A prospect theory-based analysis of housing satisfaction with relocations: Field evidence from China

This paper proposes a theoretical framework based on prospect theory to explain the determinants of housing satisfaction among relocated residents. We test the two most important elements of prospect theory, namely, reference point dependence and loss aversion. For reference point dependence, we investigate the presence of both internal and external reference points; for loss aversion, we test its effect directly by comparing coefficients in loss and gain domains and indirectly by verifying the presence of the endowment effect. Our study area is Xiamen, China, where the recent urbanization development provides a natural experiment setting to reliably test our hypotheses. Our empirical findings provide convincing evidence to support the four hypotheses developed from prospect theory, indicating that prospect theory is a working theory to better understand the motivations and concerns of relocated residents. Policy recommendations are subsequently derived to reduce social conflicts and disharmony caused by urban redevelopment and relocations.National Science Foundation of China; Senior Members’ Research Grant from Newnham College, University of Cambridg

Housing wealth and residential energy consumption

The housing wealth effect manifests as a positive relationship between consumption and perceived housing wealth. When the perceived value of a property rises, homeowners may feel more comfortable and secure about their wealth, causing them to spend more. This study adopts a behavioural approach to verify if this relationship holds true for residential energy consumption. An analytical framework is proposed to study the relationship between housing wealth and energy consumption at both the market and the individual level. We find evidence of significant association between housing wealth and energy consumption by using data between 1995 and 2016 from the UK. As the perception of housing value increases, UK residents tend to increase their energy consumption. Our models also consider psychological biases in energy consumption behaviours, such as market sentiment in the macro-level analysis and framing effect in the micro-level investigation. Our findings shed light on the behavioural aspects of housing wealth effect on residential energy consumption and demonstrate the potential of using behavioural interventions to encourage energy conservation activities. These findings are helpful in designing and implementing energy consumption policies that can strike a balance between social justice and economic efficiency.ESRC and NSF

Behavioural insights into housing relocation decisions: The effects of the Beijing Olympics

This article examines the impact of mega events on Beijing housing market from a behavioural perspective. By exploring the situation surrounding the Beijing 2008 Summer Olympics, we analyse the relationship between mega-event regeneration and expected residential relocation outcomes. Our findings suggest that Beijing Olympic regeneration caused disadvantaged groups to anticipate relocation to undesirable areas, as a result of improved infrastructure, public security, and urban environment. Behavioural sciences research indicates that expectation influences decision-making by serving as a salient reference point. Agents who perceived themselves as in a disadvantaged position or holding a gloomy prospect of their future are more likely to end up in such a situation. This paper offers insights into an effect of mega event regeneration projects that has been largely overlooked in the literature, i.e., the expected housing relocation outcomes. The research calls for government intervention and public attention to this important behavioural aspect of mega-event effects.This is the accepted manuscript for a paper published in Habitat International Volume 47, June 2015, Pages 20–28, DOI: 10.1016/j.habitatint.2015.01.00

Strategic planning framework for land consolidation in China: A top-level design based on SWOT analysis

China is in the midst of an unprecedented and critical period of strategic opportunities for land consolidation. In this process, the country has been confronted with new situations, opportunities, and serious challenges, all of which urgently require top-level design of strategic planning framework for land consolidation. Based on an SWOT analysis, we propose a strategic planning framework for land consolidation at the national level, with a focus on clarification of internal Strength–Weakness strategies and external Opportunity–Threat strategies involved in the land consolidation process. Whereas it can be concluded that land consolidation in China has not yet entered the stage of landscape-ecological pattern, it is on the brink of that stage. Thus, the proposed strategic plan should provide strong protection for continuous promotion of land consolidation through the application of a top-down and comprehensive design considering agriculture production, livelihood and ecology as comprehensive targets. Meanwhile, it should also unswervingly adhere to the “red line,” optimize the layout of urban and rural land use and propel a new landscape-ecological pattern of land consolidation. In this way, strategy-oriented support can be provided to improve land consolidation implementation and ensure that it is stable, coordinated and effective.This work was supported by the Major Program of the National Social Science Foundation of China (grant no. 09&ZD047) and the National Key Technology Research and Development Program of the Ministry of Science and Technology of China during the 12th Five-Year Plan Period (grant no. 2012BAB11B02).This is the accepted manuscript. The final version is available at http://dx.doi.org/10.1016/j.habitatint.2015.03.00

Off-farm employment and agricultural land use efficiency in China

The non-agricultural employment transfer of the rural labor force has fundamentally changed the labor input in China in recent decades. A good understanding of how the off-farm employment of rural laborers affects agricultural land use in China is needed. We use the Driscoll and Kraay standard errors fixed effects model to investigate the relationship between rural laborers’ off-farm employment and agricultural land use efficiency based on a panel data of 1,961 counties in China. We find that the distribution of county-level agricultural land use efficiency is heavily skewed to the right, with many counties below the national average efficiency level. We also identify a robust U-shaped relationship between off-farm employment and the change in agricultural land use efficiency, indicating that the substitution effect of capital and technology for rural labor has changed from weak to strong. The findings have important policy implications for the joint reform of the household registration (hukou) system and the rural land use system (i.e., the Three Rights Separation Reform) in China. Using the criteria derived from empirical analysis, we also perform content analysis to assess 20 rural land use policies implemented between 2014 and 2020. We find that these documents covered the three important areas to improve rural land use efficiency, that is, rural-urban mobility, rural land rights market development, and rural land rights protection. Although a synergy among the three areas has not yet been achieved, the central government has already put in place policies to enable and support coordinated actions in the three areas. The lessons learned from China also serve as a helpful reference for addressing the challenge of rural labor loss in other developing countries.ESR

