Daniel H. Weinberg

Intraurban residential mobility: The role of transactions costs, market imperfections, and household disequilibrium

Abstract This paper presents a model of household residential search and mobility that focuses on microeconomic elements of household behavior and incorporates housing market features. The model is cast explicitly in terms of a rigorous model of housing demand, allowing the benefits from moving to be measured as the compensating income variation of the potential change in consumption. The empirical results indicate that large changes in economic variables, such as income and prices produce only small potential gains from moving and that a major factor in the moving decision is the magnitude of search and moving costs.

Tax policy toward health insurance and the demand for medical services.

Researchers have argued that the tax subsidy to employer-provided health insurance has led to overinsurance, excess demand for medical care, and to rapid expenditure growth in the medical care sector. This paper determines the quantitative significance of this linkage, using existing estimates of the elasticities of demand for health insurance and medical services in a static microsimulation model. We find that incorrect assumptions about the elasticities of demand and pattern of health insurance coverage led earlier researchers to overestimate the likely impact of the elimination of the tax expenditures for health insurance. We estimate, using mid-range assumptions, that complete elimination of the favorable tax treatment of employer contributions to health insurance would reduce the demand for employer-sponsored health insurance by 16-27 percent and the overall demand for medical services by about 4-6 percent and not more than 10 percent.

The demand for rental housing: Evidence from the Housing Allowance Demand Experiment

Abstract This paper provides new evidence on the price and income elasticities of demand for rental housing by low income households. Housing expenditures of households participating in the Housing Allowance Demand Experiment and receiving housing allowances in the form of a proportional rent rebate are analyzed. These rent rebates experimentally vary the effective relative price of housing and thus enable estimation of the price elasticities. Natural income variation enables estimation of income elasticities. Analysis is carried out using two functional forms and a variety of models of housing dynamics. The estimated income and price elasticities of demand are 0.36 and −0.22, respectively. When the sample is restricted to include only households headed by couples, the elasticity estimates are 0.47 for income and −0.36 for price. These estimates are lower (in absolute value) than have been previously estimated and it is suggested that this may be due to the low-income nature of the sample.

Housing Benefits From the Section 8 Housing Program

The Section 8 housing program is the largest U. S. housing assistance program. This article presents the first systematic analysis of the benefits participating households receive and compares those benefits with federal government costs. Section 8 New Construction projects provide acceptable housing at an affordable price to those low-income households fortunate enough to be accepted by the developers. However, about 20% of the total project rents goes to program-related costs rather than to tenant benefits. A major advantage of the Section 8 Existing Housingprogram is that tenant benefits are provided without excessive rent increases. But, most units in that program do not meet Section 8 Acceptability Criteria. A shift in emphasis from the New Construction to the Existing Housing program can save the government significant amounts of money yet maintain the number of households assisted.

The Demand for Rental Housing

This chapter presents a simple microeconomic model that conceptualizes household behavior and also presents a summary of some of the extant evidence on housing demand. The chapter estimates housing demand models for the low-income population in the Demand Experiment, using housing expenditures to measure housing. The chapter presents a few concepts of the microeconomics of housing demand and explains the way in which the proportional rent rebates affect household behavior. It also presents some recent empirical evidence on price and income elasticities of demand for rental housing. The chapter presents comparable results obtained from two different demand functions: (1) log-linear and (2) linear expenditures functions. The results demonstrate that both price and income elasticities of demand are not constant over a range of prices and incomes or across demographic types. The evidence indicates that low-income households change their housing consumption very little in response to income and housing price changes. The equilibrium demand for housing can best be estimated when only recent movers are included in the sample.

