Evaluation of alternative housing programs

by C. Peter Rydell

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This paper evaluates six housing programs: two supply-subsidy programs (cost reduction and public housing), two rent-regulation programs (Sec. 8 existing, housing assistance and rent control), and two demand-subsidy programs (housing allowances and unrestricted cash grants). It compares the ability of those programs to (1) improve housing in general, (2) reduce poverty, and (3) improve low-income housing in particular. Giving money to housing (cost reduction) does best on the housing-improvement objective. Giving money to poor people (unrestricted cash grants) does best on the anti-poverty objective. Giving money to poor people and earmarking it for housing (housing allowances) does best on the low income housing objective. Although no program does best on all three objectives, if the pure supply subsidy (cost reduction program) is set aside because it does not reduce poverty enough and the pure demand subsidy (cash grant program) because it does not help housing enough, then there is a clear winner among the remaining programs. The housing allowance program does better than the public housing, Sec. 8, or rent control programs on all three objectives.

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