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Towards an Accurate Description of Affordability

Author

Listed:
  • Russell Chaplin

    (Investment Analyst with Property Market Analysis, Tower House, 8-14 Southampton Street, London, WC2E 7HA, UK, russell.chaplin@pma.co.uk)

  • Angus Freeman

    (Property Research Unit, Department of Land Economy, University of Cambridge, 19 Silver Street, Cambridge, CB3 9EP, UK, ajmf2@cus.cam.ac.uk)

Abstract

This paper draws upon the poverty literature and examines the desirable properties of a descriptive statistic of affordability—namely, that it should satisfy three axioms, monotonicity, transfer and transfer sensitivity. The descriptive statistics of headcounts and averages do not satisfy these three axioms and policies using these statistics as allocative tools may be misallocating resources. The paper advocates the use of a Foster, Greer, Thorbecke statistic (FGT). Examples of different hypothetical households are used to show the contradictory results that can be obtained by using the current statistics. As a case study, the paper compares regional affordability rankings in England by looking at the FGT, headcount and mean values of the rent—income ratio using the 1995/96 Existing Tenants' Survey.

Suggested Citation

  • Russell Chaplin & Angus Freeman, 1999. "Towards an Accurate Description of Affordability," Urban Studies, Urban Studies Journal Limited, vol. 36(11), pages 1949-1957, October.
    • Handle: RePEc:sae:urbstu:v:36:y:1999:i:11:p:1949-1957
    DOI: 10.1080/0042098992692
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    References listed on IDEAS

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    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    2. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
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    Cited by:

    1. William C. Baer, 2010. "Stuart London's standard of living: re‐examining the Settlement of Tithes of 1638 for rents, income, and poverty," Economic History Review, Economic History Society, vol. 63(3), pages 612-637, August.
    2. Miniaci, Raffaele & Scarpa, Carlo & Valbonesi, Paola, 2014. "Energy affordability and the benefits system in Italy," Energy Policy, Elsevier, vol. 75(C), pages 289-300.

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