The Drew Bledsoe paradox: the mysterious home economics of homo economicus
When Drew Bledsoe (then the quarterback of the New England Patriots) decided to build a home for himself, his economic advisors had to explain to him that the millions he was about to spend would never come back to him. This is because the people who bought his house would be buying it for the land alone. They would knock Drews palace down, and build anew. Everyone who owns this property, in fact, knocks down and starts fresh. None of them recapture the millions they spend on their homes.
Drew was apparently puzzled. So should we all be. Homo economicus, economic man, is not supposed to act like this. To “invest millions of dollars in a “property, and then have to walk away from it this is not the rational thing to do. (It is especially not rational when you are an NFL quarterback who may discover on any given Sunday that the caprice of an owner or a coach obliges him to pick up and pursue his career on the other side of the country. But never mind, almost everyone who spends this kind of money on a house lives a fluid life that can demand sudden relocation and this cataclysmic loss.)
The Bledsoe paradox does not hold only for the very wealthy. It is a truism of home renovation that the renovator will not recapture all (in some cases, any) of the value of the money they spend on their renovations. They might think about a new kitchen and deck as an improvement that must increase the value of this property. But theyre wrong. They are about to sacrifice hard-won savings to the Bledsoe paradox.
How should we think about this? We might say, “well, no, the money people put into their homes or their renovations is not meant as an investment. People spend this money to make themselves comfortable. They are spending for the moment, not the long term. It is an investment in happiness, not the real estate market.
Lets run the numbers, shall we? Lets say that Bledsoe spend 3 years in his house before moving to Buffalo and that he spend $2 million on house construction. The happiness fee here was around $650,000. Thats $220,000 a year, around $20,000 a month. What about the more usual home owner? Lets say the average renovation is $100,000 and that people spend an average of 3.5 years on their homes. Here the happiness fee is roughly $3000 a month or a hundred dollars a day. (An anthropologist with a calculator is a dangerous thing; better check these numbers.)
The opportunity cost is itself quite high. If the renovators had invested the $100,000 intelligently in the stock market of the middle 1990s, they could have retired by decades end. The inconvenience cost is high too. Ask any homemaker what its like to put up with commotion, dirt, and a missing kitchen for 4 months, and s/he almost always says, “we will never do it again. That there is an inconvenience cost should make us suspicious of the happiness argument. If happiness were truly the objective, this family could treat themselves to lavish hotel life every weekend and still put money in their pockets.
The socio biologists will no doubt say that we rebuild or renovate to claim the property. The notion here, to put it somewhat crudely, is that this investment is our species way of peeing in the corners. As usual, this argument is a blunt instrument which fails to explain most of the data at hand. Are we to understand that the construction of a vast faux Tudor and a monument to modernism have exactly the same motive? Are we to understand that the hundreds of little decisions that people agonize over when building or renovating are really just a false consciousness. French drapes, glazed windows, open skylights, its all really just pee. But there is a simpler question, one that sociobiology cannot reckon with: why dont we just actually pee in the corners?
Lets imagine we have done our anthropological homework. We have interviewed Mrs. Maison about the new renovation she and her husband just completed on their three year old home. They tore off the back of the house and replaced it mostly with glass. Light now pours in. When we ask Mrs. X why she went to such great expense and inconvenience, she says,
“Well, you see, my husband just loves the light in the morning. Me, I would sleep until noon, if you let me, but Franks a morning person and he loves to get up and pad around in the first light of the day. Its his quiet time. Its his thinking time.
This is a charming statement of wifely solicitude but its also wrong. When we talk to Mr. Maison, he doesnt talk at all about morning light. He talks about space and openness and being able to see the garden. When we gently prompt him about mornings, he says, “Oh, that. Yeah, I know. My wife keeps saying that to everybody, and its partly true. I mean I am a morning person, and the house is way nicer in the morning. But I liked it before. I mean in the winter months, there really isnt any light.
Homo economicus meet homo faber (man the maker). The reason Mr. and Mrs. Maison spent $180,000 on this renovation was to capture an idea Mrs. Maison has of her husband, and, more important, to create the idea she has of her husband. He works too hard, she thinks. He has so many demands made of him. If only he had a little more time to himself. If only he could be bathed in the light of the morning, maybe This is a more complicated species of wifely solicitude. It is Mrs. Maison crafting the home to craft her husband.
