Housing Economics Questioned

by Ken Gibb

I have been at a European Network for Housing Research housing economics workshop in Spain. Among a series of more or less complete papers on microeconomics, housing finance, policy papers and the like, Alex Marsh and I presented a highly preliminary paper about the extent to which (and when) housing economists anticipated, understood and communicated the impacts of the housing market/mortgage market triggers of the Global Financial Crisis.

I don’t want to talk about the paper now – it is very early and rough (that is what workshops are for after all) but the discussion did raise a few interesting points about the sociology of academic economics and the place of the sub discipline within a wider field, and the international dimension. Moreover, it raises questions about the readiness of the academic community to support and facilitate innovation and experimentation that may be more widely beneficial.

Non economists often criticise the imperialist tendencies of mainstream economics across the wider social sciences. However, this may also pertain within the discipline in terms of how specific sub-disciplines evolve. For instance, the housing economics publishing outlets are clearly dominated by North American journals such as Real Estate Economics, Journal of Urban Economics, Journal of Housing Economics and one or two others. While there are mainstream economists who also publish in more multidisciplinary places like Housing Studies, Urban Studies and Environment and Planning – it is clear that getting ahead means learning, applying and privileging a specific set of methods, assumptions, forms of knowledge at the expense of others. Of course, a more pluralistic philosophy to economics research and publishing is greatly hampered by criteria for promotion, REF panels and the like. But, I would argue, it’s long term consequence may be lessen research impact on public policy, business and society.

While there may be rigour and logic and evidence of many good pieces of useful work to support what mainstream housing economics has achieved over the decades, may it nonetheless, to use one of the phrases so beloved of US economists, be leaving something ‘on the table’ by applying this intellectual straitjacket?

To take one example, it is right that we should look closely at the links between housing markets, mortgage markets and the financial alchemy that led to the sub-prime chaos that did down the banking system – but housing economists should not simply rely on the slavish application of ideas from financial theories designed for specific financial products and imagine they apply sensibly to the very unusual commodity that is a house. While I’m sure there is much to learn (and indeed has been learnt usefully) by such approaches, even a cursory reading of the main journals suggests that there is too ready a willingness to suspend the key characteristics that set housing apart in order to shoehorn it into more orthodox financial analyses.

Both from the reading on cross-national housing economics and from simply being located in Europe and listening to differential national research papers in recent days – one cannot not be struck by the importance of different national contexts, legal and other institutional practices that filter international financial processes and suggest quite different stories and conclusions about our housing systems. In Britain, we are forever telling our students that supply inelasticity is comparatively very low compared with the USA – but while we more or less factor in key institutions like the idiosyncratic planning system and our volume house builders, many housing models still look to me, uncomfortably similar to those of their American cousins. Is there therefore an unintended danger in over homogenising our research?

I imagine many will disagree with this perspective and say plenty of good new work is forthcoming. I would not disagree but I do not think that means we are doing as well as we could. Far from it. A thousand flowers do not bloom, and, perhaps, if we do not offer a sufficiently pluralist approach to housing research to encourage the possible new hybrids, they never will see the light of day?