Reply To: Austrian Economic Analysis


If your client wants you to explain the history (including the present situation) or predict the future of the local real estate market, then your analysis is economic history. Economic history is a blending of economic theory (i.e., what is universally true for all markets and all real estate markets) and with knowledge of contingent conditions for your particular market. The difficulty of economic history is judging the relevant of the different causal factors. Take a look at Mises’s book, Theory and History:

If your client wants you to assess the independent effect of a single causal factor, then your analysis is applied economics. Applied economics constructs a theory incorporating all the relevant conditions of the situation and then changes the single causal factor tracing through its effects on the market in an imaginary construct. An example of applied economics is Joseph Calandro’s book, Applied Value Investing: