Experimental Housing Allowance Program Research Articles

Sources of inefficiency in subsidized housing programs: A comparison of U.S. and German experience

Many developed countries include some mix of housing programs oriented toward either demand-side (consumer) or supply-side (producer) subsidies. Demand-side programs take the form of rent or housing allowances of various types, some of which are characterized by direct cash payments to program beneficiaries, while supply-side programs focus on either new construction or rehabilitation with a multitude of subsidy elements which cover both capital and operating costs. Debates over the efficacy of demand-side and supply-side subsidy programs are common in countries with a mix of housing subsidy mechanisms. Such debates have emphasized a number of differences in demand-side and supply-side programs. Major arguments in favor of demand-side subsidies are that they allegedly are less costly than supply-side subsidies, permit greater freedom of choice in housing and neighborhoods, are more equitable in that they permit more widespread participation among eligible populations, are more efficient in that they make better use of the existing stock of housing, and are more flexible for program administrators in that they can be easily turned on and off in response to changing needs and priorities. Arguments against such subsidies are that they allegedly result in little or no real housing improvement, fail to stimulate the supply of new housing, and drive up housing prices. In the U.S., many of these alleged advantages and disadvantages have been investigated through a series of social experiments such as the Experimental Housing Allowance Program (EHAP) and rigorous evaluations of major subsidized housing programs.’ More recently international comparisons of program outcomes have been permitted as a result of development

Rent Subsidies

Several studies have evaluated the experimental housing allowance program authorized by Congress in 1970 and implemented by the Department of Housing and Urban Development. The studies that are relied upon most have nevertheless been considered inadequate because they were essentially case studies. An evaluation design has recently been suggested, the random-comparison-group design, that makes the data from the Administrative Agency Experiment useful for evaluation. The outcomes in the AAE program sites are compared here to projected outcomes based on an analysis of Annual Housing Survey data. The evaluation finds that rent burdens were reduced and housing quality was improved jor many who lived in substandard units. These impacts were achieved without producing inflation. Substantial confidence in the findings is permitted not only by the logic of the method itself, but by corroboration from other research. The design employed is found to be practical and powerful for certain evaluations, and its use in connection with other public programs can be recommended. The random- comparison-group design could substitute for randomized experiments in situations in which such controlled experimentation is not possible or was not carried out.

Neighborhood revitalization's effects on tenants and the benefit-cost analysis of government neighborhood programs

This paper analyzes the potential effects of neighborhood improvements on low-income tenants. The theoretical model shows that tenants with strong psychological ties to their current neighborhood may suffer significant losses due to rent increases caused by neighborhood improvement, even if no displacement occurs. These tenant effects bias property value measures of the benefits of government neighborhood programs. The model is tested using data from the Experimental Housing Allowance Program, and modest but important tenant effects are found.

Rent Paying Ability and Racial Settlement Patterns

Abstract. Based on the belief that the major remaining hurdle to integration is economic, the proposition has frequently been advanced that if minority households could afford decent housing outside their current communities, many would move from their ghettoes into society at large. Evidence from two housing allowance demonstration projects and the recently completed Experimental Housing Allowance Program raises doubts as to the validity of this contention. While recipients of housing allowances frequently moved to better neighborhoods, only rarely were they able to break free of traditional settlement patterns. Findings suggest that while it may be necessary to increase the rent paying abilities of low‐income minority households as a precondition of integration, that segregation is not likely to be eliminated until the social, psychological, and remaining legal issues associated with it are addressed as well.

Low-Income Housing Assistance Switches from Production to Vouchers

Abstract The traditional federal approach to housing assistance from the Depression through the 1970s was to subsidize the construction of new units for occupancy by low-income families. A competing approach, however, had been advocated by some since the 1930s and had gathered considerable support by the time HUD was created: Consumer vouchers could enable low-income families to afford housing selected from among dwellings provided by the private market. HUD's Rent Supplement Program and the Section 23 leased housing program under the Housing and Urban Development Act of 1965 set partial precedents for the voucher approach. The idea was extensively tested in the HUD-sponsored Experimental Housing Allowance Program (Bendick 1982; Struyk and Bendick 1981) and became operational in 1974 as the Existing Housing component of the Section 8 program.

Rent Subsidies and the Elderly

This paper brings together the relatively meager and widely dispersed findings that apply to how the elderly would fair if a rent voucher program were to become the single government housing subsidy to households of low and moderate income. The paper begins by reviewing the findings that apply to the elderly from the recent Experimental Housing Allowance Program (EHAP), and then relates these EHAP fingings to findings on housing needs of various types of elderly such as low income elderly, racial minority elderly and elderly with functional impairments. In theory, the great benefit of the rent vouchers to the elderly is the unique freedom in housing choice and location inherent in the program. However, the EHAP findings suggest that the more unique one's housing needs the less likely one will successfully negotiate the voucher process. This process requires the voucher recipient to find program eligible (minimum standard) housing. The very poor elderly, those susceptible to minority discrimination in the private market, and those in need of barrier free, security protected and support serviced housing, will have the hardest time searching for and findings housing toward which they can apply a rent voucher. At best the housing voucher concept would make sense as one among several housing subsidy options open to elderly recipients. If it became the only option many of the poorest, most disenfranchised elderly would find themselves without a housing subsidy.

Housing Allowances: A Critical Look

The Reagan Administration would like to introduce housing allowances as the federal government's principal low-income housing program. The results of HUD's 10-year Experimental Housing Allowance Program suggest important structural limitations to this approach. Only a small portion of the housing allowance is spent on housing. An allowance is likely to least serve those who most need housing assistance. The stock of vacant units is inadequate to meet the demands of voucher recipients. Landlords are not likely to repair substandard units to meet this limited added buying power. And housing market discrimination inhibits mobility that might capture existing standard units. Additional evidence from the Section 8 existing housing and the public assistance programs suggest the limitations of the housing allowance approach. The true motivation for introducing housing allowances would appear to be a desire to withdraw the federal government from its traditional rote as housing provider.

Another Look at Housing Allowances: A Response to Chester Hartman

Program experience with the Section 8 Existing Housing program and final research findings from the Experimental Housing Allowance Program have shown that, contrary lo Chester Hartman's conclusions in his recent Journal article, housing allowance programs similar to HUD's proposed Housing Payment Certificate program are an effective way to provide housing subsidies for families in need of assistance. Comparisons with public housing and unrestricted cash grants show that allowances produce the largest increase in housing consumption per subsidy dollar, and the design of the Housing Payment Certificate program will assure that those subsidies go to families most in need. Criticisms suggesting an inadequate supply of affordable, standard housing are refuted by the Section 8 Existing record of 750,000 families now renting units on the private market. Finally, discrimination has not prevented these families from finding standard housing or moving to different neighborhoods. The Housing Payment Certificate program is proposed not as a substitute for the Department's current commitment to a range of housing programs, but rather as the vehicle for new assistance.

Estimation of Dynamic Linear Expenditure Functions for Housing

THE effectiveness of programs designed to improve the housing of low-income renter households by increasing their demand for housing through income supplements or price discounts has recently been questioned, based largely on the results of the Experimental Housing Allowance Program (EHAP). The results from EHAP generally indicate small consumption responses on the part of low-income households (i.e., inelastic price and income elasticities of demand for housing; see Friedman and Weinberg (1978), Mulford (1979), and Hanushek and Quigley (1979)). However, using a cross section of households sampled before the experiment began and a static linear expenditure specification, Cronin (1979) obtains static price elasticity estimates substantially exceeding in absolute value those estimated with experimental data (i. e., 0.53 to 1.00 for the former versus -0. 16 to -0.21 for the latter). The estimates of static current income elasticities (about 0.2 to 0.3) were similar to those found in EHAP. This paper extends the previous analysis by obtaining dynamic estimates of housing income and price elasticities from the linear expenditure system. Results indicate that the responsiveness of households may be greater than previously indicated. Short-run elasticities are found to be highly inelastic. However, when households are stratified by the time period since their move to allow for varying adjustment toward equilibrium, long-run elasticities are often found to approach unity. The conceptual framework for the analysis is presented in section II. Data, samples of households and definitions of variables are discussed in the first part of section III; results are presented and discussed in the second part.

HOUSING ALLOWANCES AND DEMAND ORIENTED HOUSING SUBSIDIES

ABSTRACTIt is estimated that the Federal government will spend more than $170 million on the Experimental Housing Allowance Program (EHAP). So far more then $50 million has been spent on EHAP research alone. This paper indicates some of the analytical issues in evaluation and suggests that housing allowance policies have ample historical precedent.

Working for the Man: The Anthropologist in Policy Relevant Research

Erve Chambers is Assistant Professor of Anthropology at the University of South Florida, Tampa. The article is based on work done with the U.S. Department of Housing and Urban Development's Experimental Housing Allowance Program, while employed as an on-site observer by Ab t Associates, Inc., Cambridge, Massachusetts. The writer is indebted t o Dr. Harry Wolcott and Chris Gaffney, University o f Oregon, and t o Dr. Ev Glatt, Program Development and Research, U.S. Department of Housing and Urban Development, Washington, D. C. D URING THE LAST few years the U.S. Department of Housing and Urban Development (HUD) has sponsored major research on a new housing allowance program. One aspect of the research was the experimental operation of eight administrative agencies, located in various communities across the country.' These were fully operative housing agencies, each funded to enroll and provide financial assistance to several hundred low and middle income families. The program offered a unique opportunity to follow a social innovation from its beginning. There have been few previous opportunities to design and initiate comparative research on the activities of public service agencies, their impact on the populations they serve, and their impact on the comnlunity at large. Most research on similar organizations has been formulated around a set of preexisting administrative conditions. In this case, service agencies were created around an experimental design. It was as close as one might expect to come to creating a laboratory in the field. One feature of the research design for HUD's experimental housing allowance program which should be of particular interest to anthropologists was the use of experienced fieldworkers in on-site observation. Each administrative agency was assigned a full-time observer who would live in the community, visit the agency daily, work with a limited number of program participants, and perform specified data collection and reporting duties. In six of the eight sites, the individuals contracted to do this work had extensive training in anthropology. This was a unique form of employment, not only for the anthropologists actually on site with the experiment, but for anthropology in general. The following report will provide a brief discussion of the work, for the most part derived from personal experience.* There also will be an attempt to place the work in the larger context of current anthropological research, particularly as regards areas of policy relevant and urban studies.