The Bledsoe paradox proves not to be a paradox at all. We invest in our homes (when we have the good fortune to have homes and money enough to remake them) because they are transformational opportunities. We make them to make ourselves. This is money well spent when it works. Its badly spent when the idea we are trying to invent for and of ourselves is implausible or otherwise uninhabitable. It does not fit very well with our notions of economic man, of ourselves as rational creatures who invest for future profit. But thats only because homo economicus is defined too narrowly. It would help a little if we would see that some economic activities are also cultural ones (the reverse is also true), that we undertake these activities especially when we want to cast our ideas out into the world in the hopes that they will “discover us there and take up residence.
In a sense, the paradox comes from a paradigm. Economic man is a robust part of who we are, but only a small part of who we are. When we case this idea out into the world, we are sometimes puzzled by the creature who turns up at our door.
At the heart of most remodelling …
1.loneliness ( and lackings in relationships- ie. gives the emotionally dying , nearly unengaging couple, something to have a conversation or arguement about)
2. to try to find the self you lost somewhere along the way, or to keep the self when you fear you might be loosing it… you can say “Phew, there I am. Those are my colors, I like “antiques..” or “I’m not that way anymore…look what I am now” Phew. Im more than okay.)
3..unclaimed and un- identified fear -about not being certain that you exist/ matter/ know who you are/ or are liked enough
4..what does money have to do with it.?The money that will be spent often depends on the money available.
5. to get rid of the psychic stain left by previous unmet owners or (met) x spouses
6..having said this, there are times when its done for the sake of comfort or beauty, for the joy in the creative project.
The remodel for investment, is usually a modest one.
ps. Are you telling me that most people Don’t actually pee in the corners? hmm.
Your Bledsoe paradox got me thinking, of course. To me, the intrigue lies not only in the idea of the need for transformation, but beyond that, into the realm of perpetual transformation, the need to be transforming all the time. As I read it, I thought of the flip side, the fact that when you do not spend this ridicilous money on tranforming yourself, your partner, your matrimonial trappings, then decay sets in. The reminder of something that “needs fixing” or a room where the “colours have gone out of style”, or the presence of something whose occasional malfunction, which used to be endearing is now “starting to bother me” – this is the disatisfaction with the current state, a fraying at the edges, a reminder of the lack of real satisfaction in any of the disjointed fragments of our life (or perhaps a realization that so little holds all the pieces together, so let’s at least make each disjointed piece nicer to look at). Hence renovation has, for some, moved from a project to a hobby; to others buy, renovate, sell, move on is a way of life.
one other thought re the DBP (bledsoe paradox)
have you noticed the fanaticism/fetishism with which people watch those home/design shows on HGTV?
didn’t these used to be personal makeover shows? and now they’re interior design programs?
now the ante for everything has been upped. the other week on one of the networks they had the “extreme makeover” which included several rounds of plastic surgery which preceded the personal trailer, jose eber, hairstylist to the stars, and various other ‘counsellors’.
at one point they wheeled the 3 subjects into each other’s hospital rooms, bandaged from head to toe, so that they could see each other and give/receive moral support
it’s the jackass of self-improvement
from Jennifer Bermingham
“An investment in happiness, not the real estate market…”
It is wonderful to realize that we, as a society, are making what I believe to be the right choice. At the same time it is disheartening to note that we deny ourselves the true satisfaction that should accompany this choice by disguising it as an economic rather than an emotional investment.
My husband Andy and I have been debating the economics of renovating the kitchen. Now enlightened, we can abandon any further discussion of whether it makes financial sense and proceed with full appreciation of the happiness it will bring!
