The Scope and Method of Political Economy, 2002

In 1917, John Neville Keynes published an influential essay entitled “The Scope and Method of Political Economy.” The essay, and others before and after, defined the methodological assumptions followed by economists to this day. Reading Keynes’ essay in 2002, I feel that its main points need reconsideration and updating, particularly for real estate studies. As an applied form of economic analysis, real estate requires attention to the many empirical details that are assumed away in neoclassical economic theory and method. This applied holistic perspective would be useful throughout the fields of economics and finance. This paper briefly reviews four of the key papers that set the scope and method of mainstream economic research, points out the limitations of research along these positivist/empiricist lines and suggests an alternative similar to the Historical School/Institutional Economics paradigm. Jaffe and others have questioned real estate’s claim to be a separate discipline, based on academic real estate authors’ heavy use of economics and finance theory. This paper may provide food for thought in constructing arguments that real estate studies do involve a separate “scope and method” from mainstream economics and finance.