In Defence of Greater Agnosticism: A Response to Galster's 'Comparing Demand-side and Supply-side Housing Policies'

ABSTRACT

This paper provides a response to Galster's claim that demand-side subsidies are generally superior to supply-side subsidies. It argues that Galster's conclusion is based on a US view of how different housing systems work, that it fails to consider empirical outcomes, that it abstracts from the structure and delivery of subsidies and, despite recognising the importance of this, that it ignores the particular contexts within which markets operate. It also queries Galster's choice of goals against which policy effectiveness is assessed. Galster ignores the direct impact of subsidy design on recipient households; he ignores the effect of delivery mechanisms on social segregation and socio-tenurial polarisation; he ignores a range of macro-economic concerns. The paper presents a case for greater agnosticism in the light of imperfect information.