Housing renovation is a major activity for many consumers in Australia, and its growing popularity in recent years has been reflected not only by it share in GDP but also by publicity it receives via home exhibitions and numerous TV renovation shows. Despite this, and despite similar experiences in other countries, research on how decisions in this sector are made is still quite sparse, a major restraint being the limitation of secondary data. This thesis attempts to improve knowledge in this area while at the same time exploring the feasibility and benefits of doing applied economic research in a pluralistic manner. From the perspective of mainstream economics, individuals’ decision-making in the context of renovation can be modelled in terms of utility/profit maximization subject to a budget constraint. The literature that has attempted to follow this research strategy is reviewed in Chapter 2, as is research undertaken in sociology that has been partly informed by behavioural economics. The economic literature fails to recognize the possible importance of social influence and psychological factors in this context. This could be unfortunate, as these factors, which are seen as important in some other economic paradigms, may explain how some renovators get derailed from rational decision-making. The methodology of pluralism offers a way to bridge between these divergent arguments by keeping mainstream insights in mind whilst at the same time adopting an ‘open-minded’ rather than ‘autistic’ attitudes towards different paradigms and embracing ‘realistic’ aspects (e.g. limits to individuals’ rational behaviours) rather than assuming them away. Chapter 3 examines the case for pluralism and shows that although debate in economics is often couched in terms of a battle between fundamentally opposed ‘mainstream’ and ‘heterodox’ views, a deeper analysis of sub-paradigms reveals a complex web of partially overlapping core ideas. Once this richer view of schools of thought in economics is recognized, orthodox economics and heterodox economics are not necessarily incompatible but rather seem potentially complementary. Despite renovation being a popular topic in Australia, relevant micro-data regarding individuals’ choices and their social and psychological attitudes towards renovation are in short supply. Therefore, unlike most previous renovation studies using published secondary data, this study involved the collection of primary data by a survey mailed to a sample of Brisbane residents in late 2006 and early 2007. Chapter 4 explains this choice of method, which provided data on respondents’ decision-making regarding renovation, their demographics, and social and psychological factors. This data set was used to analyse the following four topics: individuals’ decision to renovate or not (Chapter 5); renovators’ choice between using their own labour (DIY) or outsourcing the work (Chapter 6); psychographic segments of ‘non-renovators’, ‘DIY-renovators’ and ‘Hire-renovators’ (renovators who outsource the work) (Chapter 7); and factors shaping renovators’ tendencies to engage in overcapitalization and cost escalation in their renovation projects (Chapter 8). The pluralistic philosophy is applied in an addition way to analyse these issues, since the study used a variety of statistical techniques. The empirical results reveal that this dual form of pluralism—involving theoretical inputs from a variety of paradigms (including both ‘old’ and ‘new’ behavioural economics, socio-economics and others) and a variety of analytical techniques (cluster analysis, logistic regression and others)—does indeed widen our understanding of this topic. Generally speaking, the empirical finding stresses the importance of psychological factors in the context of individuals’ decision-making on renovation. In analysing individuals’ decisions to renovate or not, it is shown that, besides conventional factors (such as age of respondents), the psychological factor ‘perceived self-performance in renovation’ is crucial: individuals are more likely to embrace renovation if they perceive highly their ability to handle the renovation process. In exploring renovators’ decisions to engage in do-it-yourself (DIY) or hire others to do the work in their latest renovation projects, besides factors such as the scope of the project and renovators’ capabilities, the psychological factor ‘trust in contractors’ plays an important role: renovators are more likely to choose to use their own labour if they are uncertain about contractors’ reliability while those who outsource renovation works are in general more trusting than those who engage in DIY. The exploratory psychographic analysis of heterogeneous groups within each of the three groups (non-renovators, DIY-renovators and Hire-renovators) indicates the necessity of recognizing the heterogeneity the population when designing policies to improve the efficiency of the renovation market. In the investigation of renovators’ mistakes that lead to overcapitalization and cost escalation, psychological factors did not show their expected strong influences on either of these phenomena. However, it was found that the factors related to the project itself, especially the scope of the project (approximated by ‘time spent on preparation’) and the age of house, influence renovators’ overcapitalized spending and the extent of their cost escalation.
| Identifer | oai:union.ndltd.org:ADTP/279236 |
| Creators | Ti Ching Peng |
| Source Sets | Australiasian Digital Theses Program |
| Detected Language | English |
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