City profile: Chongqing (1997–2017)

Chongqing has made remarkable progress in economic and social development since it was granted provincial city status in 1997. The city had become a leading economic centre for the upper part of the Yangtze River region and a focal point for an experiment in coordinated urban-rural development. How did the city accomplish such an impressive achievement in spite of the impact of the Global Financial Crisis from 2007 and the political turbulence of 2012? To answer this question, we summarise the economic and social developments in Chongqing over the last two decades and demonstrate how the Chongqing model helped the city to sustain fast economic development whilst achieving urban-rural integration. Given that Chongqing is set to be a critical hub in the ‘One Belt, One Road’ (OBOR) initiative, this article provides a comprehensive update on the 2001 version of the Chongqing city profile, which was published shortly after the city became the fourth municipality directly under the control of central government. In addition, we discuss the lessons that some Chinese cities can learn from the Chongqing model when dealing with housing affordability issues and the challenges and opportunities for Chongqing in the OBOR initiative.ESR

Land reallocation reform in rural China: A behavioral economics perspective

Based on prospect theory, we develop a theoretical framework to unify divided views on land reallocation reform in China. Our theoretical framework and empirical verification explain the driving forces behind the success of the rural land reallocation reform in China. We find that rural land reallocation reform in China is characterized by induced and imposed institutional changes. The relationship between induced and imposed institutional change is complementary instead of competing. The decision and frequency of land reallocation are affected by both local endowment and central government policy. Empirical findings also suggest that land reallocation reform in China is incremental, with interim policy targets from different stages taking gradual effect. The incremental implementation of the “No Reallocation” policy is the reason behind the widespread, diversified land reallocation practices across the country; this policy also contributes to the success of rural land reform in China. The theoretical model can be used to study a wide range of government-led institutional changes in China, such as affordable housing schemes and the National New-type Urbanization Plan (2014-2020).This is the author's accepted manuscript. The final version is published by Elsevier in Land Use Policy here: http://www.sciencedirect.com/science/article/pii/S0264837714001136

A behavioral interpretation of the nav discount puzzle in listed real estate companies

The NAV discount is a long standing puzzle in the listed real estate context. In this paper we extend the existing literature’s rational and noise trader explanations by exploring the influence of specific irrational behaviors. Based on behavioral biases identified in the stock and real estate markets, we hypothesize the existence of a relationship between lagged NAV growth and the NAV discount. The findings provide initial evidence of trend-chasing behavior between the dual real estate markets. The results have broader implications for the perception of the relationship between public and private real estate markets

“Smarter information, smarter consumers”? Insights into the housing market

This study, we explores how information helps housing consumers make informed decisions and discusses potential market outcomes. Specifically, wWe analyse the interaction between the disclosure of information on property conditions and the disparity between home sellers’ willingness to accept (WTA) of home sellers and the home buyers’ willingness to pay (WTP) of home buyers. Three hypotheses are derived and validated through field experimental investigation within the property market. We find that the WTA–WTP disparity exists. The discussed policy instrument for information disclosure appears to function as expected. The release of information helps consumers adjust their judgment and estimation of future maintenance cost in the direction of true probability, reduces the time and monetary costs of searching information and corrects the high risk-premium they demand in buying resale properties. The WTA–WTP disparity is considerably reduced after information disclosure, and market liquidity and efficiency are improved. This study is an important complement to prior research on how information changes the behaviour of consumers in housing markets. Findings can inform the central government about the wide use of smart disclosure in the near future, as well as the scope, format and structure of information to be supplied to general housing consumers.National Natural Science Foundation of China (Project #71231005 and #71671076) and the technical support of China Index Academy

Reference-dependent analysis of capital structure and REIT performance

Using prospect theory, we develop a theoretical framework to examine the relationship between leverage and Real Estate Investment Trust (REIT) returns by introducing the concept of reference point. We postulate that firms’ capital structure decisions are affected by target leverage (i.e., the reference point) as well as the observed leverage. Market conditions combined with firms’ capital structure will put firms in either loss or gain domains, where firms behave differently. In general, the leverage-return relationship is positive in the gain domain and negative in the loss domain. Firms are then subject to asymmetric risk preference in different domains. Our empirical evidence shows strong support for the theoretical model. Compared to the conventional approach where only observed leverage is used, our model is more flexible and realistic in revealing the underlying structure of the leverage–returns relationship.We are grateful for financial support from the National Natural Science Foundation of China (Project #71231005) and the Senior Members’ Research Grant from Newnham College, University of Cambridge