Buying decisions are not always based on our needs. It turns out that even the weather can influence the value of big purchases like houses or cars, according to a new working paper by National Bureau of Economic Research [PDF].
Professors Meghan R. Busse, Devin G. Pope, Jaren C. Pope, and Jorge Silva-Risso looked at the role that “projection bias” has on consumers when making important purchasing decisions, such as buying a new home or car:
Consumers overvalue warm-weather vehicle types and housing characteristics (e.g. convertibles and swimming pools) when the weather is warm at the time of purchase and overvalue cold-weather vehicle types (e.g. 4-wheel drive vehicles) when the weather is cold and snowy at the time of purchase.
Here are the results in chart form. In Chicago, researchers found that springtime weather results in a 3 per cent increase in convertible cars sold versus winter. They also found 4-wheel-drive car purchases go up in winter.
In Miami, on the hand, where the temperature remains pretty much the same year round, the variation in convertible sales is much smaller:
And here’s the results for homes featuring swimming pools. The researchers found pools caused home prices to rise $1,600 on average in the summer:
The researchers suggest the country may want to consider expanding “cooling off” laws that allow for extended refund periods for cars and homes.
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