Abstract
The public rental housing program had an in-built incentive that provided encouragement for unhappy couples to divorce. The high and rising divorce rate in Hong Kong is therefore both a cause and an effect of higher housing prices and rents. It distorts the measured inequality in household incomes. These economic and social changes were magnified through a public rental housing program that at best failed to protect the relative and absolute wealth position of families without property and at worst created perverse incentives that increased the divorce rate among the poor. The present day public housing program is reproducing poverty across generations against a background of sustained rising private property prices.
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