Individuals’ Property Investment Decisions Influenced More by Bandwagon Effect than Personal Risk-taking Propensity: Study | Be Korea-savvy

Individuals’ Property Investment Decisions Influenced More by Bandwagon Effect than Personal Risk-taking Propensity: Study


This photo taken July 28, 2020, shows apartment complexes in southern Seoul. (Yonhap)

This photo taken July 28, 2020, shows apartment complexes in southern Seoul. (Yonhap)

SEOUL, March 1 (Korea Bizwire)Individuals’ property investment decisions are influenced more by their desire to jump on the bandwagon than their personal risk-taking propensity, a study showed Monday.

The Institute for Social Development and Policy Research at Seoul National University conducted a survey of 1,200 Seoul citizens and evaluated their responses using a 4-point scale.

At 34.7 percent, more than one-third of the respondents said that they were planning to buy a home within the next two years. Their bandwagon propensity scored 4.12 points, the highest all groups.

The bandwagon propensity score for those who planned to buy homes within the next two to five years stood at 3.82 points, and that for those who had no such plans stood at 3.58 points.

The individuals with higher bandwagon propensity scores had a higher potential to actively invest.

When the bandwagon propensity score rose from 1 point to 6 points, the degree of willingness to make active investment rose from 4 points to 8 points (on a scale of 10).

“What lies behind the strong learning and bandwagon effect is the public’s distrust about the effect of government policy,” said Prof. Kim Seok-ho, the head of the Institute for Social Development and Policy Research and author of the report.

“The public foresees that the government’s real estate policy will fail, sharing the belief that housing prices will continue to rise in contrast to the government’s policy stance.”

Ashley Song (ashley@koreabizwire.com)

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