Depreciation,Nostalgia and Personal Freedom

I want to talk about this last Freakonomics podcast, about how Japanese homes are disposable.

http://freakonomics.com/2014/02/27/why-are-japanese-homes-disposable-a-new-freakonomics-radio-podcast-3/

It presented some crazy data I was unaware of… the insane depreciation rate in Japan for homes and also for cars and other goods…

“It turns out that half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S. There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.”

Listening to the podcast made me go down a road of thinking about the concept of nostalgia…

“The economic incentives to build a house that will one day be resold don’t exist in Japan because of housing depreciation. And this means that a client is free to build a house according to their own personal preferences and their own idiosyncrasies.”

My thought after listening to the podcast is that…
Nostalgia in a sense is antithetical to “true” personal freedom. If you want to build anything you want or create anything you want; the idea that something in the past is very valuable will limit you in many ways. It’s kind of a tradeoff in that the more you value the classics or greats, the less innovative or original you yourself will be.

“The houses that are built today exceed the quality of just about any other country in the world, at least for timber buildings. And so there’s really no reason that they should drop in value and be demolished.”

The podcast goes on to give specific reasons for the high depreciation rate in Japan such as WWII and earthquakes, but I do not find those that plausible as that should not affect cars and other goods. Also, I’ve always advanced my idea that Asians are less nostalgic or less nature-worshippy than Europeans by the strange fact that the majority of super cities (population > 20 mil.) are in places like Asia or South America and I don’t think there are any in Europe and maybe one in the United States. So my inclination is that it is culture or a preference based explanation. The Japanese are really different. I know Japan has a higher depreciation rate than even other Asian countries, but I would guess that maybe Asians as a whole have a higher depreciation rate than others. When I think about it anecdotally; it seems right to me.

Leave a Reply

Your email address will not be published. Required fields are marked *