By Katherine Tarbox, Senior Editor, REALTOR® Magazine
For years, social scientists have been using certain demographics such as age, income, and education level to determine how people make purchasing decisions. Scott de Marchi and James Hamilton argue that six core traits determine every choice we make from how we purchase stock to how we work or date to even if we’ll lie on our tax returns. In You Are What You Choose (Portfolio, 2009), the authors explain how by understanding these traits you can better market to your clients. The read is extremely insightful in understanding how different personalities make purchasing decisions, including homes.
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THE SIX CORE TRAITS
Do you want things now are you willing to wait for a larger payoff later? The authors argue that those who regularly exercise and eat healthy will also look at the resale value of a car before purchasing it because they care about the value of something in the future before making a decision.
How much of a gambler are you? If you got a flu shot, most likely you don’t like to play the slots in Vegas. Gamblers also usually smoke, drive fast, or become involved in extreme sports. They won’t make a risky choice when it comes to purchases.
These types are at community events, the blood drive, and are first to report a crime. For those that lack this trait, they deplore jury duty, usually don’t recycle, and won’t respond to call-for-action in communities. Those with a high altruistic score are willing to pay a premium to make lives better.
People who fall into this category will spend their leisure time reading books, blogs, magazines, and newspapers trying to collect as much data before purchasing a computer, or for that matter a home. They won’t buy on impulse or choose a stock based on a “gut feeling.” They are also willing to change their mind when presented with new information.
If you tend to follow a crowd, buy a skirt because your friend bought one, and believe that certain brands portray a certain image. These are the types concerned with status and how they appear to others, and will buy accordingly.
This trait refers to how loyal you are to certain patterns in your life. Do you enjoy multiple cuisines or dine at the same restaurant every Friday? Will you always buy a BMW or change your real estate practitioner?
“The irony, however, is that economists have simplified reality even more than physicists have. Where physics have many different types of elementary particles—strange quarks, charmed quarks, muons, gluons—economists have only one. All humans, ration or not, are treated the same. Economists argue about whether this particle is rational or irrational, but there’s little sense that there are different kinds of particles that choose differently. We will argue that people approach choice in different enough ways that the bestiary of particles must be expanded—different types of people exist, and their choices are not fully comprehensible unless you know what ‘particle’ they are.”
ABOUT THE AUTHORS
Scott de Marchi, an associate professor of political science at Duke University, heads the program for advanced research in social sciences at the university. James T. Hamilton is the Charles S. Syndor Professor of Public Policy at Duke University.