Economists, their squabbles, and especially their vices would all be an amusing intellectual cabaret, if it were not for the very real consequences of all too human ambition on the teeming billions of us who only live in their world. Like high school, like most professions, in economics there is an "in-crowd" and their in-theories and if you don't toe the line, you're "out". The Chronicle of Higher Education reminds us all that "In June, in Kansas City, Mo., the International Confederation of Associations for Pluralism in Economics will hold a World Conference on the Future of Heterodox Economics, offering thousands of marginalized economists a rare opportunity to gather en masse." Now that conference should be a blast! There's no one like a bitching heterodox economist to put away the pints.
. . .
Economics is on my mind today--and most days right now. You see, I'm trying to buy a house. That is more than enough to drive anyone heterodox.
Daily I receive the lesson that that most vital of underpinning neoclassical assumptions, the rational actor, does not exist. It is true that I am trying to buy a house in the Boston area, almost the most expensive place in North America. It is also a simple, brutal fact of life that the local real estate market can best be characterized as irrationally exuberant.
I have been looking for about six months. I have done my homework and I have done my legwork. I have as good a knowledge of the housing market in the area as anybody, professional or amateur. I certainly think that I'm rational and I seem to grow ever moreso as I acquire ever more local knowledge. All very neoclassical of me. Part of that knowledge is that the market, while having run up and up and up, is not now doing so; the market is now flat.
I placed an offer on a house that has been on the market, just sitting there, empty, for several months. I had passed it over early on as the asking price is just outside the range that I can rationally afford. But six months later, why not offer a little less and then dicker until we can agree?
My offer was rejected by a counter-offer that was higher than the listed asking price! A simple "no" would have served . . .
And I'm left wondering, what was the seller thinking? Is he just rude or is he stupid? Either way, the response was not exactly what I would call rational. And that house sits there still, empty and cold.
Posted by Martial