Role 4: Economist & Market Actor

Question 1

What is the mindset of the economist?

Answer 1

Human interaction is the exchange of goods and services (through monetary value and payment). Analytical role

Question 2

What is the mindset of the market actor?

Answer 2

Planners are actors on such markets and act within market rules - planning depends on markets, market processes and other market actors. Action oriented role.

Demand and supply lead to some kind of equilibrium. Planning comes in when the equilibrium doesn’t work.

Question 3

What is the mindset of the homo oeconomicus?

Answer 3

Humans want maximum benefit (maximum utility). Act rationally to reach maximum benefit, but also know your preferences. Seen as the normal attitude of the human being.

• full information
• rational action
• defined preferences
• maximising utility/benefit

Question 4

What are the tools and products of the economist and market actor?

Answer 4

• interventions to encourage market actions: providing information to attract/activate private development (ex. marketing), providing incentives (ex. subsidies)
• interventions to safeguard market actions: regulating developments to avoid failures (ex. bailing out failures, stepping in), ensuring the functioning of spatial development (ex. environmental standards, future infrastructure needs)
• exploitation plans: financial overview (costs, revenues, phasing in time, value, risk, return on investment, land to sell, streets, other infrastructure, public domain, water, green

Question 5

What is the land price made of?

Answer 5

• price for a new house
• VAT
• construction costs dwelling
• additional costs (architect, notary, signing agent)
• development risk
• land price

Question 6

What is the framework of the economist and market actor?

Answer 6

• demand and supply
• scarcity (ex. land, road space)
• price & value: easier to compare with a price
• development
• (ir)rationality
• equilibrium: invisible hand (planners are safeguards of this)
• makes choices based on marginal costs and maximal satisfaction
• demand is visible and measurable in economic terms, but what about need?
• land development policy: what is the government’s role, active land policy (buying farm land, site preparation, developing infrastructure, public housing) and passive land policy (since 1980s, neoliberalism, free market-oriented approach, growth of the middle class, boom of the economy, mortgage possible based on 2 salaries, active stimulation of house ownership, interest-only loan, interest rates decreased, less funding for the government)
• 2008: Spatial Planning Act (Wro): exploitation plan (municipalities have the obligation to regain the costs made for the planning process and for the public services available via the land price), if there’s no exploitation plan the local zoning plan is invalid and it’s illegal state-aid (EU-verdrag)
• tragedy of the commons
• ABC-policies
• prisoner’s dilemma

Question 7

Why are there different property markets?

Answer 7

When you own land, you still need permits to build, this depends on the local zoning plan. It only allows for a certain land-use, so different markets are created.

• agricultural land
• housing development
• offices
• business parks
• retail space or commercial real estate

Question 8

What does the role of the economist and market actor really look like?

Answer 8

• planning institutions are often unequipped to deal with market pressures
• project-driven urban development