When I was at university decades ago taking a course in macroeconomics I remember we were assigned a book on the hidden costs of economic choices. The book was radical for the time because it proposed that when someone made an allegedly economically-rational decision, there were always hidden costs that were transferred to the public domain simply because they could not be assigned with precision to a particular individual. I don’t think I’ll ever forget one example in which the author (North, I think his name was) discussed the tram system in Sao Paolo, which had been built on the cheap so that every once in a while a rail would work loose and come ripping through the bottom of the wagon and impale a passenger like a stuck pig (I think the metaphor was North’s). Who was to pay? One of the things he never mentioned, of course, was that trams are never used by the rich and powerful who take the decisions to build public transport systems. The real cost was not a social cost but a class cost, but no one talked about that in those days. It is part of the power of modern ideologies, even when they are apparently on the wane, that the notion of the social as an explicit space subject to its own dynamics was first defined by modern governments in the last half of the 19th century, as David Horn tells us, precisely to create a justification for government intervention that bypassed and delegitimated older categories such as ‘soul’, ‘spirit’ or Self. Even with over 150 years of attempts to define the social and its effect on individual choices, we understand next to nothing about it. It’s the same with the effort to try to calculate the cost of poor Bledsoe’s housing dilemma, as if such calculations can tell us anything other than profundity of the academic rhetoric of ideological obfuscation that we all learn at university if we want to call ourselves intellectuals. It is significant that even logical and sound arguments against the domination of economic rationality must be couched in the same language normally used to uphold and reproduce the rhetoric by which people are transformed into accounting units. The failings of poor old Homo oeconomicus are of course by now so thoroughly exposed, except obviously in introductory courses in economics, that we feel a little pity whenever its emaciated body is trotted out to make a point. But what was the point? That houses are not merely markers of social status like the 1930s Chicago school of wisdom still taught until recently (this time in sociology departments) but are part of the material means which we construct ourselves, or at least a part of ourselves that we feel comfortable projecting? We knew that already. The interesting point is the intersection of the means of self transformation, in the case a huge and probably economically irrational house, with the social that we all live in, or do we? That may be the ultimate point, that we live in several communities, all imagined in Benedict Andersen’s felicitous phrase, but not all of them virtual. The outlines of some of these communities may have become blurred recently as new visions of the social self emerge and reorient people towards new strategies of strategic positioning. It may be, therefore, that transformational strategies are not necessarily suggestive of a new post modern reality as they are indicative of shifts in peoples’ sense of which communities are important to their lives, that houses and objects are facilitators of membership in virtual communities. After all, why does Bledsoe need to transform himself? He’s very good at what he does and it is precisely this success that places him in the so-called dilemma of having to justify a huge non-investment. But why justify, and to whom? It may be that Bledsoe is after all the product of a series of prior successful transformations, and the big house is required testimony for the fans that he is not ‘one of them’, that he did transform albeit along a more traditional rags to riches by hard work and talent career path. In this sense, he may be sending a signal about the path more than the goal. And think of the semiotics of the house, with its rich associations of rootedness and permanency. Surely someone willing to spend such a huge sum is sending a signal that he is no longer so interested in participating in the transformational process that brought him there. Further transformation is risky business. In other words, the hidden costs of not buying the Big House are higher than the upfront costs of buying, especially since the sheer density of such a mass becomes apparent when athletes and stars are at their peak, looking down from above not on mere mortals below but on what must seem like a long inevitable slide into decline and oblivion. There may be another point. Such anti-transformational stances may be due to the proliferation of the creative possibilities in contemporary culture, which offers people the chance, sometimes frightening, of constant reinvention. Maybe the Bledsoe paradox is more real than first appears.
From Ken Ames:
There are very limited parallels with clothing,
which is also surely about self-construction but which few people expect to resell. There are, then, continua of sorts running through different categories of objects. At the least, one has to
do with the idea of investment (or resale); another has to do with objects transformational potential. There are others as well.
On a tangential point, I think that economic man/woman is but poorly and imperfectly understood. Your own close involvement
with business may make that facet of humankind appear more prominent than it actually is in the lives of many. For some few folks, the economic side is fully sufficient. It is who/what they
are, but for most others the economic self, while undeniably necessary, is never sufficient.
Response from Grant:
Many intellectuals are happy to mock the transparent insufficiency of the Economic Man model, but one of the things I learned at the Harvard Business School is that this Smithian idea is the first principle of a great deal of clear and useful thinking about the world. That it is insufficient for some purposes does not mean that it is insufficient for all purposes, and what this paradigm grasps so well is often, and appallingly, the thing the rest of assume away. This _is_ the invisible hand, not less active for the fact that it is invisible to us!