“Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.
But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.
In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.
Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.
Home ownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”
Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of home ownership.
MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that home ownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.
But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the home ownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.
The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.
Robert J. Shiller is professor of economics and finance at Yale and chief economist of MacroMarkets LLC.”
I can’t believe Mr. Shiller is speaking this psychobabble like it is pertinent fact. The statement about the foreclosed upon becoming cynical is amazing. People of all housing situations are pretty cynical about the bubble mechanics of the last several years and the results of same. Did he address the cynicism and moral hazard bailouts cause? Work and sacrifice are not related to having things that you want or a just society but that should not make you cynical?
A person sense of self worth comes from owning a yacht? I can’t even spell it and I know it wouldn’t do anything for any deep sense of self worth. So many arrogant useless bastards own yachts. You would think all that self worth would make them be better people? I guess we better throw in a nice luxury liner with principle reduction and interest rates that half the population can’t get because they didn’t fall for the American dream and instead just shuffled along with a poor self image for a decade.
I don’t even want a goddamn Yacht. Can I have more stimulus instead?My self worth needs it.
