Edgar O. Olsen

An Econometric Analysis of Rent Control

Rent control affects the allocation of resources and the distribution of well-being. In New York City in 1968, it is estimated that occupants of controlled housing consumed 4.4 percent less housing service and 9.9 percent more nonhousing goods than they would have consumed in the absence of rent control. The resulting increase in their real income was 3.4 percent. Poorer families received larger benefits than richer families. The cost of rent control to landlords was twice its benefit to their tenants. The estimates are produced within the framework of a simple general equilibrium model; the data are on thousands of families and their apartments.

The benefits and costs of public housing in New York City

Abstract Public housing has been the largest program of housing subsidies to low-income families in the United States for fifty years. This is a comprehensive study of its benefits and costs. It contains the first estimates of the extent to which the program provides its participants with greater effective incomes than the poorest ineligible families and the first detailed analysis of the distribution of benefits among all eligible households. It provides significantly better estimates of the effect of the program on consumption patterns of participants, the effect of replacing public housing with cash grants, and the efficiency with which housing services are produced. Finally, it adds to few reliable estimates of the distribution of benefits among participants.

Subsidized Housing, Emergency Shelters, and Homelessness: An Empirical Investigation Using Data from the 1990 Census

Abstract This paper uses data on the only systematic count of the homeless throughout the United States to estimate the effect on the rate of homelessness of a wide variety of potentially important determinants, including several major policy responses to homelessness that have not been included in previous studies. It improves upon estimates of the effect of previously studied determinants by using measures that correspond more closely to underlying theoretical constructs, especially by accounting for geographical price differences. It also conducts numerous sensitivity analyses and analyzes the consequences of the undercount of the homeless for point estimates and hypothesis tests. The papers most important finding from a policy perspective is that targeting the current budget authority for housing assistance on the poorest eligible households will essentially eliminate homelessness among those who apply for assistance. Achieving this goal promptly without concentrating the poorest households in housing projects and without spending more money requires vouchering out project-based assistance. The primary methodological finding of the paper is that the 1990 Decennial Census did not produce sufficiently accurate counts, especially of the street homeless, to permit very precise estimates of the effects of many factors which surely affect the rate of homelessness. The main exception is the price of housing. Other things equal, higher housing prices lead to more homelessness.

The Cost-Effectiveness of Alternative Methods of Delivering Housing Subsidies

The empirical literature is unanimous in finding that tenant-based housing certificates and vouchers provide housing of any quality at a much lower total cost (that is, cost to all levels of government and tenants) than the types of project-based assistance studied, namely Public Housing, Section 236, and Section 8 New Construction and Substantial Rehab. However, these studies are so old and inaccessible that they are unknown to most people involved in current discussions of housing policy. This paper discusses the theoretical reasons to expect that these types of project-based housing programs will have excessive costs, presents a conceptually correct methodology for the cost-effectiveness analysis of housing programs, and provides a description and critical appraisal of the data and methods used in these earlier studies as well as a summary of their results. It concludes that cost-effectiveness analyses of current forms of projectbased housing assistance should be the highest priority for research on housing policy.

The welfare economics of equal access

Abstract This paper discusses alternative definitions of equal access to a good and derives policy implications of the only definition that seems consistent with the literal meaning of access and not obviously inconsistent with the views of at least some people who say that they favor government action to reduce inequality of access to particular goods. Specifically, it considers what is necessary to achieve an efficient state and a state preferred by everyone to the situation in the absence of government action if individuals care about equality of access so defined. This is contrasted with the policy implications of a concern about inequality of consumption.

The Effects of Different Types of Housing Assistance on Earnings and Employment

This paper uses administrative data on non-elderly, non-disabled households that received HUD rental assistance between 1995 and 2002 combined with data from other sources to estimate the effect of low-income housing programs on their labor earnings and employment. Using longitudinal data to explain the change in these measures of market labor supply makes it possible to account for immutable, unobservable characteristics of households that are determinants of market labor supply and correlated with program participation. Employing a large random sample of households throughout the country makes it possible to produce estimates of the national average effect of each type of housing assistance. Using administrative data makes it possible to identify accurately the type of housing assistance received. The results indicate that each broad type of housing assistance has substantial negative effects on labor earnings that are somewhat smaller for tenant-based housing vouchers than for either type of project-based assistance. They also suggest that participation in the little used Family Self-Sufficiency Program, an initiative within the public housing and housing voucher programs to promote self-sufficiency, significantly increases labor earnings.

Rent control and homelessness

Abstract The purposes of this paper are to produce more precise estimates of the effect of rent control on homelessness using microdata on housed and homeless households and to provide evidence concerning the mechanisms through which rent control might affect homelessness. Our results suggest that rent control does increase homelessness by decreasing the rental vacancy rate and increasing the rental price of housing in the uncontrolled sector but that these effects of rent control are offset by other effects that decrease homelessness. We cannot reject the hypothesis that rent control has no net effect on homelessness.

Some Theorems in the Theory of Efficient Transfers

This paper proves a positive theorem about the effects of any voluntary voucher scheme. It also describes a situation in which vouchers can result in optimal resource allocation and shows what the face values of and charges for the voucher must be in order to achieve optimality in this situation. The paper concludes with applications of the theorems to several proposed voucher schemes.

Are Section 8 housing subsidies too high

The Section 8 Existing Housing Program, currently the largest housing program administered by HUD, provides subsidies to low-income families living in privately-owned rental units of their own choosing. Under current rules and budgets, funds have not been sufficient to serve all eligible families willing to participate in the program, and public housing agencies have not limited assistance to the poorest eligible families. Instead, they serve many families above the poverty line while denying assistance to the majority of those below it. A simple proposal for targeting more assistance to the poorest families and eliminating the horizontal inequity resulting from offering assistance to some, but not all, families with the same characteristics is to decrease the subsidy at each income level by the same amount. One objection to this proposal is that the poorest eligible families would not be able to find units meeting the program’s space and quality standards if subsidies were lower. This paper finds that the program’s subsidy to the poorest eligible families greatly exceeds the minimum rent of units meeting the program’s standards. It also shows that the most common objections to reducing subsidy levels under the program are inconsistent with existing evidence.

Explaining Attrition in the Housing Voucher Program

This paper uses administrative data on families that participated in HUDs Section 8 Housing Voucher Program between 1995 and 2002 combined with data from other sources to estimate the differences in attrition rates between families that differ with respect to characteristics of greatest interest for housing policy and the effects on attrition of changes in the programs main parameters. The most important results are that large decreases in the programs payment standard and increases in the tenant contribution to rent will have small effects on program attrition. These results suggest that the overwhelming majority of voucher recipients receive substantial benefits from program participation. The empirical analysis also indicates that the elderly and disabled status of the head of the family are by far the most important influences on the likelihood that the family will exit the tenant-based voucher program, with disabled families about 37 percent less likely to exit and elderly families around 23 percent less likely to exit each year than otherwise similar families. Differences in attrition rates based on other family characteristics are much smaller.