King, D., Metcalfe, R. & Vlaev, I. (2012) Changing Behaviour: The

mindspace way, Journal of Economic Psychology, 33, PP.265-277• Dunning, R., Watkins, C.A., Inch, A., Payne, S., While, A., Young, G., Hickman, H., Bramley, G., McIntosh,

S., Watkins, D. and Valler, D. (2014) The impact of the New Homes Bonus on attitudes and behaviour. Working Paper. Department for Communities and Local Government

• Ferrari, E., Henneberry, J., Leahy Laughlin, D., Tait, M., Watkins, C. & McMaster, R. (2011) Behavioural change approach to the housing sector, Department for Communities and Local Government, UK

• Jones, R. Pykett, J. & Whitehead, M. (2010) Governing temptation: Changing behaviour in an age of libertarian paternalism, Progress in Human Geography, 35, 4, PP.483-501

• Leggett, W. (2014) The politics of behaviour change: nudge, neoliberalism and the state, Policy & Politics, 42, 1, 3-19

• Maclennan, D. (1982) Housing Economics, Longman Group, Singapore• Marsh, A. & Gibb, K. (2011) Uncertainty, Expectations and Behavioural Aspects of Housing Market

Choices, Housing, Theory and Society, 28, 3, PP. 215-235• Speare, A., Goldstein, S. & Frey, W. (1975) Residential Mobility, Migration and Metropolitan Change,

Ballinger Publishing Company, USA• Tu, Y. & Goldfinch, J. (1996) A Two-stage Housing Choice Forecasting Model, Urban Studies, V. 33, No. 3,

PP.517-537• Watkins, C. & McMaster, R. (2011) The Behavioural Turn in Housing Economics: Reflections on the

Theoretical and Operational Challenges, Housing, Theory & Society, 28, 3, PP. 281-287• Wong, G. (2002) A conceptual model of the household’s housing decision-making process: The

economic perspective, RURDS, 14, 3, P.217-234

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