The Planning System is Ruining Your Love Life
It's not just your appearance and personality holding you back
I am reliably informed that today is Valentine’s Day. What I thought you’d enjoy more than a card or chocolates from a loved one are my hot takes on the economics of it all. You’re actually getting two for the price of none which is my gift to you (they actually appeared elsewhere a few years ago).
How the housing crisis is ruining your love life
Much has been written both here and elsewhere on the myriad problems the housing crisis causes for people, especially the young. It adds to the already punishing cost of living and stunts productivity, which in turn means lower growth. Stamp duty also makes it much more difficult for people to move house, presenting an unnecessary obstacle to older homeowners who want to downsize.
There is a housing crisis in the UK. The root causes are easy enough to identify. A toxic mix of restrictive planning rules and poorly thought out taxes means many face sky high rents and may never realise the dream of home ownership.
As it’s Valentine’s Day, it is worth considering how the housing crisis is also impacting our love lives.
In many ways, we now have more choice when it comes to romance than any other generation. Dating apps mean it’s easy to meet people in your area, while changes to the law and shifting societal norms mean that sexual minorities are now more free to openly express their love for each other.
For all this freedom, however, choice is still limited by the cost of property. With many areas out of the reach of all but the richest, the pool of potential partners is reduced. To put it simply: Mr or Mrs Right might be out there, but sadly they’re not in your city – they’re stuck in Huddersfield or Doncaster as they can’t afford to move to London, Oxford, or Edinburgh.
Now, picture the scene. You have matched with someone on Tinder and, after chatting for a while, you arrange to go on a date. After the initial awkwardness and nerves, things start going really well. They’re good looking, funny, smart, and interesting and you’ve somehow managed to convince them that you are all of those things as well. The date draws to a close, and you both agree that it would be nice to go home together. Only then does your date reveal that, like a record high number of young people, they live with their parents. There is more privacy at your place, but you’ve been forced out of the city centre due to high rents and so it will take you well over an hour to get back. You both have work in the morning, so not tonight. Maybe some other time…
Perhaps you’re very much in love with your partner. Given that you are spending an absolute fortune on rent, you decide to stay in this Valentine’s Day and enjoy a romantic meal for two. You eat a delicious dinner by candlelight, and then move into the lounge. Then, just as you are getting comfortable, your flatmate staggers in with a kebab and plonks himself down next to you. The mood dies somewhat.
You’ve been going out with each other for a while now, and you’ve decided it’s finally time to take the next step and move in together. However, due to high prices and the need to pay a deposit, you, like countless other young people, cannot afford to move in with your partner. Instead, you are forced to put your life on hold as you continue to share your living space with six other random people. In fact, a 2016 study conducted by Shelter found that 60 per cent of 18 to 44-year-olds felt that the housing crisis delayed them from achieving life goals such as home ownership and marriage. That suggests there are in the region of 13 million young people living in the UK who have had to put their lives on hold due to a lack of housing.
Imagine an alternative scenario. You have been living with your partner for a number of years now. Things were great at first, but then the small disagreements over what to watch on Netflix or who is supposed to do the washing up mature into something more serious. Now, either one or both of you realise that it’s not going to work and so it’s time to move on. There is only one problem: neither of you can afford to move out or keep the flat going by yourself. You’re not alone. One study found that 28 per cent of people who are currently in a relationship are only sticking with it for the sake of financial security.
Perhaps you’ve found somebody new. Maybe you cannot stand to be in the same home as your ex. Or, it could simply be that you need to move out and finish that chapter of your life. Thanks to the high cost of living you, and countless other people, cannot do this and have to continue with a decidedly sub-optimal living arrangement.
This situation is not only inconvenient, it can also be deeply troubling. For example, research conducted by Crisis revealed that 27 per cent of homeless service users claimed that they had formed an unwanted sexual relationship with someone since being homeless. An example of this is where a landlord offers free accommodation to women in exchange for sex.
Not only is the housing crisis forcing people into exploitative relationships, it is also placing some people in danger. Many people, especially women, are forced to stay with abusive partners as they cannot find anywhere else to live.
