Holding and opportunity cost theory in a property development context

This paper focuses on the varying approaches and methodologies adopted when the calculation of holding costs is undertaken, focusing on greenfield development. Whilst acknowledging there may be some consistency in embracing first principles relating to holding cost theory, a review of the literature reveals considerable lack of uniformity in this regard. There is even less clarity in quantitative determination, especially in Australia where there has been only limited empirical analysis undertaken. Despite a growing quantum of research undertaken in relation to various elements connected with housing affordability, the matter of holding costs has not been well addressed regardless of its part in the highly prioritised Australian Government’s housing research agenda. The end result has been a modicum of qualitative commentary relating to holding costs. There have been few attempts at finer-tuned analysis that exposes a quantified level of holding cost calculated with underlying rigour. Holding costs can take many forms, but they inevitably involve the computation of “carrying costs” of an initial outlay that has yet to fully realise its ultimate yield. Although sometimes considered a “hidden” cost, it is submitted that holding costs prospectively represent a major determinate of value. If this is the case, then considered in the context of housing affordability, it is therefore potentially pervasive.

Approaches for calculation of holding costs in the context of greenfield residential development

There are increasing indications that the contribution of holding costs and its impact on housing affordability is very significant. Their importance and perceived high level impact can be gauged from considering the unprecedented level of attention policy makers have given them recently. This may be evidenced by the embedding of specific strategies to address burgeoning holding costs (and particularly those cost savings associated with streamlining regulatory assessment) within statutory instruments such as the Queensland Housing Affordability Strategy, and the South East Queensland Regional Plan. However, several key issues require further investigation. Firstly, the computation and methodology behind the calculation of holding costs varies widely. In fact, it is not only variable, but in some instances completely ignored. Secondly, some ambiguity exists in terms of the inclusion of various elements of holding costs and assessment of their relative contribution. Perhaps this may in part be explained by their nature: such costs are not always immediately apparent. They are not as visible as more tangible cost items associated with greenfield development such as regulatory fees, government taxes, acquisition costs, selling fees, commissions and others. Holding costs are also more difficult to evaluate since for the most part they must be ultimately assessed over time in an ever-changing environment based on their strong relationship with opportunity cost which is in turn dependant, inter alia, upon prevailing inflation and / or interest rates. This paper seeks to provide a more detailed investigation of those elements related to holding costs, and in so doing determine the size of their impact specifically on the end user. It extends research in this area clarifying the extent to which holding costs impact housing affordability. Geographical diversity indicated by the considerable variation between various planning instruments and the length of regulatory assessment periods suggests further research should adopt a case study approach in order to test the relevance of theoretical modelling conducted.

On collective unintelligence

The idea of collective unintelligence is examined in this paper to highlight some of the conceptual and practical problems faced in modeling groups. Examples drawn from international crises and economics provide illustrative problems of collective failures to act in intelligent ways, despite the inputs and efforts of many skilled and intelligent parties. Choices made of “appropriate” perceptions, analysis and evaluations are examined along with how these might be combined. A simple vector representation illustrates some of the issues and creative possibilities in multi-party actions. Revealed as manifest (un-)intelligence are the resolutions of various problems and potentials that arise in dealing with the “each and all” of a group (wherein items are necessarily non-parallel and of unequal valency). Such issues challenge those seeking to model collective intelligence, but much may be learned.

The moral economy of social media

In this chapter we take a high-level view of social media, focusing not on specific applications, domains, websites, or technologies, but instead our interest is in the forms of engagement that social media engender. This is not to suggest that all social media are the same, or even that everyone’s experience with any particular medium or technology is the same. However, we argue common issues arise that characterize social media in a broad sense, and provide a different analytic perspective than we would gain from looking at particular systems or applications. We do not take the perspective that social life merely happens “within” such systems, nor that social life “shapes” such systems, but rather these systems provide a site for the production of social and cultural reality – that media are always already social and the engagement with, in, and through media of all sorts is a thoroughly social phenomenon. Accordingly, in this chapter, we examine two phenomena concurrently: social life seen through the lens of social media, and social media seen through the lens of social life. In particular, we want to understand the ways that a set of broad phenomena concerning forms of participation in social life is articulated in the domain of social media. As a conceptual entry-point, we use the notion of the “moral economy” as a means to open up the domain of inquiry. We first discuss the notion of the “moral economy” as it has been used by a number of social theorists, and then identify a particular set of conceptual concerns that we suggest link it to the phenomena of social networking in general. We then discuss a series of examples drawn from a range of studies to elaborate and ground this conceptual framework in empirical data. This leads us to a broader consideration of audiences and publics in social media that, we suggest, holds important lessons for how we treat social media analytically.

Economics of tourism & growth for small island countries

We theoretically analyze the impact of changes in foreign income from tourism source countries on the growth of tourism dependent small island economies. Using a general theoretical construct, we attempt to answer the question of how price elasticity of demand, income elasticity of tourist and the degree of competition in the service sector influence the economic development of small economies. One of the main results is that politicians may consider applying policies which lead to a competitive environment in the service sector to maximize growth and the consequent labor income share.

Economic competition and evolution: Are there lessons from ecology?

After generally discussing models in ecology and economics that combine competition, optimization, and evolution, this article concentrates on models of intraspecific competition. It demonstrates the importance of diversity/inequalities within populations of species and other environments for the sustainability of their populations, given the occurrence of environmental change. This is demonstrated both for scramble (open-access) and contest competition. Implications are drawn for human populations and industrial organization. The possibility is raised that within-industry competition may not always exist between firms in all stages of the development of a new industry. Policy implications are considered. For example, it is argued that policies designed to encourage intense business competition and maximum economic efficiency have the drawback of eventually making industries highly vulnerable to exogenous economic changes.

Why is economics not a complex systems science?

The article argues that economics will have to become a complex systems science before economists can comfortably incorporate institutionalist and evolutionary economics into mainstream theory. The article compares the complex adaptive system of John Foster with that of standard economic theory and illustrates the difference through an examination of familiar production function. The place of neoclassical, Keynesian economics in complex systems is considered. The article concludes that convincing, multiple models have been made possible by the increase in widely available computing power available.