On the Inadequacy of Economics for Understanding Housing Markets – A Pragmatic Response

ABSTRACT The focus article of this issue of the journal argues for the need to use tools and concepts from many disciplines of social science when analysing real-world housing market. Lux and Sunega argue that analyses relying only on the toolbox of mainstream economics fail to capture important aspects of the working of the markets, we agree. However, part of the critique of mainstream economics is based on a caricature of economics. In order to arrive at a new pragmatic socio-economics of housing markets, we see it as crucial to arrive at explicit, concise and shared interpretations of core concepts, e.g. the concept of norms is often used differently in different disciplines. Two of the lines of future housing market research proposed by Lux and Sunega that we regard as particular promising is design of surveys capturing variation in expectations, preferences and risk attitudes and use of (stochastic) agent-based models.