Opinion: Perspective - The behavioural economics guide to buying a house
By Rory Sutherland, campaignlive.co.uk, Friday, 05 February 2010 12:00AM
I am looking for a new house at the moment, and have just realised my months spent investigating behavioural economics have messed up my head. Perhaps mistakenly, I have started to apply economic logic to choosing where to live.
Mine is similar to the approach Edward de Bono adopted when buying cars. Ed always bought two-year-old Jaguars, on the grounds that "the kind of person who drives a Jaguar hates the idea of a second-hand car". He reasoned that newish but not-new Jags should be a bargain.
When pursuing the de Bono approach to housing, the first trick is never to make a list of the things you want in a house. The problem with this approach is that most other people will want these things as well. That makes the house expensive. Instead, make two lists. The first list is of things you don't like that other people love. Any house possessing any of these qualities should be eliminated. Top of this list for me was the phrase "equestrian facilities". These words mean that you will end up paying over £1 million for your house to adjoin a cluster of hideous outbuildings that smell of shit. If you have daughters, there is the risk they will fill these sheds with a few tons of the stupidest and most fragile animals on earth. Better to get the family to take up something safer, cheaper and more useful to society, such as base-jumping or smoking crack.
Next, on your second list, write the things you like that other people hate. Now you're talking. Modern architecture, especially of the 60s, is a great bet here. The rich hate this.
A postal address in Essex works wonders; likewise, an adjoining curry house or pub. I recently viewed a place in Tunbridge Wells rejected by ten viewers because of the fear of being kept awake by noise from a pub 80 yards away. (Who are these people? If you're in bed before 11pm, you should be searching for a clinic in Switzerland, not a house.)
For good or ill, even a small time spent reading about economics will change your patterns of behaviour. My other significant decision has been to stop drinking wine. How come a drink with such a low level of consistency and with such a high chance of being vile has become the standard middle-class way to consume alcohol? The great majority of the world's wine output is appalling, and yet we tolerate a degree of failure here that we would never accept in spirits or beer. How long would a pub stay in business if every third pint were bad? Yet the wine industry seems to do fine with a hit rate worse than this - probably through an Earlsian Herd Effect. I've found drinking whisky sours is more reliable, with the additional bonus it contains healthful lemon juice. So far, however, my proposed pamphlet, "Drink your way to five a day", has met with little enthusiasm from COI.
- Rory Sutherland is the vice-chairman of Ogilvy Group UK and the president of the IPA.
This article was first published on campaignlive.co.uk
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