Do Housing Programs for Low-Income Households Improve Their Housing?
Year: 1996
Type: preprint
Study design: Observational Study
Abstract: The primary goals of the 1937 Housing Act were to provide safe and sanitary housing and to reduce crowding for low- income households. During the nearly 60 years since, the effective goals have expanded to include lowering housing costs, and by extension, to increasing nonhousing consumption. This paper examines the effect these programs have had on the overall consumption behavior of participants. Using data from the 1987 American Housing Survey (AHS), the results indicate that federal housing programs have little effect on the housing consumption of participants (4.4 percent increase), but an enormous effect on their nonhousing consumption (141 percent increase). Furthermore, the assistance seems to lower the housing consumption of 42 percent of participating households. Finally, substituting cash subsidies for in-kind housing assistance will provide more housing consumption, but with smaller increases in nonhousing consumption than the current (primarily in-kind) system. The model takes into account two sources of selection bias in a housing demand framework. The first source is self selection due to households choosing whether to participate in a housing program. The second source is due to rationing of housing benefits; only 25 percent of eligible households are currently served. The estimates of the program effects rely on the estimated distribution of participant preferences which eliminates aggregation bias in the last stage.
Source: SSRN Electronic Journal
Author: Amy Crews Cutts
Institution: Freddie Mac (United States)
Language: English
Topic: Housing Market and Economics
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W33341634