Interpreting Housing Allowance: The Norwegian Case

Abstract

Housing allowances are part of both the housing policy and the general welfare policy. In order to understand fully how the housing allowances affect welfare and well-being, one needs to use multiple approaches. We propose to complement traditional analyses of marginal effects and short-run incentives with long-run perspectives taken from the new social investment literature and elements of self-esteem and fairness taken from the literature on universalism. A neo-liberal approach where analysts limit themselves to studies of marginal effects and short-run incentives both in the housing and in the labour market runs the risk of neglecting important aspects of the effects of housing allowances. Therefore, this may lead to retrenchment. The approach we propose is illustrated through a closer analysis of important elements of the housing allowance system in Norway as it is today, and the development of the system over time.