Housing consumption under a constrained income transfer

Congress is considering increasing the emphasis in federal housing policy toward use of existing housing as against new construction (e.g., Levine, 1978). Debate continues, as well, between advocates of an unrestricted cash transfer and those in favor of housing-based subsidies (e.g., Khadduri

The Demand for Housing Services

This chapter presents the use of hedonic indices in comparing dwelling units. Hedonic indices weigh each characteristic of a dwelling unit by its importance in determining the units rental or market value. Such an index results in a dollar amount of housing, interpretable as housing services. The concept of hedonic indices of housing was developed to enable comparisons among different housing units. The assumption underlying the hedonic approach is that the rent or value of a housing unit comes directly from the quantity and types of characteristics it contains and that the market prices of these housing characteristics can be estimated by pooling information from many dwelling units via multivariate regression analysis between rents and dwelling characteristics. The result of the regression is a set of implicit prices, which measure the value of each dwelling and neighborhood characteristic for the time period and geographical area from which the sample of dwellings is drawn.

The Effect of Minimum Standards Housing Allowances on Housing Consumption

This chapter focuses on the effect of housing allowances with Minimum Standards requirement on the probability of meeting those standards and on housing consumption as measured by housing expenditures. A households response to a housing gap allowance offer is likely to depend in a critical way on whether they meet the Minimum Standards requirement when they enrolled in the program. Households that already met the requirement at enrollment were not required to alter their normal housing consumption pattern and could treat the allowance payment essentially like any other additional income. The chapter presents the estimated impact on expenditures of a constrained income transfer—a housing gap allowance payment conditional on meeting a housing requirement. In contrast, the unconstrained group received housing allowance payments without having to meet any housing requirements. The procedure used to estimate the impact of the housing allowance on the unconstrained households was the same as that used to estimate the impact of the housing allowances on the housing gap households. The two alternative measures of housing adequacy discussed in the chapter and which are closely related to the Minimum Standards failed to indicate significant differences in housing improvement between Minimum Standards and unconstrained households.

The Effect of Housing Gap Allowances on the Consumption of Housing Services

This chapter explores housing consumption in terms of housing services, as measured by the hedonic indices. It explains the effect of the allowance payments on the shopping behavior of households in the housing market. The chapter presents the estimates of housing services changes for Minimum Rent households. Minimum Rent Low households in Pittsburgh showed no significant increase in housing services. Even Pittsburgh Minimum Rent Low and Minimum Rent High households that only met requirements after enrollment showed no increase in housing services. This was in contrast to significant housing expenditures increases for this group. It appears that the allowance had little or no effect on the housing services obtained by Minimum Rent households in Pittsburgh. Such additional housing expenditures by households in that site went largely for increased rents without any material change in real housing. In Phoenix, the median allowance-induced increases in housing services above normal were significant for both Minimum Rent groups. The households that met the housing requirements only after enrollment had the largest increases, while those that already met requirements at enrollment showed no significant increases.

The Effect of Minimum Rent Housing Allowances on Housing Consumption

This chapter discusses the effect of Minimum Rent housing allowances on housing consumption. Based on an assumption that housing quantity and quality increase with a units rent, an alternative requirement—setting a minimum rent level—was tested in the Demand Experiment. Such a requirement is easy to administer because rent payments can be verified by rent receipts. Under the Minimum Rent alternatives that were tested in the experiment, households were required to live in units whose rent levels met or exceeded a certain minimum. Two levels of Minimum Rent were tested—70% and 90% of C *, where C * was the estimated cost of modest, existing, housing meeting the Minimum Standards requirement at each site. The two levels were referred to as Minimum Rent Low and Minimum Rent High. In comparison to Minimum Standards, the Minimum Rent High requirement induced larger expenditure changes for recipients as a whole and for households that met requirements only after enrollment. Even increases among households that already met requirements at enrollment were larger for Minimum Rent High than for Minimum Standards, although the difference was not significant. Expenditure effects for Minimum Rent Low households fell between those of Minimum Standards and Minimum Rent High. The findings of the analysis suggest that housing allowances affected recipients in two ways. The payment itself was sufficient to induce some increase in expenditures, as indicated in the response of the unconstrained households. The housing requirements led to additional housing changes, which varied according to the specific requirement used.