Wednesday 30 April 2014

Accounting for Tastes

Why do we see buildings and in particular houses differently to products of other industrial sectors, such as cars or electronics and white goods?  Does society dictate the mechanics of an industry or do the limits of the industry dictate the accepted choices within society?  Yes, the life cycle of a building is longer than a TV,  but the house is the most widely adapted and altered building type.  Existing houses are altered to meet the changing needs and aspirations of society, so why is building such a messy, expensive, fragmented and often difficult process?  In addition, why do traditional references have such value?

In his book Accounting for Tastes, Gary Becker describes that everyone has a personal capital of values which people surround themselves with.  Changes to these values come as a consequence to or from changes in personal capital.  For example, the reduction of smoking in society, and increase in fitness clubs over the last 30 years have been a result of government efforts to encourage us to live more healthily.  These changes are recognised to have added value to to our personal capital, and our values have changed accordingly.  According to Becker we define our values looking for certainty and assurance of the present, and stability of the future.  He refers to Adam Smith, describing humans as creatures of habit.  Industry recognises this and acknowledges that change in a product or service can be a risk to consumer acceptance and market share, unless the change is a clear consumer requirement or it adds value to their personal capital.  Becker aligns habits to addiction.

Looking at the basic needs of people, there are shelter, food and drink, and recreation.  With food and drink, there has been considerable change since the Second World War.  Grocers were overtaken by the supermarket, then the hypermarket as society became more mobile, and then online shopping as society embraced computer technology.  All these steps were seen to add value to peoples' personal capital, and as Phil McKinney describes, each step offered a more exciting (if not better) experience which people want to explore, and peer pressure encourages.  On the other hand, the products of the grocery store / supermarket / online shop are the same and change incrementally.   They represent the stability within the sector and wholesale changes here might back-fire on sales.  By comparison, it could be argued that the building industry has not had such a dramatic evolution in either product or process / consumer experience.

Many market sectors work hard to fight our cultural urge to look for stability of the future.  Cars, electrical goods etc., become superseded with more advanced products, depreciate and eventually need replacing.  Stability of the future is sidelined by the desire for the best and the latest, and the assurance of an even more exciting future in 18 months or 5 years, depending on the product.  Again, this is about the experience.  How can the building industry capitalise on that?  Building can not really be described as a cutting edge technological process even though houses need flexibility in plan, layout and size to meet changing living patterns, and there are continued environmental performance, energy saving and ecological advances being made.  Resulting from our fragmented industry we largely have traditional procurement processes, materials and construction methods.     If the values surrounding our personal capital are driven by choice and availability on the one hand and habits, social interactions, culture and peer pressure on the other, does that mean that lack of choice from the market has driven us to consider housing in terms of size, location and aesthetics?  Have the choices presented by the building industry compounded the public desire to choose house aesthetics which are traditional or 'in keeping' - the best of an affordable choice - but when considering a car, the latest Land Rover is a popular choice?  Each item makes a statement and says a lot about personal capital, only one looks backwards and the other looks forward.  The building industry appears to have spent a long time reinforcing social norms, rather than challenging them to create a cycle of progress.  Can the building industry find ways to innovate and add value within the market place, based on the ideas given by Becker of experience, technology and explicit cycles of improvement, focused on an assured and positive future?  Its not an easy task.  Apart from tackling the fragmented professional structure of the building industry, Becker says that our public values are stamped in us and can prove difficult to change.  They act as control mechanisms on our living patterns and social behaviour.  Not easy to change but not impossible:  Becker draws on Adam Smith by saying economic processes affect preferences.  Our nature changes as we change the world.

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