When we hear a long list of words, and we’re asked to recall them, it’s likely we’ll recall the words at the end of the list rather than the middle ones. This phenomenon applies to experiences as well, and psychologists call this the recency effect.
So, why the talk about human psychology in space devoted to trying to be helpful to those who design, develop, and build homes and communities for people?
Well, we know that one measure of collective psychology, consumer confidence, is not only an important bellwether of what’s going on in housing, it’s regarded as a leading economic indicator. The Conference Board and the University of Michigan each month release survey data tracking consumer confidence and sentiment, and the Conference Board even zeroes in on its respondents’ stated plans to buy a home within six months.
Here, National Association of Home Builders senior economist Jing Fu looks at the latest readings from the Conference Board, noting that “despite the monthly volatility the trend in the share of respondents planning to buy a home within six months has been steadily upward since the end of the recession.”
Still, if you look at that fever chart, you can see that the indicators since the Great Recession are running lower than they did as a norm prior to the great run-up in the early part of the last decade. That’s why it seems appropriate to mention the recency effect.
Now, here’s insight from another telling survey, done on behalf of Ikea by the Economist Intelligence Unit, called “Discovering the New American Dream.” One of the conclusions of this analysis brings to mind the recency effect phenomenon, because it suggests that the aftermath of the Great Recession still weighs heavily on people’s sense of both current conditions and expectations. Here’s how the EIU sums it up.
“Americans still overwhelmingly strive for independence and autonomy. A majority of respondents believe a core tenet of the American Dream is the freedom to live as they choose. However, compared with past expressions of the Dream that were defined by physical autonomy—such as a house in suburbs—few survey respondents are now defining success by material signposts, instead focusing on experiences, education and social equality. Americans celebrate achieving elements of their dream in their daily lives, such as everyday moments with family and friends, and professional and educational achievement.”
Now, this is not an assertion that the American Dream is definitionally materialistic, with homeownership as a baseline requirement for its achievement. But the Economist survey, we believe, reflects a collective experience still digging out of the damages of the downturn, not just to economic well-being and expectations, but to basic values attached to work and productivity and trust.
At a deep level, the meaning of the American Dream as James Truslow Adams popularized it was multi-generational in scope. The hard work and forward focus of a present generation of working-age adults would elevate the prospects and expectations of their children when they’d come of age, and so on.
Which is where homes and homeownership come in. Owning a home has been, and still is for many, a physicalization of an inter-generational personal financial plan in action. The EIU analysis, a snapshot in time of a respondent base of respondents who remain in early recovery from the black-hole gravity of 2007 and 2008 and 2009, suggests that the American Dream is downsized, chastened of specific financial goals and expectations, and more metaphysical than it once was.
“The focus on quality of life rather than specific aspirations highlights the idea survey respondents expressed that attaining the American Dream is a process. About a third of Americans believe they are well on their way to living the dream today, with another third still on the journey.”
What we think is that once people travel beyond the recency effect of the Great Recession, the journey will lead back to an embrace of homeownership and community-making as essential dimensions of the American Dream.
