Competing Notions of Search for Home: Behavioural Economics and Housing Markets

Abstract

The frequent use of the unifying term “behavioural economics” in contemporary economic theories and English housing policies masks divergent accounts of human ability, search processes and housing markets. The resurgence in interest in the behaviours of housing markets brings exchange mechanisms and housing search processes into sharp focus; this paper provides and applies a framework to assess the compatibility of behavioural economics theories of housing search. Assessing the ontological commitments of theories is possible through analysis of their conceptualizations of human ability, the search process and the structure and operation of the market. This assessment reveals a spectrum of diversity; distinctions between “old” and “new” behavioural economics are evident despite there being only limited acknowledgement of this variation. Whilst significant contributions to housing economics have taken place across the spectrum, clear distinctions are needed to prevent policy-makers’ inadvertently misapplying incompatible approaches to behavioural economics and to prevent inappropriate synthesis in academic theorization.

Key Words:

• Housing search
• Conceptual model
• Behavioural economics
• Institutional economics
• Ontology

Notes

1. There is a caveat to this claim. This view does not consider time, and the delays between a dwelling becoming available and marketed online. In slow markets this may be of little concern, but it is feasible that in hot markets the dwelling may be transacted before the details have been submitted online. This may be more likely in the rental market than in the freehold market, where time may be of greater significance.