Photo: Flickr / Sarah_Ackerman
Smart vending machines aren’t the only things changing their prices with the weather. Shoppers also spend more or less depending on the heat. What we want at the time of purchase can influence what we think we’ll want in the future, whether that’s a swimming pool to cool off or a convertible to drive to the beach, according to an NBER working paper. This is called the projection bias, or what happens when people overestimate their current desires and how they’ll ride out over time.
This holds especially true for convertible sales, which rise during summer:
Our estimates suggest that a location that experiences a mean temperature that is 20 degrees higher than normal will experience a 0.22 percentage point increase in the percentage of total vehicles sold that are convertibles … We find large and significant effects both in the spring and in the fall (e.g. an abnormally warm week in November increases the fraction of vehicles sold that are convertibles).
The theory also applies to home features like a swimming pool. Summer buyers are willing to pay for the “added value” but winter buyers could do without it:
A swimming pool adds more value to a house that goes under contract in the summertime than it adds to the same house that goes under contract in the wintertime. Specifically, a house with a swimming pool that goes under contract in the summertime sells for an average of 0.4 percentage points more than the same house when it goes under contract in the wintertime. Given the average value of homes with swimming pools in our dataset, this effect suggests a swing in value of approximately $1600 between summer and winter contract dates.
Beyond swimming pools, other housing features that might have a seasonal component are central air conditioning, fireplaces and lot size. However, there’s little evidence that the number of bedrooms, bathrooms or square footage make much of a difference to buyers either way.