The housing crisis is having a negative impact on our love lives. Thankfully, it should be relatively easy to fix and does not require you to join a gym or change your personality. Liberalise the planning system, free up green belt land which is of no environmental or agricultural benefit and get rid of stamp duty as soon as possible. Do all that and the Government would be giving Britain an economic boost, as well as a romantic one.
A longer version of the above first appeared on CapX in 2019
The Economics of Valentine’s Day
It’s Valentine’s Day, which means couples all around the world will be giving each other gifts, going out for dinner, and sending cards containing nauseating messages. The rest of us sad singletons will be filled with bitter resentment that everywhere is booked up and that it’s marginally more difficult to get served at the local watering hole.
The evolution of Valentine’s Day itself also offers some interesting lessons about economics.
First, it’s quite remarkable that so many people will be celebrating Valentine’s Day at all (or at least writing articles about the economics behind it). A few hundred years ago Valentine’s Day was the preserve of the very wealthy. They were the only ones who could afford to buy their loved one’s gifts and to have enough leisure time to go out for dinner or even a romantic stroll.
Thanks to the labour-saving genius of market capitalism we not only have a lot more free time than our forebears, but we can generally afford to buy them a nice trinket or too to express our affection.
What’s more, thanks to advances in technology and increased mobility, people now have more choice about who they spend Valentine’s Day with. A relatively short time ago, a person’s romantic options were incredibly limited. They would likely stay in the small town or city in which they were born, and would get married at a young age to somebody from the same area.
Compare that to the mobility and technological advances most of us enjoy today, all of which mean the pool of potential partners is far greater.
Not only can you (hopefully) spend Valentine’s Day with who you want, you can also spend it doing what you want. Even a few generations ago the idea of dining out was a luxury to be enjoyed by the affluent, not something most of us can do with a degree of regularity. Equally, if staying in is more your thing, the profusion of apps and delivery services means a previously unimaginable quality of food is available at the touch of a button – that too is an incredibly recent development in the grand scheme of things.
And if you want a romantic city break, the enormous democratisation of travel in the last few decades means going abroad is no longer a huge treat or once-in-a-lifetime experience, even for those on modest incomes.
Beyond all this marvellous progress, how we go about Valentine’s Day tells us something about the concept of signalling. Say you’ve been on a few dates with someone, but you’re in that awkward situation where you’re not sure if you’re just dating or if it’s become something more serious. If the person were to just give you money (economically efficient, sure, but an odd gift for a romantic partner), you would have little clue as to how they really feel about you. However, if they were to get you a first edition of your favourite book, or tickets to see that band you mentioned you liked on date three, that signals information about their feelings towards you.
Signalling is a concept originally developed in contract theory and shows the importance of the credible conveying of information by one party about itself to another. Whether this is on the job market, a company brand, or an IPO, signalling is incredibly important. It helps match businesses with workers and ensures that they are paid a salary based on their skills and experience, it also helps consumers make choices about what to buy, and investors when deciding where best to put their money.
Without signalling, it would be difficult for the economy to function, in much the same that it would be for romantic relationships to develop. Again, we can thank the free market for improvements in this area. Due to technological advances, parties now have more ways available to them to reduce information asymmetry between them. That means businesses can find suitable workers and workers can find a job which matches their skills and pays them what they’re worth, consumers have more information about the products they’re buying, and businesses receive investment.
The final lesson Valentine’s Day teaches us is about gift-giving. As I mentioned above, giving money is much more efficient than buying someone a gift. This is because there is a lot of research that shows we are generally pretty lousy gift givers. This is the case even when it comes to spouses and parents and children.
Obviously, there is more to gift-giving – sentimental value, for one thing, not to mention the signalling element. I would certainly advise getting your significant other a gift rather than bunging £50 and a card signed, ‘yours, efficiently. Happy Valentine’s
A longer version of the above article first appeared on CapX in 2020
So, there we have it! I do hope that however you choose to spend it that you have a very Happy Valentine’s Day!