My husband has banned me from moving house. It’s either him, or the house, so for now I’m sticking with him. He might (just) have a point, we’ve moved house too many times. Every time it involves a level of compromise that falls just short of calling in the UN along with countless weekends spent trekking around houses looking for the impossible perfect.
But when it comes to making purchasing decisions, like a house, we are often faced with comparing alternatives and these can be difficult and take time to make. Sometimes the simple act of comparing the alternatives can lead us to make decisions that we’d never have made had we had no options.
We often have to choose between the available alternatives
When you want to buy a property, your first port of call is most likely a property aggregator that displays multiple homes for sale. You might have a budget in mind (or at least your bank will have an idea of how much they’re willing to lend you), preconceptions about the kind of area you want to buy in, how many rooms you need, whether you need outdoor space etc.
But when it comes down to it, there will be a pool of available properties and you will most likely be making a choice from among that selection.
Comparisons between features that are not at all similar are hard
When we buy a house we make what is called a “joint evaluation”: we consider the features or qualities of each property in comparison to those of other properties. This is relatively easy when their features are comparable, but becomes much harder when the characteristics you’re comparing are nothing alike.
For instance, it’s easy to compare “has garden” to “does not have garden” but much harder to compare a city centre flat to a detached rural house because they have few features in common.
Comparing can lead us to change our mind
Research on how we evaluate things has shown that people choosing under single evaluation (where there’s nothing to compare), make a different choice than when making the decision in joint evaluation (where there are multiple options to compare).
Imagine, for instance, that you’re renting a house which you like living in well enough, apart from finding the third bedroom a little cramped. Your lease is up soon and your landlord tells you that they’re intending to sell. You happen to be considering buying when your lease expires. You decide to make your landlord an offer and buy the house.
If you had gone into the open market you would have compared the house you let to all the others in similar locations and decided that the compromise of the small third bedroom wasn’t something you could put up with because there was a better alternative. You’d have bought a different house.
This is called a preference reversal. It means that the decision you make might change depending on whether you have alternatives to compare with. Preference reversals have been shown to be more likely when the attributes are hard to evaluate (Diff Hsee). However, because you make the decision of which house to buy at one point in time but then live in it well after the decision is made, you effectively experience the house in single evaluation mode – you don’t live in your small third bedroom continually comparing it to a hypothetical palatial apartment.
Joint evaluations don’t always make us happier
The rise of internet dating and social media has brought this issue of comparability out of the purchasing domain and into other areas of our lives. When you bump into a stranger in a pub (reader, I married him) you make a decision of “will I see this person again” under single evaluation – you judge them on their merits at the time.
But if you swipe on Tinder (or your app of choice), you make comparisons between the “goods on offer”. Someone you might have been happy with bumping into in a bar won’t get a look-in when compared to the alternatives.
Similarly, while you might be perfectly happy with your lived experience of your life, comparison to others in the harsh light of “living your best life” on social media can be enough to cause marked decreases in our wellbeing.
Comparisons can take time
So does that mean we should choose to evaluate our choices singly or jointly? There is benefit in both, depending on circumstances and personal preference.
I dislike shopping for clothes. For me, a day spent trekking around every shop in town to find the “best” dress when the first shop had a “good enough” dress is a waste of time. However, if I loved shopping or cared particularly about fashion I might view that process of comparison as adding to the value I get from buying a dress at all.
However, one area of life where you can’t go wrong with comparisons is in shopping around for easily comparable household utilities like electricity and gas supply companies. The gas or electricity supply itself is independent of the company that bills you, so the return for your invested time is clearly measured in hard cash and the comparisons are made easy by price comparison websites (although be sure to select the “compare whole of market” option so you don’t just see paid-for advertising).
To some extent mortgages are the same – the cost of money is the single biggest differentiating factor between lenders, so comparing alternatives can save you money in the long term.
Not that I’m in the market for a mortgage. This week.