As part of the compensation package that it offers members of the armed forces, the Department of Defense (DOD) provides several housing allowances designed to help members pay certain costs of housing services. This report examines recent trends in the U.S. housing market and relates them to DOD policy. It then reviews the recent professional economics literature on housing demand, particularly the empirical literature, and relates findings from this literature to DOD policy. Finally, the report offers concrete proposals on how to simplify current DOD policy and make it more efficient without compromising any of its basic goals.
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