Micro-Housing: Nudging Ourselves to a New Shared Value

Part of the American dream has been telling us to choose big over small. This notion holds its ground well among many people to this day. However, a new form of housing, which contradicts this notion, has been thriving noticeably in recent years, especially in prosperous cities like Seattle. I am talking about micro-housing. While reading Richard H. Thaler and Cass R. Sunstein’s Nudge: Improving Decisions about Health, Wealth, and Happiness, I could not help but to relate their discussion of bases of bias and “People are nudge-able” with the micro-housing trend.

Here is how I think their discussion of bases of bias fit into the conversation and feed the micro-housing trend. First, the representativeness heuristic caused misconceptions of then the robust housing market patterns while the unrealistic optimism and overconfidence heuristic among home purchasers (Well, not to forget the malpractices of financing industry) led to risk-taking mortgages that caused the recent meltdown of the economy. Then the availability heuristic reminds us how much we have lost from this recent experience. Along with the gain and loss heuristic telling us how much we hate losing more than we like gaining, more people, in the fear of losing their investment, began to favor renting smaller housing forms over owning a big house. That is true even when some really do have to ability to afford living in bigger units and the economy has been seemingly improving. While some may ask why, I would argue that renting and living in smaller units have become a default for many, where the status quo heuristic is in effect. Furthermore, as framing heuristic shows its wonder, the description of living experience in cities has been gradually transformed from being dangerous to adventurous.

The discussion above might be too linear and somewhat oversimplified. However, it does show us that while people are nudge-able, so can biases. Given enough time, they might collectively become a new culture, or even a new value. This idea ties into the idea of creating shared value discussed by Michael E. Porter and Mark R. Kramer. With the real estate developers exploring the micro-housing market, increasing number of people choosing to live in smaller units, and the governments regulating this relatively new form of housing, a positive feedback loop can be observed. First, people looking for smaller housing units create a demand of micro-housing. Then real estate developers provide such units that will meet the people’s needs and the government’s requirements. As the governments overseeing the progress, the quality of micro-housing units will improve, which may lead to more people willing to live in those smaller units. Other positive results include reducing automobile dependency and sprawl, and increasing building material efficiency, cities’ residential capacity and housing options for various social classes that lead to a more sustainable future.

In the end, I would like to share a video by Kristen Dirksen which shows some examples of how smaller living units can be stylish, innovative, and comfortable.


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